This is not an offer to sell a franchise. An offer may be made only through Arthur Murray International, Inc.'s Offering Circular for Prospective Franchisees. No Arthur Murray Franchise will be sold to a Prospective Franchisee until Arthur Murray International Inc.'s Offering Circular for Prospective Franchisees has been delivered to the Prospective Franchisee before the sale in accordance with applicable law.

Dear Prospective Franchisee:

Welcome and thank you for your interest in an Arthur Murray Franchised Dance Studio.

Arthur Murray International Inc.(AMII) together with it franchisees is the largest and most prominent dance organization in the world. There are approximately 225 studios throughout the world today located in Australia, Brazil, Canada, Egypt, England, Germany, Hong Kong, Israel, Italy, Japan, Jordan, Lebanon, South Africa and the United States.

The company's founder, Arthur Murray, began teaching dance in 1912 and formed the company as it known today in 1946. Arthur Murray began officially franchising in 1939, making it one of the oldest franchise companies in the world. The first franchised dance studio was opened in Minneapolis , Minnesota .

Throughout our long history, Arthur Murray Dance Studios have not only been innovators in franchising but have also relied on its franchisees to play a major role in the organization's success. AMII has taken extreme care in franchising qualified individuals in order to protect the Arthur Murray trade name. The company particularly focuses on recruiting, screening, training, developing, servicing and retaining qualified franchisees. Together with the unique relationship we have with our Franchisees we have been able to maintain our organization's leadership in dance through generations. This has allowed AMII to continue a longstanding stellar reputation with our clientele, making it synonymous with dancing worldwide.

We are, therefore, in the fortunate position to seek only the very highest qualified individuals to join the Arthur Murray Team. Dance or business background, quality service experience, financial qualifications and integrity are essential in our evaluations of your qualifications to become and Arthur Murray Franchisee.

You will find a brief overview of franchising located in this section. We hope it will assist you in evaluating our Franchise opportunities and answer most of your preliminary questions.

At Arthur Murray International, Inc. we believe in supporting you and your future as a Franchisee. As AMII helps you succeed, we pledge to continue maintaining the highest standards in franchising. We recognize that you represent the single most important factor in your own success. As such, you must also be prepared to maintain the strong work ethic and determination it takes for a successful business.

If you are ready for success with the world's most recognized and renowned Dance Studios and meet our qualifications, Arthur Murray International, Inc. will invite you to join our organization.

- In order to be considered for an Arthur Murray franchise, the following attributes, among others are essential:

- Entrepreneurial Spirit and high motivation

- Ability to train people in business and dance

- Ability to manage finances

- Willingness to devote significant time and best efforts towards the day-to-day operations of a dance studio as an on-premise Franchisee

- And finally, meet our financial qualifications

The dance studio business is unique. Mainly, a prospective franchisee without a dance background must ascertain how he or she will be able to gain the dance experience needed to become a franchisee.

Usually, it is acquired through teaching in one of our Arthur Murray Franchised Dance Studios . Arthur Murray International, Inc. will assist whenever possible in the development of your dance experience. It is, however, the financial responsibility of the franchisee to become and remain proficient in dancing.

For further information, please forward a letter containing the relevant details of your interest, including anticipated location and opening date. Also, any demographic information for the intended area.

That information, along with a detailed personal resume of your educational, business as well as any dance training and experience should be forwarded to:

Arthur Murray International, Inc.
Att: John Kimmins
1077 Ponce De Leon Blvd.
Coral Gables, FL 33134
Office (305) 445-9645
Fax (305) 445-0451

E-mail: info@arthurmurray.com

Upon receipt of the above requested information, we will then be in a more favorable position to properly determine the appropriate documents to send to you for your review and consideration.

On behalf of the Arthur Murray organization, we again thank you for your interest.

John Kimmins
President

Why Arthur Murray?
"In business for yourself but not in business by yourself."

• Over 88 years of teaching the world dance
• A proven Dance Syllabus with ongoing support
• Association with largest Global Dance Chain - nearly 200 strong unique student sales tracking
• A custom computer information system
• National advertising and marketing programs
• Bulk purchasing rates on all Arthur Murray materials
• Worldwide name recognition
• New product development
• Assistance in legislative matters
• Recognizable and protected trademarks and logos
• Corporate web site with linking capability
• Movie, music and broadway show affiliation
• Access to established business and dance consultants
• A network of people to plug into for assistance
• Established and respected Awards System
• Staff incentive programs
• AND MUCH, MUCH MORE...

What are the terms of the Arthur Murray's Franchise Agreement?

The full details of Arthur Murray's Franchise Agreement are set forth in our Offering Curricular. In general, Arthur Murray has a two (2) year Franchise Agreement with a five (5) year renewal option. The royalty fees are 5% of gross sales for the initial six (6) month period, 6% for the second six (6) months, 7% for the third (3) six month period and then 8% thereafter of total gross sales.

What does Arthur Murray require for the initial Franchise Fee?

Your initial Franchise Fee ranges from $12,000 to $100,000, depending upon the population within your market area and whether or not you have been a dance instructor at an Arthur Murray Franchised Dance Studio. Prospects who have worked within the Arthur Murray system need not pay any additional fees.

How do I find out which geographical areas are available?

Included in your initial correspondence with Arthur Murray International, Inc. you will need to indicate which National or International city you are interested in.

How much is the initial investment for securing an Arthur Murray franchise location?

The estimated initial investment required ranges from $33,700 to $220,000

Does Arthur Murray International, Inc. offer any financial assistance?

Arthur Murray does not offer direct or indirect financing. We do not guarantee your note, lease or obligation. For your information, our Franchisees are eligible for expedited and streamlined Small Business Administration loan processing through the SBA's Franchise Registry Program. Go to www.franchiseregistry.com for more information.

Do I receive training from Arthur Murray International, Inc.?

Yes, Franchisees must attend a Franchisee Training School within their first (1st) year of operation. This training school is fully run and operated by AMII with no training fees involved. Further, throughout the year there are numerous Area and Regional training programs. Due to the nature of the dance business, outside top dance consultants are available to travel to your studio location for further one on one instruction. This cost, however, is incurred by your studio.

Can I sell my Arthur Murray Franchise?

Yes, you can sell your Arthur Murray Franchised Dance Studio to a qualified buyer that has been approved by AMII. Currently, there is not a transfer fee for administrative, legal and training expenses, although we do reserve the right to charge a fee in the future.

Regarding the operation of my franchise, what further guidance will Arthur Murray International, Inc. provide?

Upon opening, you will receive several manuals outlining the guidelines for your day to day operations. Arthur Murray has also developed a customized computer program offered for a nominal fee; Regional and Area Training Programs, field support from dedicated Franchise Relations Representatives; Advertising and Marketing guidance and resources for your promotional, operational and other business needs.