What changed in this filing

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Item 1. Business

2020-09-28 compared with 2019-09-30 · 140 added, 179 removed, 107 unchanged (75% of the section changed)

Rave Restaurant Group, Inc., through its subsidiaries (collectively, the “Company” or “we,” “us” or “our”) operates and franchises pizza buffet (“Buffet Units”), delivery/carry-out

(“Delco Units”) and express (“Express Units”) restaurants under the trademark “Pizza Inn” and operates and franchises fast casual pizza restaurants (“Pie Five Units”) under the trademarks “Pie Five Pizza Company” or “Pie Five”.

The Company also

licenses Pizza Inn Express, or PIE, kiosks (“PIE Units”) under the trademark “Pizza Inn”.

We facilitate food, equipment and supply distribution to our domestic and international system of restaurants through agreements with third party distributors.

As of June 30, 2019, we owned and operated one Pie Five Unit.

As of that date, we also had 57 franchised Pie Five Units, 194 franchised Pizza Inn restaurants and nine licensed PIE Units.

domestic franchised Pizza Inn restaurants were comprised of 87 Buffet Units, nine Delco Units and 50 Express Units.

Rave Restaurant Group, Inc., through its subsidiaries (collectively, the “Company” or “we,” “us” or “our”) operates and franchises pizza buffet (“Buffet Units”),

delivery/carry-out (“Delco Units”) and express (“Express Units”) restaurants under the trademark “Pizza Inn” and operates and franchises fast casual pizza restaurants (“Pie Five Units”) under the trademarks “Pie Five Pizza Company” or “Pie Five”.

The Company also licenses Pizza Inn Express, or PIE, kiosks (“PIE Units”) under the trademark “Pizza Inn”.

We facilitate food, equipment and supply distribution to our domestic and international system of restaurants through agreements with third

party distributors.

As of June 28, 2020, we had 42 franchised Pie Five Units, 176 franchised Pizza Inn restaurants and 13 licensed PIE Units.

The 138 domestic franchised Pizza Inn restaurants

were comprised of 83 Buffet Units, ten Delco Units and 45 Express Units.

As of June 28, 2020, there were 38 international franchised Pizza Inn restaurants.

Domestic Pizza Inn restaurants and kiosks were

located predominantly in the southern half of the United States, with Texas, Arkansas, North Carolina and Mississippi accounting for approximately 25%, 18%, 17% and 8%, respectively, of the total number of domestic units.

Domestic Pizza Inn restaurants and kiosks were located predominantly in the southern half

of the United States, with Texas, Arkansas, North Carolina and Mississippi accounting for approximately 23%, 19%, 17% and 9%, respectively, of the total number of domestic units.

The Company has offered consumers affordable, high quality pizza since 1958, when the first Pizza Inn restaurant opened in Dallas, Texas.

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We began franchising the Pizza Inn brand internationally in the late 1970s.

In 1993, our stock began trading on the NASDAQ Stock Market, and presently trades on the NASDAQ Capital Market under the

ticker symbol “RAVE.” In June 2011, we opened the first Pie Five restaurant in Ft.

In 1993, our stock began trading on the NASDAQ Stock Market, and presently trades on the NASDAQ Capital Market under

the ticker symbol “RAVE.” In June 2011, we opened the first Pie Five restaurant in Ft.

Worth, Texas.

In November 2012, we signed our first franchise development agreement for Pie Five.

In 2018, we launched the PIE kiosk and convenience store solution to

meet the consumer demand for tasty and high-quality pizzas within a grab-and-go delivery model.

In 2019, we launched the PIE kiosk and convenience store

solution to meet the consumer demand for tasty and high-quality pizzas within a grab-and-go delivery model.

We operate and franchise restaurant concepts and license PIE kiosks under two distinct brands:

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Our pizzas are made with a proprietary all-in-one flour mixture, real mozzarella cheese and a proprietary mix of classic pizza spices.

In international markets, the

menu mix of toppings and side items is occasionally adapted to local tastes.

Buffet Units offer

dine-in, carryout and catering service and, in many cases, also offer delivery service.

Buffet Units offer a variety of pizza crusts with standard toppings and special combinations of toppings in addition to pasta, salad, sandwiches, appetizers,

desserts and beverages, including beer and wine in some locations, in an informal, family-oriented atmosphere.

We occasionally offer other items on a limited promotional basis.

Buffet Units are generally located in free standing buildings or strip

center locations in retail developments near offices, shopping centers and residential areas.

The current standard Buffet Units are between 2,100 and 4,500 square feet in size and seat 120 to 185 customers.

The interior decor is designed to promote

a casual, lively, contemporary, family-style atmosphere.

Some Buffet Units feature game rooms that offer a range of electronic game entertainment for the entire family.

In international markets,

the menu mix of toppings and side items is occasionally adapted to local tastes.

Buffet Units offer dine-in, carryout and catering service and, in many cases, also offer delivery service.

Buffet Units offer a variety of pizza crusts with standard toppings

and special combinations of toppings in addition to pasta, salad, sandwiches, appetizers, desserts and beverages, including beer and wine in some locations, in an informal, family-oriented atmosphere.

We occasionally offer other items on a limited

promotional basis.

Buffet Units are generally located in free standing buildings or strip center locations in retail developments near offices, shopping centers and residential areas.

The current standard Buffet Units are between 2,100 and 4,500

square feet in size and seat 120 to 185 customers.

The interior decor is designed to promote a casual, lively, contemporary, family-style atmosphere.

Some Buffet Units feature game rooms that offer a range of electronic game entertainment for the

entire family.

Delco Units offer delivery and carryout service only and are typically located in shopping centers or other in-line retail developments.

Delco Units typically offer a variety of

crusts and some combination of side items.

Delco Units typically offer a variety

of crusts and some combination of side items.

Delco Units occupy approximately 1,200 square feet, are primarily production facilities and, in most instances, do not offer seating.

The decor of the Delco Unit is designed to be bright and highly visible

and feature neon lighted displays and awnings.

The decor of the Delco Unit is designed to be bright and highly

visible and feature neon lighted displays and awnings.

We have attempted to locate Delco Units strategically to facilitate timely delivery service and to provide easy access for carryout service.

We discontinued offering new domestic Delco Unit

franchises during fiscal 2014.

Express Units serve our customers through a variety of non-traditional points of sale.

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offer a lower initial investment and reduced labor and operating costs while maintaining product quality and consistency.

Like Delco Units, Express Units are primarily production-oriented facilities and, therefore, do not require all of the equipment,

labor or square footage of the Buffet Unit.

PIE Units serve customers through a non-traditional, licensed pizza-only model called Pizza Inn Express.

PIE Units provide a nimble and streamlined pizza preparation and sales

model at a minimal investment.

PIE Units provide customers with a fast, seamless experience when picking up their favorite hot pizza.

Geared towards convenience stores, but also an airport or entertainment venue option, PIE Units allow customers to

order and pay at a kiosk for grab-and-go or pick up their food at a designated spot.

A PIE Unit typically occupies approximately 52 square feet and is simple to configure and move to meet licensee retail sales traffic needs.

For PIE Units, we have

developed a high-quality pre-prepared crust that is topped and cooked on-site, allowing this concept to offer a lower initial investment and reduced labor and operating costs while maintaining product quality and consistency.

Like Delco Units and

Express Units, PIE Units are primarily production-oriented facilities and, therefore, do not require all of the equipment, labor or square footage of the Buffet Unit.

Pie Five is a fast-casual pizza concept that creates individualized pizzas which are baked in 140 seconds in our specially designed oven.

Pizzas are created at the direction of

our customers who choose from a variety of freshly prepared and displayed proprietary and non-proprietary toppings, cheeses, sauces and doughs and complete their purchase process in less than five minutes.

Customers can also get freshly prepared side

salads, also made to order from our recipes or at the customer's direction.

Like Delco Units, Express Units are primarily production-oriented facilities and, therefore, do not require all of the

equipment, labor or square footage of the Buffet Unit.

Historically, the Company established PIE Units to serve customers through a non-traditional, licensed pizza-only model called Pizza Inn Express.

Like Delco Units and Express

Units, the PIE Units are primarily production-oriented facilities and, therefore, do not require all of the equipment, labor or square footage of the Buffet Unit.

The Company does not intend to expand the licensed business model in the foreseeable

Pie Five is a fast-casual pizza concept that creates individualized pizzas which are baked in our specially designed oven.

Pizzas are created at the direction of our customers

who choose from a variety of freshly prepared and displayed proprietary and non-proprietary toppings, cheeses, sauces and doughs.

Customers can also get freshly prepared side salads, also made to order from our recipes or at the customer’s

They can also choose from several baked daily desserts like brownies, cookie pies, and cakes.

A variety of soft beverages are available, as well as beer and wine in some

A variety of soft beverages are available, as well as beer and wine in some locations.

Traditional Pie Five restaurants typically occupy leased, in-line or end-cap space of between 1,800 and 2,400 square feet in retail strip or multi-unit retail space.

for 65 to 85 customers in most units, and patio seating where available, Pie Five restaurants primarily serve lunch and dinner to families, adults and kids of all ages.

During fiscal 2018, an alternative prototype Pie Five was developed to minimize

retail space needs with only 1,400 square feet and seating for 20 to 25 customers.

Pie Five restaurants typically are in high traffic, high visibility urban or suburban sites in mid to large-size metropolitan areas.

Sales are predominantly on-premise

though carry out and delivery are offered as well.

The majority of Pie Five restaurants also sell salads, calzones, and desserts.

Due to the relatively compact footprint of the restaurants, and other operating advantages, we believe Pie Five is also

well suited for non-traditional locations such as airports.

seating for 65 to 85 customers in most units, and patio seating where available, Pie Five restaurants primarily serve lunch and dinner to families, adults and kids of all ages.

Pie Five restaurants typically are in high traffic, high visibility

urban or suburban sites in mid to large-size metropolitan areas.

Sales are predominantly on-premise though carry out and delivery are offered as well.

Due to the relatively compact footprint of the restaurants, and other operating advantages, we

believe Pie Five is also well suited for non-traditional locations such as airports.

Site Selection

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The site selection process includes a review of trade area demographics using a third-party customer and site selection tool, as well as a proprietary evaluation process.

We may also rely on a franchisee’s knowledge of the trade area and market

characteristics when selecting a location for a franchised restaurant.

We may also rely on a franchisee’s knowledge of the trade area and

market characteristics when selecting a location for a franchised restaurant.

A member of our development team visits each potential domestic restaurant location.

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New Unit Development

We intend to expand the Pizza Inn system domestically and internationally in markets with significant long-term growth potential and where we believe we can use our competitive strengths to establish

brand recognition and gain local market share.

We intend to expand the Pizza Inn system domestically and internationally in markets with significant long-term growth potential and where we believe we can use our competitive

strengths to establish brand recognition and gain local market share.

We plan to expand our Pizza Inn branded domestic restaurant base primarily through opening new franchised restaurants with new and existing franchisees.

We also plan to seek new domestic licensees for

We expect to evaluate the continued development of new Pizza Inn Buffet and Delco Units in international markets in fiscal 2020, particularly in the Middle East.

In appropriate circumstances, we may grant area developer rights for Pizza Inn restaurants in new and existing domestic markets.

A Pizza Inn area developer typically pays a

negotiated fee to purchase the right to operate or develop restaurants within a defined territory and, typically, agrees to a multi-restaurant development schedule.

The area developer assists us in local franchise service and quality control in

exchange for half of the franchise fees and royalties from all restaurants within the territory during the term of the agreement.

In fiscal 2020, we intend to continue developing franchised Pie Five Units domestically and internationally.

As of June 30, 2019, we had 57 franchised units open.

The rate at which we will be able to

continue to expand the Pie Five concept through franchise development is determined in part by our success at selecting qualified franchisees, by our ability to identify satisfactory sites in appropriate markets and by our ability to continue training

and monitoring our franchisees.

We intend to continue to focus on franchise development opportunities with experienced, well-capitalized, restaurant operators.

In addition, we intend to take the brand into international markets, starting with Panama.

We expect to evaluate

the continued development of new Pizza Inn Buffet and Delco Units in international markets in fiscal 2021, particularly in the Middle East.

In appropriate circumstances, the Company previously granted area developer rights for Pizza Inn restaurants in existing domestic markets.

However, the Company is no longer

pursuing such agreements.

A Pizza Inn area developer typically paid a negotiated fee to purchase the right to operate or develop restaurants within a defined territory and, previously, agreed to a multi-restaurant development schedule.

developer assisted us in local franchise service and quality control in exchange for half of the franchise fees and royalties from all restaurants within the territory during the term of the agreement.

We intend to continue developing franchised Pie Five Units domestically and internationally.

The rate at which we will be able to continue to expand the Pie Five concept

through franchise development is determined in part by our success at selecting qualified franchisees, by our ability to identify satisfactory sites in appropriate markets and by our ability to continue training and monitoring our franchisees.

intend to continue to focus on franchise development opportunities with experienced, well-capitalized, restaurant operators.

In addition, we intend to take the brand into international markets.

Domestic Franchise Operations

Franchise and development agreements.

We discontinued offering new Delco Unit franchises during fiscal 2014.

Our current standard forms

of franchise agreements provide for the following basic terms:

We discontinued offering new domestic Delco Unit franchises during fiscal 2014.

Our current standard

forms of domestic franchise agreements provide for the following basic terms:

Pie Five Unit

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Common to those forms are provisions that:

(i) require the franchisee to follow the Pizza Inn system of restaurant operation and management, (ii) require the franchisee to pay a franchise fee and continuing

royalties, and (iii) except for Express Units, prohibit the development of one restaurant within a specified distance from another.

(i) require the franchisee to follow the Pizza Inn system of restaurant operation and management, (ii) require the franchisee to pay a franchise fee,

contribute a specified percentage of sales to a marketing fund managed by the Company, and continuing royalties, and (iii) except for Express Units, prohibit the development of one restaurant within a specified distance from another.

We launched the franchise program for Pie Five in fiscal 2013.

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Initial and certain supplemental training programs are offered free of charge to franchisees, who pay their own travel and lodging expenses.

New franchisees also receive on-site training from

Company employees to assist with their first two restaurant openings under their development agreements.

New franchisees also receive on-site training

from Company employees to assist with their first two restaurant openings under their development agreements.

Restaurant managers train their staff through on-the-job training, utilizing video and printed materials produced by us.

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adherence to our standards through ongoing support and education of our franchisees by our franchise business consultants, who are deployed locally in markets where our franchisees are located.

Domestic Kiosk License Agreements

Domestic Kiosk License Operations

Kiosk license agreements.

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PIE Unit licensees are not charged development fees, license fees, royalties, or advertising assessments.

PIE Unit license agreements require that the licensee comply with standards of the Pizza Inn brand, including marketing, kiosk system

configuration, and sales and sourcing of authorized products and services.

PIE Unit license agreements require that the licensee comply with standards of the Pizza Inn brand, including marketing, kiosk

system configuration, and sales and sourcing of authorized products and services.

The mandated products and sourcing provisions within the PIE Unit licensing agreement result in supplier rebates for the Company.

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Pizza Inn brand.

All licensees are required to operate their kiosks in compliance with these written policies, standards and specifications, which include matters such as menu items, ingredients, materials, supplies, services, furnishings, decor and

Our efforts to maintain consistent operations may result, from time to time, in the closing of certain kiosks that have not achieved and maintained a consistent standard of quality or operations.

We also maintain adherence to our standards

through ongoing support and education of our licensees by our franchise business consultants, who are deployed locally in markets where our licensees are located.

We also maintain adherence to our

standards through ongoing support and education of our licensees by our franchise business consultants, who are deployed locally in markets where our licensees are located.

Company-Owned Restaurant Operations

As of June 30, 2019, we operated one Pie Five Unit in the Dallas/Fort Worth metropolitan area.

We do not presently intend to open or operate additional Company-owned restaurants

during fiscal 2020.

As of June 28, 2020, we did not operate any Company-owned restaurants.

We do not presently intend to open or operate any Company-owned restaurants during fiscal 2021.

International Franchise Operations

We also offer master license rights to develop Pizza Inn and Pie Five restaurants in certain foreign countries, with negotiated fees, development schedules and ongoing royalties.

We also offer master license rights to develop Pizza Inn and Pie Five restaurants in certain foreign countries, with negotiated fees, development schedules and ongoing

A master licensee for a foreign country pays a negotiated fee to purchase the right to develop and operate restaurants within a defined territory, typically for a term of 20 years, plus a ten-year renewal option.

The master licensee agrees to a

multi-restaurant development schedule and we train the master licensee to monitor and assist franchisees in their territory with local service and quality control, with support from us.

In return, the master licensee typically retains half the

franchise fees and half the royalties on all restaurants within the territory during the term of the agreement.

Master licensees may open restaurants that they own and operate, or they may open sub-franchised restaurants owned and operated by third

parties through agreements with the master licensee, but subject to our approval.

The master licensee

agrees to a multi-restaurant development schedule and we train the master licensee to monitor and assist franchisees in their territory with local service and quality control, with support from us.

In return, the master licensee typically retains

half the franchise fees and half the royalties on all restaurants within the territory during the term of the agreement.

Master licensees may open restaurants that they own and operate, or they may open sub-franchised restaurants owned and

operated by third parties through agreements with the master licensee, but subject to our approval.

Our first franchised Pizza Inn restaurant outside of the United States opened in the late 1970s.

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internationally.

Except for two restaurants in Honduras, all of the Pizza Inn restaurants operated or sub-licensed by our international master licensees are in the United Arab Emirates, Saudi Arabia and adjoining countries.

Our ability to continue to

develop select international markets is affected by a number of factors, including our ability to locate experienced, well-capitalized developers who can commit to an aggressive multi-restaurant development schedule and achieve maximum initial market

penetration with minimal supervision by us.

We expect the first international franchised Pie Five Unit to open in fiscal 2020 in Panama.

Except for three restaurants in Honduras, all of the Pizza Inn restaurants operated or sub-licensed by our international master licensees are in the United Arab Emirates, Saudi Arabia and adjoining countries.

Our ability to

continue to develop select international markets is affected by a number of factors, including our ability to locate experienced, well-capitalized developers who can commit to an aggressive multi-restaurant development schedule and achieve maximum

initial market penetration with minimal supervision by us.

Food and Supply Distribution

During the fiscal quarter ended December 24, 2017, the Company discontinued its Norco distribution division and revised its arrangements with third party suppliers and distributors of food, equipment

and supplies.

The discontinuation of the Norco food and supply distribution entity was a strategic shift for the Company, releasing the Company from the credit risk, overhead expense, and delivery responsibilities of directly supplying franchised

restaurants and PIE kiosks.

As a result of the revised arrangements, franchisees and licensees began purchasing food and supplies directly from authorized, reputable and experienced supply and distribution companies.

As a result, we no longer receive

revenue from the sale of food, equipment and supplies.

Prior to the discontinuation of the Norco distribution division, supplier incentive funds were included in the margin of the Norco business unit.

As a result of the Norco strategic shift, the Company

reports incentive revenues received from third party suppliers and distributors as revenue.

The Company provides sourcing, quality assurance, and research and development for both the Pizza Inn and Pie Five systems.

The authorized distributors make deliveries to all

domestic units from several distribution centers, with delivery territories and responsibilities for each determined according to geographical region.

As a franchisor, the Company is able to leverage the advantages of direct vendor negotiations and

volume purchasing of food, equipment and supplies for the franchisees’ and licensees’ benefit in the form of a concentrated, one-truck delivery system, competitive pricing and product consistency.

Franchisees and licensees are able to source all

products and ingredients from authorized distributors.

In order to assure product quality and consistency, our franchisees and licensees are required to purchase from authorized distributors certain food products that are proprietary to the Pizza Inn

and Pie Five systems, including cheese, pizza sauce, flour mixture, certain meats and spice blend.

Franchisees and licensees may purchase other non-proprietary food products and supplies either from authorized distributors or from other suppliers who

meet our requirements for quality and reliability.

Our franchisees and licensees purchase food and supplies directly from authorized, reputable, and experienced supply and distribution companies.

The Company provides sourcing,

quality assurance, and research and development for both the Pizza Inn and Pie Five systems.

The authorized distributors make deliveries to all domestic units from several distribution centers, with delivery territories and responsibilities for

each determined according to geographical region.

As a franchisor, the Company is able to leverage the advantages of direct vendor negotiations and volume purchasing of food, equipment and supplies for the franchisees’ and licensees’ benefit in

the form of a concentrated, one-truck delivery system, competitive pricing and product consistency.

Franchisees and licensees are able to source all products and ingredients from authorized distributors.

In order to assure product quality and

consistency, our franchisees and licensees are required to purchase from authorized distributors certain food products that are proprietary to the Pizza Inn and Pie Five systems, including cheese, pizza sauce, flour mixture, certain meats and spice

Franchisees and licensees may purchase other non-proprietary food products and supplies either from authorized distributors or from other suppliers who meet our requirements for quality and reliability.

Non-proprietary food and ingredients, equipment and other supplies are generally available from several qualified sources.

With the exception of several proprietary food products,

such as cheese and dough flour, we are not dependent upon any one supplier or a limited group of suppliers.

With the exception of several proprietary food

products, such as cheese and dough flour, we are not dependent upon any one supplier or a limited group of suppliers.

We contract with established food processors for the production of our proprietary products according to our specifications.

We have not experienced any significant shortages of supplies or any delays in receiving our food or beverage inventories, restaurant supplies or products, and do not anticipate

any difficulty in obtaining inventories or supplies in the foreseeable future.

Prices charged by our suppliers are subject to fluctuation, and franchisees and licensees bear increased costs or benefit from savings through changes in product pricing.

We have not experienced any significant shortages of supplies or any delays in receiving our food or beverage inventories, restaurant supplies or products, and do not

anticipate any difficulty in obtaining inventories or supplies in the foreseeable future.

Prices charged by our suppliers are subject to fluctuation, and franchisees and licensees bear increased costs or benefit from savings through changes in

product pricing.

We do not engage in commodity hedging but enter into pricing arrangements for up to a year in advance for certain high-volume products.

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We offer or facilitate several ways for the brand image and message to be promoted at the local and regional levels.

The Pizza Inn Advertising Plan Cooperative (“PIAP Cooperative”) is a cooperative association that is responsible for creating and producing various marketing programs and

materials, which may include print and digital advertisements, direct mail materials, social media and e-mail marketing, television and radio commercials, in-store promotional materials, and related marketing and public relations services.

operator of a domestic Buffet Unit or Delco Unit is entitled to membership in PIAP Cooperative.

Nearly all of our existing Pizza Inn franchise agreements for Buffet Units and Delco Units require the franchisees to become members of PIAP Cooperative.

Members contribute 1% of their sales to PIAP Cooperative.

PIAP Cooperative is managed by a board of trustees comprised of franchisee representatives who are elected by the members each year.

We do not have any ownership interest in PIAP Cooperative.

We provide certain administrative, marketing and other services to PIAP Cooperative and are paid by PIAP Cooperative for such services.

As of June 30, 2019, substantially all of our domestic Buffet Unit and Delco Unit franchisees were members of PIAP

Operators of Express Units do not participate in PIAP Cooperative.

However, they contribute directly to a Pizza Inn Express Fund (“PIEF”) to help fund purchases of Express Unit marketing materials and similar expenditures.

International

franchisees and PIE Unit licensees do not participate in the PIAP Cooperative or the PIEF.

Pie Five franchisees contribute a specified percentage of their sales to the Company to fund the creation and production of various marketing and advertising programs and

materials, which may include print and digital advertisements, direct mail materials, customer satisfaction systems, social media and e-mail marketing, television and radio commercials, in-store promotional materials, and related marketing and public

relations services.

We anticipate continuing to optimize Pie Five marketing activities commensurate with the contributions of the Pie Five system.

Pizza Inn and Pie Five franchisees contribute a specified percentage of their sales to the Company to fund the creation and production of various marketing and advertising

programs and materials, which may include print and digital advertisements, direct mail materials, customer satisfaction systems, social media and e-mail marketing, television and radio commercials, in-store promotional materials, related marketing

and public relations services, and consumer research.

We anticipate continuing to optimize Pizza Inn and Pie Five marketing activities commensurate with the contributions of the marketing funds.

Pizza Inn and Pie Five franchisees are required to conduct independent marketing efforts in addition to their participation in the national marketing programs for each brand.

provide Company-owned and franchised restaurants with access to an assortment of local store marketing materials, including pre-approved print, radio, and digital media marketing materials.

We also provide local store marketing materials and programs

specifically to support new restaurant openings.

We provide Company-owned and franchised restaurants with access to an assortment of local store marketing materials, including pre-approved print, radio, and digital media marketing materials.

We also provide local store marketing materials and

programs specifically to support new restaurant openings.

Trademarks and Quality Control

We own various trademarks, including the names “Pizza Inn” and “Pie Five,” that are used in connection with the restaurants and have been registered with the United States Patent

and Trademark Office.

We own various trademarks, including the names “Pizza Inn” and “Pie Five,” that are used in connection with the restaurants and have been registered with the United States

Patent and Trademark Office.

The duration of our trademarks is unlimited, subject to periodic renewal and continued use.

In addition, we have obtained trademark registrations for our marks in several foreign countries and have periodically re-filed and

applied for registration in others.

In addition, we have obtained trademark registrations for our marks in several foreign countries and have periodically

re-filed and applied for registration in others.

We believe that we hold the necessary rights for protection of the trademarks essential to our business.

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We and our franchisees are subject to various federal, state and local laws affecting the operation of our restaurants.

Each restaurant is subject to licensing and regulation by

several governmental authorities, which include health, safety, sanitation, wage and hour, alcoholic beverage, building and fire agencies in the state and municipality in which the restaurant is located.

Difficulties in obtaining, or the failure to

obtain, required licenses or approvals could delay or prevent the opening of a new restaurant or require the temporary or permanent closing of an existing restaurant in a particular area.

We are subject to Federal Trade Commission (“FTC”) regulation and to various state laws regulating the offer and sale of franchises.

The FTC requires us to furnish to prospective

franchisees a franchise disclosure document containing prescribed information.

Substantive state laws that regulate the franchisor-franchisee relationship presently exist in a number of states, and bills have been introduced in Congress from time to

time that would provide for further federal regulation of the franchisor-franchisee relationship in certain respects.

Some foreign countries also have disclosure requirements and other laws regulating franchising and the franchisor-franchisee

relationship.

As of June 30, 2019, we had 45 employees, including 33 in our corporate office and two full-time and 10 part-time employees at the Company-owned restaurant.

None of our employees

are currently covered by collective bargaining agreements.

Each restaurant is subject to licensing and regulation

by several governmental authorities, which include health, safety, sanitation, wage and hour, alcoholic beverage, building and fire agencies in the state and municipality in which the restaurant is located.

Difficulties in obtaining, or the

failure to obtain, required licenses or approvals could delay or prevent the opening of a new restaurant or require the temporary or permanent closing of an existing restaurant in a particular area.

We are subject to Federal Trade Commission (“FTC”) regulations and to various state laws regulating the offer and sale of franchises.

The FTC requires us to furnish to

prospective franchisees a franchise disclosure document containing prescribed information.

Substantive state laws that regulate the franchisor-franchisee relationship presently exist in a number of states, and bills have been introduced in

Congress from time to time that would provide for further federal regulation of the franchisor-franchisee relationship in certain respects.

Some foreign countries also have disclosure requirements and other laws regulating franchising and the

franchisor-franchisee relationship.

As of June 28, 2020, we had 22 employees.

None of our employees are currently covered by collective bargaining agreements.

Industry and Competition

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Competitors include a number of international, national and regional restaurant and pizza chains, as well as local restaurants and pizza operators.

Some of our competitors

may be better established in the markets where our restaurants are or may be located.

Within the pizza segment of the restaurant industry, we believe that our primary competitors are national pizza chains and several regional chains, including chains

executing a “take and bake” concept.

competitors may be better established in the markets where our restaurants are or may be located.

Within the pizza segment of the restaurant industry, we believe that our primary competitors are national pizza chains and several regional chains.

We also compete against the frozen pizza products available at grocery stores and large superstore retailers.

In recent years, several competitors have developed fast-casual pizza concepts that compete with Pie

Five in certain metropolitan areas.

In recent years, several competitors have developed fast-casual pizza concepts that compete with Pie Five in certain metropolitan areas.

A change in the pricing or other market strategies of one or more of our competitors could have an adverse impact on our sales and earnings.

With respect to the sale of franchises and licenses, we compete with many franchisors of restaurants and other business concepts.

We believe that the principal competitive factors

affecting the sale of franchises are product quality, price, value, consumer acceptance, franchisor experience and support, and the quality of the relationship maintained between the franchisor and its franchisees.

In general, there is also active

competition for management personnel and attractive commercial real estate sites suitable for our restaurants.

We believe that the principal competitive

factors affecting the sale of franchises are product quality, price, value, consumer acceptance, franchisor experience and support, and the quality of the relationship maintained between the franchisor and its franchisees.

In general, there is

also active competition for management personnel and attractive commercial real estate sites suitable for our restaurants.

RISK FACTORS.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business