Owner Meeting

I had a long call with Xie Wen Hong and her husband today.

Her son speaks English and is going to school in Santa Barbara. She will be visiting him from Dec 12-Jan 3rd. In that time she wants to travel to visit the locations. She would like us to help arrange a pick up from the train station in San Diego to the locations. We may need an interpreter as well. They had questions about their son being 19 and the time of the application. Will he age out? I said from my experience that is not how it works but I am not an immigration attorney and they would want to talk to their counsel about how the application was filed.

They are worried about the second location. They wanted to know how it was doing. They had questions about the guest count and the ticket average. I told them about the cash shortfall and told them additional capital may be needed. They wanted to know what all their options were to keep the business open. I explained the impact of closing 1 location. The lease liability would be there. I believe I can get the franchise liability excused. I explained that this was not ideal. They asked for my opinion. I told them I think they should be prepared to add additional capital into the investment. They were concerned and wanted to know what assurances they had that the additional capital would make the situation better. I explained that there are not assurances, however we worked with the local experts and the franchisor. I explained that together we created a proforma break even analysis that we believe will require around 35k in additional capital.

They were confused as to why the investment was doing good several months ago when they called a meeting with us. They wanted to know what had changed. I explained that the locations are viable and are growing from the trend reports we are looking at. We just feel that it is going to take longer than the capital reserve allows for. They went back and asked more questions on if we have done a professional analysis on the viability of the location. I told him (husband) we have. I explained that I look at the numbers every day and that the trends are moving in a positive direction. I went over guest count numbers needed (250 at a ticket average of $20 or 300 guests at a lower ticket average).

They said they would have to borrow money and could not provide it outright. They again stated that they wanted to know our plan for the money if we got it. I explained the plan is not to need a capital call. We have brought in additional managers, have bought in additional trainers, we raised the prices and we are focusing on marketing to the current customers, but that they need to be prepared that a capital call may be needed.

She said that she appreciates our way of doing business and keeping them informed and involved. They want to be able to look at all aspects.

We exchanged email addresses. 13501204831@139.com

They asked for a written report and they are going to review the report with David, their representative in China. They will let me know and will keep a close eye on the project through the portal.

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