1.

0 EXECUTIVE SUMMARY
Sonic Drive-In restaurant that featuring charming carhops on rollerskates, and
specialty drinks has captured the hearts and mouths of Americans since 1950s. Sonic
Drive-In operates and being the largest drives chain of franchises throughout the
United States. Sonic serves fast-food specialty orders, such as burgers and fries, but
the restaurant also has staple food and drinks including cherry limeades, slushies and
other frozen desserts, Coneys cheese garlic, salads, and packs. Sonic also offers
breakfast items, including sausages or bacon with eggs and cheese toast or
CroisSONIC sandwich breakfast, and all-day breakfast.

The unique atmosphere and delicious food, Sonic's customer loyalty is among
the strongest in the food industry. Sonic's largest presence in the southern US explains
why Sonic is the most popular in the region. Over the past five years, Sonic has just
opened a store in many northern United States. During their fiscal year, Sonic
unveiled 85 new drivers. In the stores, which are the five companies owned by Drive-
In and 80 franchise Drive-In. As Sonic is relatively new in the northern United States,
many people living there have never had the opportunity to hear about the brand or
visit Sonic's restaurant. Our media plan is designed to raise awareness of Sonic Brand
among 18-years-old to 24-years-old in 32 new target geographic markets by June, 30,
2015.

Highly strategic and cost effective for 3months plan that running from July 1,
2014 to June 30, 2015, we believe that young adults in the north will grow to know
and love Sonic just like the rest of the United States. We designed our media plan to
generate high frequency throughout most used adult media vehicles in 32 new
geographies. Many Sonic competitors spend most of their budget on cable and TV
network advertising. However, according to Mediamark's MRI 2011 data, we find
that the majority of the TV index is for people aged 18 until 24 is under 100.

Mediamark MRI data show that the internet and radio have the highest indexes
for our target age group and the number of external indices is also high among fast
food eaters. TV is one of the most expensive media vehicles, we decided to buy less
on TV media and focus our budget on more expensive and effective media that our
target audience uses most. In addition, by purchasing this media, we will also ensure a
significant increase in our voice share in radio, internet, and outdoor advertising.

P a g e 1 | 27
 For the internet, we found several websites, including hulu.com and
fandango.com that have very high index numbers for our target audience. We decided
to divert a large percentage of our budget to U.S. display ads on high-index websites
to increase frequency and get maximum brand exposure. For radio, we plan to buy
most of the late nights due to the fact that our target audience has a higher propensity
for radio use at this time. Our radio purchases are also reaching high frequency, which
we need to increase brand awareness in these 32 new markets.

We also decided to spend a large percentage of our budget on external

advertising, due to the high potential of the medium for both reach and frequency.
Many 18-years old to 24-years-old are included in the workforce and will see our
billboards in their homes from work before they have time for dinner. Our billboards
will encourage young people to take a break from sitting in 4 hours in a hurry and
immediately satisfy their hunger on nearby Sonic Drive. We spend money on TV and
magazines. As our competitors spend a lot of money on TV commercials, we want to
make sure we have a voice in this very dynamic medium. We decided to spend a
small portion of our money on magazine advertising, as magazines have a high index
in our target market.

In addition, our magazine ads will feature full-color images and highly
descriptive copies, hopefully starving readers. In terms of traditional media, we plan
to leverage the huge potential of the internet to build brand awareness through the
purchase of keywords on popular search engines and banner display ads on highly-
used websites. The use of keywords will allow Tim Tam to stay relevant throughout
the campaign, ensuring the target audience of tech savvy is where they are best suited
to search for information the internet.

According to Mediamark's MRI data, we find that the websites with the highest
index numbers in our target audience are entertainment websites like Hulu with an
index of 220, so we plan to use this data to buy display ads on other high-index
websites. In addition to keyword search, we plan to introduce several promotions
through social media such as Facebook and Twitter to stay relevant to our target
audience of young adults. These young adults are really looking for ways to engage
with the brand and interact with the product on a social level.

P a g e 2 | 27
 Social media also has high potential, especially since many people tend to use
Facebook to share information about their favorite brands with friends and family
who may not follow the brand. Social media is a very cost-effective medium that will
give Sonic a great opportunity to reach its market, express its unique brand
personality, and connect on a personal level with our target audience. We are
confident that our media plan will meet the goals we set for Sonic and reach the target
of 32 new markets.

The plan is focused on optimizing high frequency to produce Sonic's well-known

brand in the highly competitive fast food market. Through media strategies such as
pulses and aviation, we should help Sonic achieve its goals of raising brand awareness
among young people in 32 new geographic markets. South's love and loyalty to Sonic
will spread to North America, and we can't wait for all these adults to taste Sonic's
unique and delicious food.

P a g e 3 | 27
2.0 MARKETING

Figure 1: Sonic Drive-In

What is a market? What is marketing? Is it market and marketing share the

same meaning? A market is a customer or a group of customers. Marketing is the
management process involved in identifying, anticipating and satisfying customer
wants profitably. Marketing is not just selling; it is also about knowing and
understands the customers. Building customer relationships based on customer value
and satisfaction is at the heart of modern marketing. On other hand, marketing is
defined as process concern the distribution of goods and services to existing and
potential customers to satisfy some want or need. Often, there are eight elements are
included in the marketing section of the franchisor business plan, as identified here.
For example, Sonic Drive-In restaurant is a fast food restaurant. The aim is to know
and understand the customers well so that the products or services sell itself. There
will be a lot of problems will face by the restaurant. So, Sonic Drive-In has emphasis
some elements of the marketing section which is:

 Major marketing objectives

 Market plan and pricing strategy
 Franchisee recruitment plan and flowchart
 Franchisee prospectus
 Franchisee sales and advertising
 Franchisee location criteria selection

1. Major Marketing Objectives

Marketing objectives are goals set by a business when promoting its products or
services to potential consumers that should be achieved within a given time frame.
P a g e 4 | 27
 In other words, marketing objectives are the marketing strategy set in order to
achieve the overall organizational objectives. Major goals and objectives of the
organization will explain what the franchisor ultimately wants to do and when the
franchisor plans to do. This objective has the major elements that are important in
an “operational objective”. These include:
- Definition or description of the activities
- Quantitative measurable number
- Time period of one year

This form of an operational objective allows the franchisor to understand the

extent of the goal or objective and how they can evaluate the completion or
satisfaction of that goal and objective.
Sonic Drive-In Objectives:
1. Aim to open one thousand locations over the next 10 years
2. Increase the customer relationship towards Sonic
3. Make the taste of foods loved by everyone
4. To become America’s most loved restaurant brand
5. Do different, special and better things to surprise and attract the customers.

2. Market Plan and Pricing Strategy

- Create the market plan and pricing strategy is an encompassing step in the
business plan. This section needs to include a description of services. It is
important to list in the details of the products or services. Additionally, this
section should describe and discuss the target market “Who? Where? How?” The
target market information should also contain the basic demographics including
age, gender, income, education and marital status of the target market consumers.
The price list also needs to be included.
- Sonic’s target customers are adults who age 18 until 24 years old that reside in the
upper North West United States. This age group is less health conscious than other
people in older age demographics. This age group typically lives in a very active
life style and likes to eat inexpensive fast food with their friends in a fun and
original environment. Due to the fact that Sonic is a part of the quick serve

P a g e 5 | 27
 restaurant industries in which the customer get made to order food, it specially fit
to this customer’s needs.
- Pricing, fast food consumers commonly seek to pay a reasonable price for quality
meal and receive them in a timely fashion. Sonic meets this need by serving
customers freshly prepared food at moderately higher rates than competitors.
While McDonald who is Sonic’s biggest competitor in industry, sells the popular
Big Mac for $ 3.99 and Sonic sells their double cheeseburger at $ 4.29. This is a
justifiable price difference because Sonic’s loyal customers do not mind spending
an extra dollar to get higher quality food accompanied by personalized service.
(Appendix A shows the details of food and prices in Sonic Drive-In)

3. Franchisee Recruitment Plan and Flowchart

- The franchisee recruitment plan and flowchart also include a basic description of
the franchisee profile describing Sonic Drive-In is trying to recruit. It is important
to understand what location and from where Sonic is trying to recruit these
individual. (Appendix B shows the Flowchart)

4. Franchise Sales and Advertising

Sonic promotes their sales and brand in television advertisement; create websites
such as hulu.com and fandango.com and in newspaper, Facebook, Instagram and
also radio. These advertisements used by Sonic Drive-In to increase their sales
and brands.

5. Franchisee Location Criteria Selection

- Sonic Drive-In target customer’s age range from 18 - 24 years old. This age is
teenager who do not care about their health. So the franchisee should observe the
area that has a lot of teenagers. Therefore, the franchisee also needs to choose
corner location closed to another fast food store, gasoline services, station or
shopping center. These will attract the customers and can sell the fast food.

6. Franchisee Prospectus

P a g e 6 | 27
- Sonic Drive-In is about the fast food restaurant. Franchisee fee for single unit is
$45,000 and total initial investment in the franchise can range from $710,000 to
$3 million with 4 to 5% in royalty fee and 5.9% advertising fee.

3.0 MANAGEMENT

Sonic Corp commonly referred as Sonic. Sonic is the owner of the fast-food
drive chain of Inspire Brands Arby’s parents and Buffalo Wild Wings, headquartered
in Oklahoma. In 2011, the company was the 10 th largest restaurant group in QSR
Magazine to hold the top 50 brands in fat-food services and casual dining. Popular for
its use of carhops on roller skates, the firm holds a contest every year to find the best
skating carhop in its process.

The workers at three locations in Ohio left in February 2019 in mass a result
of changes in leadership and a 50% cut in the hourly rate of pay for employees. Sonic
subsequently released an announcement that no wages of workers have been
changing. Sonic carhops have not yet earned credit paid in cash, although Carhops
have a lower wage. A petition on Change.org launched in 2017 with more than 33,000
signatures but Sonic’s rule was not changed.

Organizational Charts

CEO

CFO&TREASURY MARKETING SONIC RESTAURANT FRANCHISE

RELATIONS

-MEDIA &
SPONSORSHIP FRANCHISE
OPERATIONS
-DIGITAL
STRATEGIES

-DESIGN
-HR
CONSTRUCTION
-BRAND
-FIELD MARKETING
TECHNOLOGY
-NATIONAL
P a g e 7 | 27 -CYBERSECURITY
MARKETING
-BRAND INSIGHT
& EXPERIENCE
Policies and Procedures

- Employees must wear their proper uniform. Must follow the dress code of the day.

- Sick time usage is a maximum of 10 days and can be moretized.

- Shut down all machines before leaving the company.

- vacation must be a maximum of 7 days and it could also be moretized of not used.

Compensation

The details on the total cash compensation covers the annual basis salaries and
bonuses. The Edgar filling system offers quarterly SONIC CORP income statements
for executive base salary and bonuses. The most important results in the Def 14 a
records are SONIC CORP annual statements on executive compensation and
remuneration.

Total equity aggregates offers the equity and the long-term bonuses given for
stocks and options in the fiscal year fair value period. Other compensation shall cover
all awards identical to compensation which do not match in any of these other
categories of norm. No changes in pension value or non-qualified latency payments
are included in the numbers reported.

See the new departmental wages and job titles. Sonic Drive-In has an average
estimated salary of $ 131,248 or $ 63 an hour including base and bonus, while the
median estimated salary is $ 131,300 or $ 63 an hour. The highest paid job at Sonic
Drive-In is a Sales Officer of $ 234,273 per year, and a receptionist of $ 37,310 per
year. Sonic default Drive-in pay by department includes: Engineering at $ 140,770, IT
at $ 116,482, Customer Support at $ 66,711, and Product at $ 162,266. Half the wages
of Sonic Drive-In exceed $ 131,300. 108 of Sonic Drive-in employees rank 20% in
the bottom of similar-sized businesses in the United States on the basis of 340 ratings;
106 Sonic Drive-In employees rank 100% in the bottom of similar-sized enterprises in
the US on the basis of 117 ratings. Sonic Drive-In workers compensation
contributions includes job names such as Designer and Receiver. Comparably, the
data comprises a total of 1 Sonic Drive-In salary reports.

P a g e 8 | 27
4.0 FINANCING AND ACCOUNTING
A. HEADQUATERS
Start-up Costs
The lowest investment to start-up Sonic is about $ 1,236,800 and the higher
investment to start-up Sonic is about $ 3,536,300.

Breakeven Analysis
Breakeven analysis = fixed cost
(sales price per unit – variable cost per unit)

= $ 690,440
($ 3,593 - $ 1,250)

= $ 294.68

Ratio Analysis

1) Liquidity ratios

Current ratio = current assets

current liabilities

= $ 89,184

$ 58,616

= $ 1.52

2) Profitability ratios

Gross profit ratio = gross profit / net sales X 100

= $ 477,267 / $ 63,663 X 100

= $ 749,68

P a g e 9 | 27
Operating cost ratio = operating cost / net sales X 100

= $ 90,655 / $ 63,663 X 100

= $ 142.40

Operating profit ratio = operating profit / net sales X 100

= $ 74,872 / $ 63,663 X 100

= $ 117.61

Net profit ration = operating profit / net sales X 100

= $74,872$ 63,663 X 100

= $ 117.61

3) Working capital ratios

Inventory ration = net sales

inventory

= $ 63,663
$ 2343

= $ 27.17

P a g e 10 | 27
 Balance Sheet for Sonic

2017 ($) 2016 ($)

ASSETS
Current Assets :
Cash 22,340 72,092
Restrictrd cash 19,736 15,873
Account Receivable 33,758 35,437
Inventories 2,343 3,321
Prepaid expenses 5,455 4,713
Property held for sale 5,150 5,299
Others current assets 402 922
Total Current Assets 89,184 137,657
Non-current Assets:
Non-current restricted cash 42,120 140
Investment 11,853 9,859
Notes receivable 9,801 12,562
Property, equipment and capital leases, net 312,380 392,380
Goodwill 75,756 76,734
Debt origination costs 2,439 3,093
Other assets, net 18,211 16,236
Total Non-Current Assets 472,560 511,004
Total Assets 561,744 648,661

LIABILITIES AND STOCKHOLDER’S

EQUITY
Current Liabilities:
Accounts payable 9,213 14,372
Franchisee deposit 1,093 720
Accured liabilities 44,846 51,913
Income taxes payable - 2,568
Long-term debt and capital leases 3,464 5,090
Total Current Liabilities 58,616 74,663
Obligations under capital leases 16,167 17,391
Long-term debt 628,116 566,187
Deferred income taxes 40,101 42,530
Other non-current liabilities 20,502 23,533

Stockholder’s equity :
Preferred stock - -
Common stock 1,183 1,183
Paid-in capital 236,895 234,956
Retained earnings 934,017 894,442
Treasury stock (1,373,853) (1,206,224)
Total stockholder’s equity (201,758) (75,643)
Total Liabilities and Stockholder’s Equity 561,744 648,661

P a g e 11 | 27
 Statements of Income for Sonic
2017 ($) 2016 ($)
Revenues :
Company drive-in sales 296,101 425,795
Franchise drive-ins :
Royalties and fees 170,527 170,319
Lease revenue 7,436 7,459
Other 3,203 2,747
Total Revenues 477,267 606,320

Cost and expenses :

Company drive-ins :
Food and packaging 80,971 118,136
Payroll 107,477 150,260
Other operating expenses 61,463 88,424
Total cost of company drive-in sales 249,911 356,820

Selling, general and administrative 78,687 82,089

Depreciation and amortization 39,248 44,418
Provision of long-lived assets 1,140 232
Other operating income, net (14,994) (4,691)
Total costs and expenses 353,992 478,868
Income from operation 123,275 127,452

Interest expenses 29,206 26,714

Interest income (1,398) (516)
Loss from early debt - 8,750
Net interest income 27,808 34,948

Income before income taxes 95,467 92,504

Provision for income taxes 31,804 28,437
Net Income 63,663 64,067

Basic income per share 1.47 1.32

Diluted income per share 1.45 1.29

Cash dividends per common share 0.56 0.44

P a g e 12 | 27
 Statements of Cash Flow for Sonic
2017 ($) 2016 ($)
Cash flow from operating activities :
Net income 63,663 64,067
Depreciation and amortization 39,248 44,418
Compensation expenses 3,942 3,766
Loss from debt - 8,750
Gain on disposition od assets (14,994) (4,691)
Other (1,204) 4,961
Increses / decrease in operating assets :
Restricted cash 886 (2,829)
Accounts receivable 1,918 2,109
Increses / decrease in operating liabilities :
Accounts payable (4,404) 380
Accured and other liabilities (10,884) 4,520
Income taxes (3,299) (9,242)
Total adjustments 11,209 52,142
Net cash provided by operating 74,872 116,209
activities

Cash flow from investing activities :

Property and equipment (46,528) (46,553)
Sales of assets 91,741 16,206
Sales of investments 8,357 -
Other 6,918 (3,713)
Net cash provided by investing activities 60,488 (34,060)

Cash flow from financial activities :

Payments on debt (24,416) (422,090)
Proceeds from borrowings 83,000 563,000
Securitization (46,730) 6,587
Treasury stock (171,562) (150,444)
Stock options 2,682 3,842
Dividends (24,062) (21,309)
Extinguishment costs (10) (18,420)
Other (4,014) 1,586
Net cash used in financing activities (185,112) (37,248)

Net increase/decrease in cash and cash (49,752) 44,901

equivalents
Cash and cash equivalents at begining of year 72,092 27,191
Cash and cash equivalents at end of year 22,340 72,092

P a g e 13 | 27
 Provision for Taxation
2017 ($) 2016 ($)
Current :
Federal 30,352 20,137
State 3,921 3,791
34,273 23,928
Deferred :
Federal (2,378) 4,372
State (91) 137

Provision for income taxes 31,804 28,437

B. FRANCHISEE

Start-up Cost

It cost a lot of money to open-up the business for franchisee that want to start a
business. First, they need to know about Sonic's license fee. A traditional Sonic
restaurant's license fee is RM 188,000.00, with a total investment of RM 1.23 million
to RM 2.40 million (excluding land). A non-traditional Sonic restaurant's license fee
is RM 93,882.33, with a total investment ranging from RM 1.48 million to RM 4.07
million (excluding land). A partner's net worth can be used to meet the total net value
or liquidity requirements. A partner’s net worth can be used to meet the total net value
or liquidity requirements. A Sonic franchise term ranges from 10 to 20 years, plus a
10 years option for renewal. It usually takes six to eight months for the Sonic site to
be secured. Once the site selection is complete and the planning and building of your
Sonic restaurant is underway, it takes an average of 100 days to open your Sonic site,
depending on the area. Sonic’s corporate office has a full support staff and services
available to franchisee, such as useful demographic data and in-depth project
assessment, to make the entire site choice and development cycle as seamless and
efficient as possible for franchisee.

P a g e 14 | 27
Financial Requirement

Liquidity Net Worth

1-2 Units RM 500,000 RM 1 Million
3+ Units RM 1.0 Million RM 2 Million

Investment for Traditional Sonic Drive-in

Type of Expenditure Estimated Low Estimated High

Franchisee Fee RM 45,000 RM 45,000
Payroll RM 55,000 RM 130,400
Training, travel and Living RM 4,000 RM 32,000
Expenses while Training.
Advertising Funds RM 1,500 RM 4,000
Beginning Inventory RM 30,000 RM 140,000
Insurance Premiums RM 10,000 RM 20,000
Restaurant Equipment RM 165,000 RM 250,000
Total estimated RM 310,500 RM 621,400

Balance Sheet for Sonic

2017 (RM) 2016 (RM)

ASSETS
Current Assets :
P a g e 15 | 27
 Cash 22,000 70,090
Restrictrd cash 18,736 15,553
Account Receivable 30,456 34,123
Inventories 2,567 3,125
Prepaid expenses 4,554 3,713
Property held for sale 5,150 4,299
Others current assets 302 901
Total Current Assets 83,765 131,804
Non-current Assets:
Non-current restricted cash 41,119 130
Investment 10,789 8,765
Notes receivable 8,097 11,345
Property, equipment and capital leases, net 311,645 393,000
Goodwill 75,342 76,734
Debt origination costs 2,450 3,100
Other assets, net 18,221 15,236
Total Assets 551,428 640,114

LIABILITIES AND STOCKHOLDER’S

EQUITY
Current Liabilities:
Accounts payable 9,214 13,567
Franchisee deposit 1,345 820
Accured liabilities 44,678 52,653
Income taxes payable - 2,194
Long-term debt and capital leases 4,213 5,099
Total Current Liabilities 59,450 74,333
Obligations under capital leases 15, 168 17,391
Long-term debt 624,115 566,187
Deferred income taxes 39,101 42,530
Other non-current liabilities 19,402 23,533

Stockholder’s equity :
Preferred stock
Common stock 1,183 1,183
Paid-in capital 235,886 230,952
Retained earnings 832,016 894,442
Treasury stock (1,365,721) (1,206,224)
Total stockholder’s equity (296,636) (79,647)
Total Liabilities and Stockholder’s Equity 551,428 640,114

Statements of Income for Sonic

Revenues : 2017 (RM) 2016 (RM)
Company drive-in sales 300,100 430,600
Franchise drive-ins :
Royalties and fees 171,900 170,400
P a g e 16 | 27
 Lease revenue 6,788 6,984
Other 4,203 2,895
Total Revenues 482,991 610,879

Cost and expenses :

Company drive-ins :
Food and packaging 84,998 118,140
Payroll 107,477 150,260
Other operating expenses 60,121 88,423
Total cost of company drive-in sales 252,596 356,823

Selling, general and administrative 77,887 81,092

Depreciation and amortization 40,000 41,453
Provision of long-lived assets 1,210 250
Other operating income, net (13,788) (3,110)
Total costs and expenses 105,309 119,685
Income from operation 123,275 127,452

Interest expenses 30,000 25,345

Interest income (1,298) (421)
Loss from early debt 0 7,765
Net interest income 28,702 32,689

Income before income taxes 94,567 92,504

Provision for income taxes 31,804 28,437
Net Income 62,763 64,067

Basic income per share 1.40 1.22

Diluted income per share 1.44 1.25

Cash dividends per common share 0.51 0.43

Statements of Cash Flow for Sonic

Cash flow from operating activities : 2017 (RM) 2016 (RM)
Net income 62,763 64,067
Depreciation and amortization 38,248 43,417

P a g e 17 | 27
 Compensation expenses 2,876 2,766
Loss from debt 0 8,562
Gain on disposition od assets (13,765) (4,765)
Other (1,201) 4,969
Increses / decrease in operating assets :
Restricted cash 765 (2,435)
Accounts receivable 1,872 2,076
Increses / decrease in operating liabilities :
Accounts payable (4,303) 379
Accured and other liabilities (10,755) 4,528
Income taxes (3,228) (9,647)
Total adjustments 10,449 49,850
Net cash provided by operating activities 80,730 121,525

Cash flow from investing activities :

Property and equipment (46,528) (45,875)
Sales of assets 90,234 15,556
Sales of investments 7,123 -
Other 5,231 (3,890)
Net cash provided by investing activities 56,060 (34,209)

Cash flow from financial activities :

Payments on debt (23,456) (423,099)
Proceeds from borrowings 83,100 562,000
Securitization (45,564) 5,284
Treasury stock (170,897) (149,333)
Stock options 2,563 3,121
Dividends (20,021) (19,408)
Extinguishment costs (10) (17,502)
Other (4,021) 1,532
Net cash used in financing activities (178,306) (37,405)

Net increase/decrease in cash and cash equivalents (48,654) 44,910

Cash and cash equivalents at begining of year 71,076 26,081
Cash and cash equivalents at end of year 22,422 70,991

Breakeven Analysis
Breakeven analysis = fixed cost
(sales price per unit – variable cost per unit)
P a g e 18 | 27
 = RM 252,596
(RM 3,593 - RM 1,250)

= RM 107.80
Ratio Analysis

1) Liquidity ratios

Current ratio = current assets

current liabilities

= RM 83,765

RM 59,450

= RM 1.40

2) Profitability ratios

Gross profit ratio = gross profit / net sales X 100

= RM 477,267 / RM62,763 X 100

= RM760.42

Operating cost ratio = operating cost / net sales X 100

= RM 90,655 / RM62,763 X 100

= RM 144.44

Operating profit ratio = operating profit / net sales X 100

= RM 74,872 / RM62,763 X 100

= RM 119.29

P a g e 19 | 27
Net profit ration = operating profit / net sales X 100

= RM74,872 / RM62,763 X 100

= RM 119.29

3) Working capital ratios

Inventory ration = net sales

inventory

= RM62,763
RM 2,343

= RM 26.80

Provision for Taxation

2017 (RM) 2016 (RM)
Current : 30,340 20,120
Federal 3,822 3,655
State 33,765 22,821

Deferred :
Federal (2,254) 4,650
State (80) 138

Provision for income taxes 30,876 28,536

P a g e 20 | 27
 FRANCHISE AGREEMENT

This Franchise Agreement is made and effective this 27th June 2019
© Copyright Envision SBS. 2006. All rights reserved. Protected by the copyright laws of the United States and Canada and by international

BETWEEN : SONIC DRIVE IN, a company organized and existing under the laws of
Oklahoma, with its head office located at:

Sonic Corporation,
300 Johnny Bench Dr,
Oklahoma City,
OK 73104,
United States.

AND : SONIC DRIVE-IN SDN BHD, a company organized and existing under the
laws of the Selangor with its head office located at:

L1-07A, Jalan Dulang,

Mines Wellness City,
43300 Seri Kembangan,
Selangor.

WHEREAS, Franchisor and certain of its Affiliates own, operate and franchise American drive-
in fast-food throughout Malaysia which, among other things, rent, sell and market hamburgers
and French fries to the ROF, Registrar of Franchise; and

WHEREAS, Franchisor and certain of its Affiliates acquire, produce, license market and sell
hamburgers and French fries; and

WHEREAS, Franchisee is willing to purchase on a per location (the terms initially capitalized in
this Agreement and not otherwise defined herein shall have the respective meanings set forth)
basis a specified number of hamburgers and French fries; and

WHEREAS, Franchisor is willing to provide various marketing, advertising and promotional

services and activities in support of Franchisee;

P a g e 21 | 27
THEREFORE, based on the above premises and in consideration of the covenants and
agreements contained herein and intending to be legally bound, the parties agree hereto as
follows:

1. AGREEMENT TERM

The term of this Agreement shall be for the period the “Term” commencing as of the date of this
Agreement. Each year of the Term, as measured from the date of this Agreement is a “Contract
Year”

2. REVENUE SHARING

Franchisee shall remit to Franchisor 4% of the net profits of its business in the form of Royalty
and Advertising fees. Distribution of profits shall be made on the 30th of June.

3. PUBLIC DISCLOSURE AND CONFIDENTIALITY

3.1 Public Disclosure
Each party agrees that no press release or public announcement relating to the
existence or terms of this Agreement, including within the context of a trade press or
other interview or advertisement in any media shall be issued without the express
prior written approval of the other party hereto.
3.2 Confidential Information
During the Term and for a period of a year thereafter, Franchisee and Franchisor shall
hold and shall cause each of their directors, officers, employees and agents to hold in
confidence the terms of this Agreement, including the financial terms and provisions
hereof and all information received pursuant to accordance with this Agreement,
specifically including but not limited to the Franchisor. Franchisee and Franchisor
hereby acknowledge and agree that all information contained in, relating to or
furnished pursuant to this Agreement, not otherwise known to the public, is
confidential and proprietary and is not to be disclosed to third parties without the
prior written consent of both Franchisee and Franchisor.

P a g e 22 | 27
4. FRANCHISOR'S REPRESENTATIONS AND WARRANTIES

Franchisor represents and warrants that:

a) It is a corporation organized and existing under the laws of Shawnee, Oklahoma, US with its
principal place of business in Oklahoma;
b) The undersigned has the full right, power and authority to sign this Agreement on behalf of
Franchisor;
c) The execution, delivery and performance of this Agreement does not and will not, violate any
provisions of Oklahoma articles or certificates of incorporation and bylaws, or any contract
or other Agreement to which Franchisor is a party;
d) This Agreement has been duly executed and delivered and constitutes a legal, valid and
binding obligation, enforceable in accordance with its terms, except as enforceability may be
limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws now or
hereinafter in effect, affecting the enforcement of creditors' rights in general and by general
principles of equity, regardless of whether such enforceability is considered in a proceeding
in equity or at law.

5. FRANCHISEE'S REPRESENTATIONS AND WARRANTIES

Franchisee represents and warrants that:

a) It is a corporation organized and existing under the laws of the Selangor, Malaysia with its
principal place of business in the Malaysia;
b) The undersigned has the full right, power and authority to sign this Agreement on behalf of
Franchisee;
c) This Agreement has been duly executed and delivered and constitutes the legal, valid and
binding obligation of Franchisee enforceable in accordance with its terms, except as
enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or
other similar laws now or hereinafter in effect, affecting the enforcement of creditors' rights

P a g e 23 | 27
 in general and by general principles of equity, regardless of whether such enforceability is
considered in a proceeding in equity or at law; and
d) The execution, delivery and performance of this Agreement do not and will not violate any
provisions of Franchisee's articles or certificates of incorporation and bylaws, or any contract
or other Agreement to which Franchisee is a party.

6. TERMINATION

The following transactions or occurrences shall constitute material events of default each an
“Event of Default” by the applicable party the “Defaulting Party” hereunder such that, in
addition to and without prejudice to or limiting any other rights and remedies available to the
non-defaulting party at law or in equity the non-defaulting party may elect to immediately and
prospectively terminate this Agreement at the sole discretion of the non-defaulting party by
giving written notice thereof to the other party at any time after the occurrence of an Event of
Default setting forth sufficient facts to establish the existence of such Event of Default.

6.1 Material Breach

A material breach by a party of any material covenant, material warranty or material

representation contained herein, where such defaulting party fails to cure such breach within 90
calendar days after receipt of written notice thereof, or within such specific cure period as is
expressly provided for elsewhere in this Agreement; or

6.2 Insolvency and/or Bankruptcy

A party makes an attempt to make any arrangement for the benefit of creditors, or a voluntary or
involuntary bankruptcy, insolvency or assignment for the benefit of creditors of a party or in the
event any action or proceeding is instituted relating to any of the foregoing and the same is not
dismissed within 90 calendar days after such institution; or

6.3 Failure to Make Payment

Failure by party to make payment of any monies payable pursuant to this Agreement as payment
is due. Except as otherwise provided herein, no termination of this Agreement for any reason

P a g e 24 | 27
shall relieve or discharge any party hereto from any duty, obligation or liability hereunder which
was accrued as of the date of such termination.

FRANCHISE DISCLOSURE DOCUMENT

TRADEMARKS

You are licensed to operate your restaurant under the name Sonic Drive-In®. You are also
authorized to use the logos. You may only use SONIC®’s Marks in the manner authorized in
writing by SONIC®.

All required affidavits have been filed. There are no presently effective determinations of the
United States Patent and Trademark Office, the Trademark Trial and Appeal Board, the
trademark administrator in any state or any court, no pending infringement, opposition or
cancellation proceeding, and no pending material litigation involving the Marks which have
limited or restricted the use of SONIC®’s Marks in any state.

There are no agreements currently in effect which significantly limit the rights of SONIC ® to use
or license the use of the Marks in any manner material to you.

To the knowledge of SONIC®, there are no infringing uses which could materially affect your
use of the licensed Marks or other related rights in any state. You are required to provide
SONIC® with written notice of any claims made against or associated with SONIC ® Marks.
SONIC® will protect your right to use the Marks and other related rights and protect you against
claims of infringement and unfair competition with respect to the Marks. However, if anyone
establishes to SONIC®’s satisfaction that its rights are, for any legal reason, superior to any of
SONIC®’s Marks, then you must use such variances or other service marks, trademarks or trade
names as SONIC®’s requires avoiding conflict with any superior rights.

P a g e 25 | 27
6.1 CONCLUSION

P a g e 26 | 27
REFERENCE

Richard J. Judd and Robert T. Jusils. (n.d.). Franchising An Entrepreneur's Guide. Fourth
Edition. (Chapter 3, The Franchisor Business Plan, 67-96). Retrieved from,
https://www.comparably.com/companies/sonic-drive-in-99566/salaries

Johson, K. (April 21, 2013). Mcdonald’s Prices. Retrieved from,

http://www.fastfoodmenuprices.com/mcdonalds-prices/

Madden, M. (March 13,2013). Teens and Technology 2013. Retrieved from

http://www.pewinternet.org/Reports/2013/Teens-and-Tech.aspx

Merrin, J. (March 22, 2010). Spring 2010 NCS Adult Study. Retrieved from, www.mriplus.com

Welton, C. (July 9, 2009). Why Social Media is Important for Your Brand: infographic.
Retrieved from, http://www.prnewsonline.com/water-cooler/2013/07/09/infographic-why-social-
media-is-important-for-your-brand/

P a g e 27 | 27