M U R F E T T L E G A L - B A R R I S T E R S b S O L I C I T O R S

Our ref: TRM.HT.8627.100401

Australian Competition and Consumer Commission GPO Box 3131 CANBERRA ACT 2601

By Post

1 April 2010

Dear SirIMadam

CAFFlSSlMO FRANCHISE C A F ~ SYSTEM - NOTIFICATION OF EXCLUSIVE DEALING

We act for Caffissimo Holdings Pty Ltd as Trustee for the Caffissimo Franchising Unit Trust ("Our Client'), being the Franchisor of the Caffissimo franchise cafe system.

Please find enclosed:

A. a Form G - Notification of Exclusive Dealing completed by Our Client (x2); and

B. a cheque in the sum of $100.00 as the filing fee for the above Notification.

Please contact Tom Meagher if you have any queries.

Yours faithfully ..,y . . .

MURFETT LEGAL

Murfett Legal Pty Ltd ACN 120 362 825

21 Hay Street, Subiaco, Western Australia 6008 Postal Address: PO. Box 8089, Subiaco East 6008

Tel: +61 (08) 9388 3100 Fax: +61 (08) 9388 3105 Email Address: reception@rnurfett.corn.au

Web Address: www.murfett.corn.au

Form G

Commonwealth of Australia

Trade Practices Act 1974 - subsection 93(1)

NOTIFICATION OF EXCLUSIVE DEALING

To the Australian Competition and Consumer Commission:

Notice is hereby given in accordance of with subsection 93(1) of the Trade Practices

Act 1974, of particulars of conduct or of proposed conduct of a kind referred to

subsections 47 (2), (3), (4), (5), (6), (7), (8) or (9) of that Act in which the person

giving notice engages or proposes to engage.

1. Applicant

1 .I Name of person giving notice:

A144567 Caffissimo Holdings Pty Ltd (ACN 108 765 699) as Trustee for the

Caffissimo Franchising Unit Trust ("Caffissimo Holdings").

1.2 Short description of business carried on by that person:

Caffissimo Holdings carries on the business of:

(a) Franchisor of the Cafissimo cafe franchise system ("the

Caffissimo System") which has (at the time of this Notification)

twenty three (23) Caffissimo cafe franchisees ("the Caffissimo

Franchisees") operating retail cafe businesses in Western

Australia; and

(b) Supplying (in particular) specified coffee, tea, branded disposable

cups, branded disposable napkins, branded general cafe utensils

and branded retail food supply packaging products to the

Caffissimo Franchisees pursuant to their respective franchise

agreements.

1.3 Address in Australia for service of documents on that person:

p p p p p p p p p p p p p p p p p p p p p p p p p p p p

Page 1 of 12 p p p p - - - - p -

Unit 8, 84 Nanson Street

Wembley 6014

WESTERN AUSTRALIA

Notified arrangement

Description of the goods or services in relation to the supply or acquisition of

which this notice relates:

(a) This Notification relates to:

(i) the supply of unroasted and roasted coffee beans,

including various award winning coffee bean blends

recipes of Caffissimo Holdings and Caffissimo Pty Ltd

(ACN 101 781 159) (intellectual property holding entity);

(ii) the supply of tea products; and

(iii) the supply of branded disposable cups, branded

disposable napkins, branded general cafe utensils and

branded retail food supply packaging,

collectively "the Core Products".

(b) The Core Products are the subject of valuable intellectual property

and some are the subject of various hospitality industry awards.

(c) It is proposed that the Core Products are to be sourced by and

supplied to Caffissimo Franchisees by Caffissimo Holdings'

nominated supplier, Perth Coffee Roasters Pty Ltd (ACN 135 990

215) as Trustee for the Perth Coffee Roasting Unit Trust trading as

'Caffissimo Coffee Roasters (WA)' (BN11443900) ("CCR). This

proposed arrangement of supply will, subject to acceptance of this

Notification, be conducted pursuant to a Franchise Agreement

between Caffissimo Holdings and CCR ("the CCR Franchise

Agreement").

2.2 Description of the conduct or proposed conduct:

(a> In accordance with the CCR Franchise Agreement, CCR will be

appointed as Caffissimo Holdings' nominated supplier of the Core

Products. CCR will source and manufacture (as the case may be)

the Core Products (including any ingredients or component parts)

for supply to the Caffissimo Franchisees in order to ensure uniform

quality standards and consistency of the Core Products utilised and

sold by the Caffissimo Franchisees.

(b) The Caffissimo Franchisees are granted the right to operate in

accordance with and utilising the Caffissimo System. The

Caffissimo System requires the Caffissimo Franchisees only utilise

and sell the Care Products which accord with specified quality and

uniformity standards. Subject to the terms and condition in each

Caffissimo Franchisee's franchise agreement for sourcing alternate

Core Products of the same or similar type and quality to the Core

Products, the Caffissimo Franchisees will obtain the Core Products

from CCR.

3. Persons, or classes of persons, affected or likely to be affected by the

notified conduct

3.1 Class or classes of persons to which the conduct relates:

(a) Any existing or future person, partnership or body corporate that:

0) enters into a Caffissimo cafe franchise agreement to operate a franchise cafe business in accordance with the

Caffissimo System with; or

(i i) seeks to obtain Core Products from,

Caffissimo Holdings.

3.2 Number of those persons:

At present time:

Twenty three (23).

Page 3 of 12 - - - - - - -

3.3 Estimated within the next year:

Five (5).

3.4 Where number of persons stated in item 3.2 is less that 50, their names and

addresses:

(a) Clive and Karen Pittman as Trustees for the Pittman Investment

Trust trading as 'Caffissimo West End Village'

73A Colin Street

West Perth 6005

WESTERN AUSTRALIA

(b) T & N Brutti Pty Ltd as Trustee for the T & N Brutti Family Trust

trading as 'Caffissimo at the Quadrant' and 'Caffissimo Australia

Place'

The Quadrant

1 William Street

Perth 6000

WESTERN AUSTRALIA

15 William Street

Perth 6000

WESTERN AUSTRALIA

(c) Campbell James trading as 'Caffissimo Central Law Courts'

501 Hay Street

Perth 6000

WESTERN AUSTRALIA

(dl Renlim Enterprises Pty Ltd trading as 'Caffissimo Whitford City'

Shop K10

Whitford City Shopping Centre

Whitfords Avenue

Hillarys 6025

WESTERN AUSTRALIA

(el Catherine Marie Blackman and Ann Vierk Sandover trading as

'Caffissimo Maritime Museum Fremantle'

Page 4 of 12 - - - - - -

Fremantle Maritime Museum ,

Victoria Quay

Cliff Street

Fremantle 61 60

WESTERN AUSTRALIA

(9 David and Sandra Holliday trading as 'Caffissimo Bank West

Tower'

Bank West Tower

108 St Georges Terrace

Perth 6000

WESTERN AUSTRALIA

(9) Stonebrook Enterprises Pty Ltd as Trustee for the Snelgrove Trust

trading as 'Caffissimo at the Art Gallery'

The Art Gallery of Western Australia

Cultural Centre

James Street

Perth 6000

WESTERN AUSTRALIA

(h) Degacola Pty Ltd as Trustee for the DT & Blackwell Family Trust

trading as 'Caffissimo ABC'

ABC Studios

30 Fielder Street

East Perth 6004

WESTERN AUSTRALIA

(9 Ian and Jacqueline Morgan trading as 'Cafissimo Floreat Forum'

Floreat Forum Shopping Centre

Howtree Place

Floreat 6014

WESTERN AUSTRALIA

6) Frank Riley, Richard Moody and Thomas O'Donohue trading as

'Caffissimo Belmont Forum'

Belmont Forum Shopping Centre

227 Belmont Avenue

Page 5 of 12 - - - - - -

WESTERN AUSTRALIA

(k) Mr Coffee WA Pty Ltd as Trustee for the Mr Coffee Investment

Trust trading as 'Caffissimo International House'

International House

26 St Georges Terrace

Perth 6000

WESTERN AUSTRALIA

(1) Anthony and Pauline Quiligotti as Trustees for the Quiligotti Family

Trust trading as 'Caffissimo Ord St'

56 Ord Street

West Perth 6005

WESTERN AUSTRALIA

(m) Jupiter Pty Ltd trading as 'Caffissimo 256' and 'Caffissimo

Wesfarmers'

256 St Georges Terrace

Perth 6000

WESTERN AUSTRALIA

(n) Barry and Judith Dalton trading as 'Cafissimo 500'

500 Hay Street

Perth 6000

WESTERN AUSTRALIA

(0) Grandis Holdings Pty Ltd trading as 'Caffissimo Market City'

T8-9-10, Building C, Market City

280 Bannister Road

Canning Vale 61 55

WESTERN AUSTRALIA

(P) Ian Rivett trading as 'Caffissimo - Lakeside'

Shop T245

Lakeside Joondalup Shopping City

Joondalup 6027

WESTERN AUSTRALIA

Page 6 of 12 - - - - - - - - -

(4) Breffni and Marta Doyle as Trustees for the Doylers4 Family Trust

trading as 'Caffissimo - Carramar'

Shop 7

Carramar Village Shopping Centre

Cheriton Drive

Carramar 6031

WESTERN AUSTRALIA

(0 Carrafi Enterprises Pty Ltd trading as ' Caffissimo Mount Lawley'

Shop 7, 595 Beaufort Street

Mount Lawley 6050

WESTERN AUSTRALIA

(s) Taiven Pty Ltd as Trustee for the Parker Trust trading as

'Caffissimo - Cottesloe'

460 Stirling Highway

Peppermint Grove 601 1

WESTERN AUSTRALIA

(t) Avenir O/VA) Pty Ltd trading as 'Caffissimo - Stirling Street'

80 Stirling Street

Perth 6000

WESTERN AUSTRALIA

(u) Asterleigh Pty Ltd (ACN 096 170 286) as Trustee for the Lahdo

Family Trust

Shop 38

Phoenix Shopping Centre

254 Rockingham Road

Spearwood 61 63

WESTERN AUSTRALIA

4. Public benefit claims

4.1 Arguments in support of notification:

(a) The arrangements pursuant to the CCR Franchise Agreement will

be of benefit to the public in that:

Page 7 of 12

CCR's manufacture and supply of the Core Products will

produce consistent and continuous quality, health and

taste standards in respect of the consumable food product

(e.g. coffee beans) type Core Products that are supplied by

the Caffissimo Franchisees to the public, thereby ensuring,

amongst other things:

(A) the Caffissimo Franchisees will have ready and

reliable access to the Core Products thereby

enhancing efficiency in the operation of the

respective Caffissimo Franchisee businesses, as

opposed to individually sourcing such Core

Products;

(B) the public receives consistently high and standard

quality of products and services from Caffissimo

Franchisees; and

(C) uniformity and protection of the goodwill, brand

and reputation of both Caffissimo Holdings and

the Caffissimo Franchise System in a competitive

retail cafe market.

(i i) The:

(A) obligations and covenants incumbent upon CCR

as contained in the CCR Franchise Agreement;

and

(B) Caffissimo Franchisees ordering the Core

Products from CCR in bulk,

should result in:

(C) a consistent and reliable supply of the Core

Products being available to the Caffissimo

Franchisees so as to service the public at market

competitive prices; and

Page 8 of 12 - - - - - - - -

(D) CCR being potentially able to negotiate

competitive reduced prices for products that it

sources for itself and then provides to Caffissimo

Franchisees from established supply

relationships, allowing CCR to offer reduced costs

for Caffissimo Franchisees when supplying the

Core Products which may in turn allow the

Caffissimo Franchisees to offer reduced prices to

the public.

(iii) As CCR will be abiding by Caffissimo Holdings' confidential

and proprietary recipes and operations manuals with

respect to consumable food products (e.g. coffee bean

blends), Caffissimo Holdings will be able to provide more

effective and specific assistance to the Caffissimo

Franchisees in respect of their operation under the

Caffissimo System.

4.2 Facts and evidence relied upon in support of these claims:

(a) Caffissimo Holdings is presently supplying the Core Products to the

Caffissimo Franchisees in accordance with uniform quality and

supply standards. The relevant recipes, quality standards and

current suppliers will be transferred to CCR pursuant to the CCR

Franchise Agreement. The Franchise Agreement will require CCR

to supply the Core Products uniformly to all Caffissimo Franchisees

in the same manner and to the same quality standards as are

currently being followed and applied by Caffissimo Holdings in its

supply to the Caffissimo Franchisees.

(b) Caffissimo Holdings currently receives reduced prices for the Core

Products or their individual components ordered from suppliers as a

result of orders being placed in bulk. These Core Products may

then be supplied to the Caffissimo Franchisees at a reduced price

taking into account this reduced cost from the suppliers.

5. Market definition

5.1 Provide a description of the market(s) in which the goods or services

described at 2 (a) are supplied or acquired and other affected markets

including: significant suppliers and acquirers; substitutes available for the

relevant goods or services; any restriction on the supply or acquisition of the

relevant goods or services (for example geographic or legal restrictions):

(a) Caffissimo Holdings submits that the relevant market to the

arrangement under the Franchise Agreement is:

0) the wholesale market for the sale and supply of branded

coffee products, branded tea products, branded disposable

cups, branded disposable napkins, branded general cafe

utensils and branded retail food supply packaging; and

(ii) indirectly, the retail cafe, food and hospitality market.

5.2 On the basis that:

(a) Caffissimo Holdings' current supply of some of the Core Products to

the Caffissimo Franchisees which are manufactured pursuant to

Caffissimo Holdings' recipes and other procedures (the subject of

valuable intellectual property); and

(b) the Caffissimo Franchisees may seek alternative suppliers of:

0) the Core Products if Caffissimo is unable to supply such

Core Products; and

(ii) "approved products" (as defined under the Caffissimo

franchise agreements),

but none have availed themselves of such ability to date,

the potential market impact of the Franchise Agreement arrangement and its

exclusive dealing would most likely be minimal.

6. Public detriment

6.1 Detriments to the public resulting or likely to result from the notification, in

particular the likely effect of the notified conduct on the prices of the goods

Page 10 of 12 - - - - - - - -

or services described at 2.1 above and the prices of goods or services in

other affected markets:

(a) Caffissimo Holdings submits that the supply arrangement

envisaged by this Notification would, in practical effect, have a

minimal anti-competitive impact or no substantial detrimental to the

public in light of the fact that:

(i) all the Caffissimo Franchisees are currently sourcing the

Core Products solely from Caffissimo Holdings directly;

(ii) the Franchise Agreement will transfer the supply operation

for the Core Products to CCR so as to ensure CCR

supplies the Core Products in the same manner, to the

same quality standard and under the same price regime as

is currently being operated by Caffissimo Holdings; and

(i i i) the Caffissimo Franchisees may seek to obtain alternative

suppliers for the Core Products under their respective

franchise agreements, subject to such alternative suppliers

complying with reasonable quality standards and

commercial confidentiality as required by Caffissimo

Holdings.

(b) The proposed arrangement under this Notification may in-part prevent the Caffissimo Franchisees selecting their own suppliers for

the Core Products. However, as required under the various

franchise agreements with each Caffissimo Franchisee, Caffissimo

Holdings will not unreasonably withhold consent for the Caffissimo

Franchisees to request Caffissimo Holdings' consent to obtain an

alternative supplier of the Core Products, provided that those

alternative suppliers meet minimum required quality and service

standards.

6.2 Facts and evidence relevant to these detriments:

As outlined in sections 4.1 and 5.1 above.

7. Further information

Page 11 of 12 - - - - - -

Name, postal address and contact telephone details of the person

authorised to provide additional information in relation to this notification:

Contact: Tom Meagher Director - Commercial Law Murfett Legal

Address: 21 Hay Street Subiaco 6008 WESTERN AUSTRALIA

Postal: PO Box 8089 Subiaco East 6008 WESTERN AUSTRALIA

Phone: (08) 9388 31 00

Fax: (08) 9388 31 05

E-mail: tom@murfett.com.au

.................................................. ... Dated (/..q.!!.?

Signed by the applicant:

(Signature) \ I Michael John Barr

Managing Director

Caffissimo Holdings Pty Ltd

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