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Exhibit 10.21
April 30, 1999
Arthur Treacher's, Inc.
Mr. Bruce Galloway
7400 Baymeadows Way, Suite 300
Jacksonville, FL 32256
Dear Bruce:
This letter hereby amends the Arthur Treacher's/Miami Subs Development Program
Master Agreement dated August 13, 1998.
1. Arthur Treacher's, Inc. ("Arthur Treacher's") agrees to grant Miami Subs USA,
Inc. ("MSUSA") the exclusive (United States only) right to co-brand Arthur
Treacher's concept and products. MSUSA shall have the exclusive right to (a) co-
brand Arthur Treacher's in existing Miami Subs restaurants; (b) co-brand Arthur
Treacher's in new restaurants within the Miami Subs system which may or may not
include co-branding with Nathan's, Kenny Rogers, or Miami Subs; and (c) co-
brand with any other fast-food restaurant or fast-food restaurant company;
provided, however, Arthur Treacher's has the right to enter into a co-branding
arrangement with Riese Restaurant in Manhattan, Pudgies Chicken and Sylvia's.
Arthur Treacher's recognizes that Miami Subs co-brands with other concepts
(including Baskin-Robbins, Nathan's and Kenny Rogers) and plans to expand this
program to other cc-branding partners and is developing co-branded units which
may or may not include a Miami Subs or an Arthur Treacher's.
Arthur Treacher's may not operate or license others to operate a standard Arthur
Treacher's restaurant within a one (1) mile radius (or within ten (10) city
blocks in any urban market) of any Miami Subs restaurant or co-brand restaurant
In the Miami Subs system. Arthur Treacher's agrees to enter into franchise
agreements or license agreement with each co-brand restaurant designated by
Miami Subs permitting the sale of Arthur Treacher's products at such co-branded
restaurant. Arthur Treacher's retains all retail rights to Arthur Treacher's
products and the right to license non-chain (multi-unit) non-fast food,
restaurants to sell Arthur Treacher's products.
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2. An initial franchise fee associated with entering into an Arthur Treacher's
Franchise Agreement under this program shall be no less than Five Thousand
Dollars ($5,000.00). Miami Subs will collect the franchise fee from the
franchisee and will remit Two Thousand Five Hundred Dollars ($2,506.00)
collected from any existing Miami Subs Restaurant and any existing Miami Subs
franchisee who are opening a new restaurant, to Arthur Treacher's within 15 days
following the collection of the initial franchise fee. There shall be no
separate franchise fee due to Arthur Treacher's for Miami Subs company operated
co-branded restaurants; however, Miami Subs shall reimburse Arthur Treacher's
for approved direct, out- of-pocket expenses incurred by Arthur Treacher's in
participating in the unit opening. For prospective franchisee to the Miami Subs
or Nathan's system whose principle(s) are not currently a franchisee with the
Miami Subs or Nathan's system, Miami Subs will remit Five Thousand Dollars
($5,000.00) to Arthur Treacher's within fifteen (15 days following collection
from such prospective franchisee of the initial franchise fees associated with
entering into an Arthur Treacher's Franchise Agreement under this program. Miami
Subs may, in its sole discretion, charge each co-brand restaurant an opening
fee.
3. For any prospective cc-brand restaurant whose principle(s) are not currently
a franchisee with the Miami Subs System, Miami Subs shall remit to Arthur
Treacher's a royalty fee of two percent (2%) of the total Arthur Treacher's
products Gross Revenue in the Restaurant on a monthly basis within ten (10) days
following the month tat the entire royalty fee is collected from the owner of
the co-brand restaurant.
4. Arthur Treacher's further agrees to two (2) Nathan's Famous, Inc.
("Nathan's)/Arthur Treacher's test units. There will be no royalty fees due
Arthur Treacher's from the Nathan's/Arthur Treacher's test units for one hundred
and twenty (120) days from the opening of each Nathan's/Arthur Treacher's test
unit. After one hundred and twenty (120) days from the opening of each
Nathan's/Arthur Treacher's test unit, Arthur Treacher's shall receive a royalty
fee of two percent (2%) of the total Arthur Treacher's gross revenue in the test
unit on a monthly basis within ten (10) days following the month the revenues
were collected. There will be no initial franchise fee charged for either of the
Nathan's/Arthur Treacher's test units. Upon termination or expiration of the
test period, Arthur Treacher's shall provide the owner/operator with the
approved Arthur Treacher's franchise agreement for use with this program.
5. To maintain the exclusivity granted to Miami Subs by Arthur Treacher's, Miami
Subs agrees that 1) between the date hereof and April 30, 2001, twelve (12)
existing Miami Subs restaurants shall be converted into co-branded restaurants
which include Arthur Treacher's and there will be twenty-five (25) new co-
branded restaurants which include Arthur Treacher's a 2) by April 30, 2002 there
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will be an additional twenty-five (25) new co-brandedrestaurants which include
Arthur Treacher's be opened; and 3) each twelve (12) months thereafter there
will be an additional forty (40) new co-branded restaurants which include Arthur
Treache to be opened. If there are more than the required approved in any year,
the excess will be applied to meet the requirements in the following year.
Should Miami Subs fail to meet the above schedule, Miami Subs shall lose its
right to exclusivity but shall continue to have all other rights set forth
herein and in the Miami Subs/Arthur Treacher's Development Program Master
Agreement, including, without limitation, the right to open co-branded
restaurants with Arthur Treacher's.
If Arthur Treacher's is acquired by an entity which desires to terminate Miami
Subs exclusive rights to co-brand with Arthur Treacher's, Arthur Treacher's has
the right to terminate Miami Subs exclusivity by paying Miami Subs Fifteen
Thousand Dollars ($15,000.00) for each existing or approved Arthur Treacher's
co-branded restaurant and Ten Thousand Dollars ($10,000.00) for each co- branded
restaurant that would have been developed or approved in accordance with the
schedule set forth above bad Miami Subs continued to have the exclusive right to
co-brand with Arthur Treacher's for the three (3) years following the date Miami
Subs exclusivity was terminated (ie., if Miami Subs exclusivity is terminated on
April 29, 2002, then Arthur Treacher's would pay Miami Subs $ 15)000.00 for each
existing or approved co-branded restaurant and $250,000 for the first year
following the termination and $400,000 for each of the two years thereafter).
If Arthur Treacher's desires to cancel this Agreement for any other reason,
other than its' being acquired, then it may do so under the same terms and
conditions outlined herein, provided it so advises Miami Subs at least six (6)
months prior to the proposed date of cancellation.
In the event the exclusivity outlined herein is terminated, Miami Subs (or its
corporate affiliates) shall continue to have all other rights set forth herein,
including, without limitation, the right to open co-branded restaurants serving
Arthur Treacher's products.
6. If Arthur Treacher's files for bankruptcy, Arthur Treacher's desires and
grants Miami Subs the right to continue to use the Arthur Treacher's trademarks,
recipes, operational procedures, and other items necessary to continue to
develop and operate the co-branded restaurants, ten existing or to be opened.
Miami Subs shall retain all rights it has under this Agreement and the same
rights tat other Arthur Treacher's franchisees have during a pending bankruptcy,
including the right to order from Arthur Treacher's suppliers.
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7. Except as amended hereby, all of the terms arid conditions of the Development
Program Master Agreement shall continue in full force and effect and the
representation, warranties and covenants contained in the Development Program
Master Agreement shall be read to give effect to the amendments contained
herein. In the event this letter conflicts with the Development Program Master
Agreement, this letter governs.
Please execute below acknowledging your acceptance of the terms of this letter.
Sincerly,
Miami Subs Corporation
Donald Peflyn
President and
Chief Operating Officer
ACCEPTED AND AGREED:
/s/ Bruce Galloway
Bruce Galloway, Chairman of the Board
Date: 05/04/99
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