AUST. COMPET!T!ON &CONSUMER c6^tillisSION

FormG I '9APRllll I.^.^=.^.- ,~~^..

Commonwealth of Australia

Coinpe!ino17 grid Consumei. AC/ 2010 - subsectioi? 93 (1)NOTIFICATION OF EXCLUSIVE DEALING

To the Australian Competition and Consumer Commission:

Notice is hereby given, in accordance with subsection 93 (1) of the Compelitioi? aitdConsumei. ACr 2010, of particulars of conduct or of proposed conduct of a kindreferred to subsections 47 (2), (3), (4), (5), (6), (7), (8) or (9) of that Act in which theperson giving notice engages or proposes to engage.

PLEASE FOLLOW DIRECTIONS ON BACK OF THIS FORM

I. Applicant

(a) Name of person giving notice:(R</'a, 10 dii'ecii'on 2)

Rolld Australia Pty Ltd ACN 160241789 ("Roll'd").

(b) Short description of business carried on by that person:(R</'er. 10 di, .ection 3)

Roll'd is in the business of granting to third parties ("Roll'd Franchisees")the right to operate a retail outlet of the Roll'd business ("FranchisedBusiness") on such terms set out in a franchise agreement between theparties. The Franchised Business involves the sale of Vietnamese style foodand beverages by Roll'd Franchisees to customers for dine-in, take-away and delivery, in particular, rice-paper rolls, soups, salads, filledrolls, hot and cold beverages and other related products using a system andthe "Roll'd" name and logo.

(c) Address in Australia for service of documents on that person:

C/- Robert Alderuccio, Robert James Lawyers, Level I0,200 Queen Street,Melbourne, Victoria 3000.

2. Notified arrangement

(a) Description of the goods or services in relation to the supply or acquisitionof which this notice relates:

This notification relates to the acquisition by Roll'd Franchisees of goodsand services approved or nominated, or which may be approved ornominated by Roll'd including:

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products and ingredients including soups, rice-paper rolls, salad, meat,chicken, seafood, noodles, bread rolls, beverages (hot, cold and liquor),sauces, seasonings, condiments and other related items, boxes, cartons,

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containers and other miscellaneous non-perishable items such asnapkins and cutlery used in the packaging and presentation of theproducts along with any equipment used in the conduct of theFranchised Business, including stoves, refrigerators, computer systemand other equipment nominated by Roll'd froni time to time(collectively referred to as the "Goods"); and

such services as Roll'd Franchisees are required to acquire from thirdparty service providers including food safety consultancy services,bookkeeping services, store fit-out and devdopment services andinfonnation technology services (collectively referred to as the"Services").

(b) Description of the conduct or proposed conduct

Refer to Section I of attached Annexure A.

3.

(R<10,10 direciioit 4)

Persons, or classes of persons, affected or likely to be affected by thenotified conduct

(a) Class or classes of persons to which the conduct relates(R</'e, ' 10 direction 5)

Roll'd Franchisees (or persons who will become Roll'd Franchisees)who are granted the right to operate Franchised Businesses PUTSuant toa franchise agreement with Roll'd; and

(b) Number of those persons:

(i) At present time:

. Franchisees:

. Approved Suppliers.

. Approved Suppliers: O

(ii) Estimated within the next year:(R<lei, to di'I, ecii'o17 6.1

. Franchisees:

(c)

. Approved Suppliers: 6

Where number of persons stated in item 3 (b) (i) is less than 50, their namesand addresses:

o

Not applicable

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4. Public benefit claims

(a) Arguments in support of notification:(Refei' 10 direction 7:1

Refer to Section 3 of attached Annexure A.

(b) Facts and evidence relied upon in support of these claims:

Refer to Section 3 of attached Annexure A.

Market definition

Provide a description of the market(s) in which the goods or servicesdescribed at 2 (a) are supplied or acquired and other affected marketsincluding: significant suppliers and acquirers; substitutes available for therelevant goods or services; any restriction on the supply or acquisition ofthe relevant goods or services (for example geographic or legal restrictions):(R<lei' 10 dii. ection 8)

Refer to Section 4 of attached Annexure A.

6. Public detriments

(a) Detriments to the public resulting or likely to result from the notification, inparticular the likely effect of the notified conduct on the prices of the goodsor services described at 2 (a) above and the prices of goods or services inother affected markets:

(R<Ier, 10 direc!ion 9)

Refer to Section 5 of attached Annexure A.

(by Facts and evidence relevant to these detriments:

7.

Refer to Section 5 of attached Annexure A.

Further information

(a) Name, postal address and contact telephone details of the person authorisedto provide additional information in relation to this notification:

Robert Alderuccio

Robert James LawyersLevel I O

200 Queen StreetMELBOURNE VIC 3000

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Dated: I'^) I L\/ 2013

Signed

.A. :....10n behalf of the applicant:

(Signature)

ROBERT ALDERUCCIO

PARTNER

ROBERT JAMES LAWYERS

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ANNEXURE "A"

Commonwealth of Australia

Coinpetition und Coilsi!meI' ACi 2010 - subsecii0}I 93 (1)NOTIFICATION OF EXCLUSIVE DEALING

DESCRIPTION OF THE CONDUCT OR PROPOSED CONDUCT:

(Refer to paragraph 2(b) of Form G)

The conduct to which this notice relates is the requirement for Roll'dFranchisees to acquire the Goods and Services described in paragraph 2(a)of Form G, from suppliers approved by Roll'd ("Approved Suppliers")

Roll'd Franchisees will be granted the right to operate Franchised Businesseson the condition, among other things, that they agree to:

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use certain Goods and Services nominated by Roll'd from time to timein the conduct of the Franchised Business; and

2.2

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only acquire those Goods and Services from Roll'd (or its associates)or the Approved Suppliers.

Unless Roll'd has specifically notified a Roll'd Franchisee that a particulargood or service must be acquired from an Approved Supplier or from Roll'd,the Roll'd Franchisee may acquire that good or service from the supplier of itschoice

.4 If a Good or Service cannot be provided by an Approved Supplier or Roll'd forwhatever reason at any time, Roll'd Franchisees may acquire the Good orService from an alternative supplier of their choice until an Approved Supplieror Roll'd is able to provide the Good or Service

Roll'd Franchisees also have the ability to notify Roll'd of alternate suppliersfrom which the Roll'd Franchisee wishes to buy goods and services that arecompareble with the Goods and Services (being suppliers other than theApproved Suppliers) ("Alternate Suppliers"). Roll'd will not unreasonablywithhold its consent to a Roll'd Franchisee buying goods and services fromsuch Alternate Suppliers provided that, amongst other things, the Roll'dFranchisee can demonstrate to Roll'd that the Alternate Supplier has thecapacity and ability to supply goods and services to all Roll'd Franchisees at aquality and price which is compareble to the quality and price of the Goodsand Services sold by Roll'd and/or Approved Suppliers

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I. 6 Details of

1.61 the Goods and Services which Roll'd Franchisees are required toacquire from an Approved Supplier; and

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1.62 the Approved Suppliers,

are (or will be) set out in an operations manual which Roll'd provides (or wil

provide) together with updates from time to time to all Roll'd Franchisees.

PURPOSE OF THE CONDUCT OR PROPOSED CONDUCT:

2.1 The purpose of the proposed conduct referred to in clause 1.1 is not to lessencompetition in the relevant market or markets but to:

ensure consistency in the Goods and Services provided to Roll'dFranchisees which in turn ensures consistency in customer experienceregardless of which Franchised Business a customer attends;

21.2 ensure a certain standard of quality of the Goods and Servicesprovided to Roll'd Franchisees;

21.3 ensure confidence in compliance with food safety, food handling andother food or health regulations as a result of the consistency in Goodsand Services;

2.1.4 ensure that Goods and Services provided to Roll'd Franchisees meetRoll'd's standards and specifications;

21.5 protect the value, integrity and reputation of Roll'd and the Roll'dsystem through consistency and quality;

21.6 ensure consistency in the nature and quality of the in out andequipment used in the Franchised Business and the overall servicedelivery and business efficiency of the Franchised Business; and

21.7 ensure that Roll'd Franchisees are able to acquire the Goods andServices at competitive prices through the power of bulk buying,making Roll'd Franchisees more competitive in the market andensuring that Roll'd Franchisees' potential profitability is maximised.

PUBLIC BENEFIT CLAIMS

(Refer to paragraph 4 of Form G)

3.1 Roll'd submits that the proposed conduct will have considerable public benefi

3.2 The purpose of the proposed arrangement is not to substantially lessencompetition.

3.3 The Roll'd Franchisees operate in the competitive retail food market. Thenotified arrangement will enhance the capacity of Roll'd Franchisees, as smallbusinesses, to compete with larger businesses (i. e. large retail food chain andfranchises) and other competitors. The existence of the FranchisedBusinesses in the market place will increase competition and improve thelikelihood of lower prices for end consumers,

3.4 Small independent businesses do not have access to the benefits of largerorganisations such as buying power, market presence and group marketing.This puts them at a disadvantage.

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3.5 Roll'd Franchisees gain a number of benefits from being part of the Roll'dsystem:

35.1 High Quality Services and Certainty of Supply

Roll'd has the ability to source high quality Goods and Services at amore favourable price than if Roll'd Franchisees individually sourcedGoods and Services of coinparable quality. Access to better buyingprices enhances the Roll'd Franchisees' likelihood of operatingprofitably. Roll'd will approve only those suppliers who, based onRoll'd's investigations, are able to provide the consistency of supply ofthe Goods and Services required by Roll'd Franchisees to foster andimprove their business efficiency.

35.2 Better Buying Power

Roll'd Franchisees by themselves would have little or no ability tonegotiate with Approved Suppliers the types of prices for Goods andServices which Roll'd is able (or will be able) to negotiate. If Roll'dFranchisees negotiated independently with any of the ApprovedSuppliers, they would in all likelihood have to pay a higher price for theGoods and Services. In some cases, it is possible that Roll'dFranchisees may not be able to acquire Goods and Services at allfrom a particular supplier if they were to approach them independently.

35.3 Increased Sales

By being part of the Roll'd system, Roll'd Franchisees have marketpresence and group marketing power which they would otherwise nothave. By all branding their businesses using Roll'd's name and logo,the Roll'd Franchisees increase customer awareness of the productsand services that Roll'd businesses provide. In addition, Roll'dundertakes marketing and promotional activities on behalf of the Roll'dgroup, increasing the profile of the Franchised Businesses within therelevant markets. By pooling funds, Roll'd is able to undertakeprofessional advertising, marketing and promotional campaigns at afraction of the comparative (often prohibitive) cost of individualbusiness initiatives. The branding of the Franchised Businesses andthe group marketing will draw more customers to Roll'd businessesthan if they were independents, resulting in increased sales.

Increased Profitability

By being part of the Roll'd system, Roll'd Franchisees will be able toacquire Goods and Services at more competitive prices than if theywere independents. This improves the profitability of their businessesand helps them achieve the economies of scale normally associatedwith larger organisations.

35.4

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3.55 Improved Management and Operating Skills

Roll'd has experience in the retail food industry in particular, in the saleof Vietnamese style food and beverages. By sharing its experiencewith Roll'd Franchisees and providing them with systems andoperating procedures to follow, Roll'd provides Roll'd Franchisees withsignificant advantages normally associated with big businessmanagement and operating techniques. This encourages moreefficient retail practices within the Franchised Businesses, increasingtheir competitiveness within the relevant markets.

3.56 Improved Productivity through Reduction in Business Administration

Roll'd will provide Roll'd Franchisees with advice and guidance on theconduct of the Franchised Business, including administrative andgeneral operating procedures for the proper conduct of the FranchisedBusiness. This encourages more efficient business practices andincreased productivity. By ensuring that Roll'd Franchisees acquirethe Services (i. e. IT services, bookkeeping services and moutdevelopment services) from the Approved Suppliers, Roll'd ensuresthat the Franchised Businesses have consistent fit-out, equipment,operating procedures and appearance which results in an improvedcustomer experience for consumers and improved businessfunctionality for Roll'd Franchisees

Roll'd submits that, as a consequence of the benefits provided by Roll'd toRoll'd Franchisees and the benefits of the proposed conduct, consumers inthe relevant retail markets will benefit.

3.6

3.7 The increased competitiveness and viability of Roll'd Franchisees enablesthem to compete with larger businesses, resulting in greater competition at theretail level and better prices and increased service levels for end consumers,If independent businesses such as those operated by Roll'd Franchisees wereto be pushed out of the marketplace, the major competitors would havegreater market share enabling them to increase the prices of goods to thepublic.

3.8 There is also a high probability that the majority of profits earned by Roll'dFranchisees are likely to be spent locally, resulting in greater demand forGoods and Services in the areas in which Roll'd Franchisees operate andincreasing competition in those areas.

3.9 There are also a number of benefits to be gained by the Approved Suppliersfrom the proposed conduct. By being appointed as an Approved Supplier, thesupplier will have some degree of certainty as to frequency of supply of Goodsand Services required by Roll'd Franchisees. This will give them a greaterability to plan for their businesses and may encourage them to invest in theirbusinesses. The increased volumes will also result in greater economies ofscale and efficiencies within the Approved Suppliers' businesses. This in turnenables the Approved Suppliers to provide Goods and Services to Roll'dFranchisees at more competitive prices, increasing competition and resulting

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in lower prices to end consumers,

MARKET DEFINITION

(Refer to paragraph 5 of Form G)

4.1 Roll'd submits that the relevant market is the retail and wholesale market for

the provision of the Goods and Services in Australia.

4.2 Based on investigations made by Roll'd, this market is highly competitive andthere are many suppliers and recipients of the Goods and Services in therelevant market.

4.3 There are no restrictions including of a geographical or legal nature that affectthe provision of the Goods and Services within the relevant market.

PUBLIC DETRIMENTS

(Refer to paragraph 6 of Form G)

5.1 Roll'd submits that there is no public detriment that results from the proposedconduct.

5.2 Roll'd submits that the proposed conduct will not lessen competition in themarket and will have a positive impact on end-consumers' retail experience.

5.3 The proposed conduct will not prevent Roll'd Franchisees from dealing withother suppliers of the Goods and Services:

Roll'd Franchisees are independent operators and except for thoseGoods and Services which Roll'd specifies must be acquired fromeither Roll'd or its Approved Suppliers, Roll'd Franchisees may acquireall other goods and services from the suppliers of their choice; and

53.2 Roll'd may appoint different suppliers as Approved Suppliers from timeto time (including any proposed Alternate Suppliers as may benominated by Roll'd Franchisees for approval by Roll'd from time totime). In determining whether to appoint a supplier as an ApprovedSupplier, Roll'd will consider such things as the quality of their Goodsand Services, ability to provide the frequency of supply of Goods andServices and price.

5.4 Approved Suppliers will be able to contract with competitors of Roll'dFranchisees (excluding Goods and Services which are proprietary to theFranchised Business).

5.5 Roll'd will not be limited in its dealings with competitors of the ApprovedSuppliers.

5.6 To the extent that the proposed conduct contravenes section 47 of the Act,Roll'd submits that the public benefits resulting from the proposed conductoutweigh any public detriment caused by the proposed conduct.

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