FRANCHISE AGREEMENT

EXHIBIT 10.5

COSI, INC.

FRANCHISE AGREEMENT

TABLE OF CONTENTS

FRANCHISE AGREEMENT

     THIS FRANCHISE AGREEMENT (the “Agreement”) is made and entered into on this                      day of                                         , 200       (the “Effective Date”), by and between:

BACKGROUND:

     A. Franchisor owns a format and system (the “System”) relating to the establishment and operation of fast casual restaurants, which operate at retail locations that display Franchisor’s interior and exterior trade dress and feature and operate under the Proprietary Marks (as defined below) (each a “Cosi Restaurant”). Cosi Restaurants are designed using Franchisor’s interior trade dress to be welcoming and comfortable for customers, and offer menus specializing in Franchisor’s signature flatbread, sandwiches, soups, salads, gourmet coffee and specialty beverages and food items using Franchisor’s proprietary recipes, formulae and techniques (“Proprietary Products”), as well as other non-proprietary food, beverage, and other compatible items designated by Franchisor from time to time (collectively, “Products”).

     B. The distinguishing characteristics of the System include distinctive exterior and interior design, decor, color schemes, fixtures, and furnishings; recipes, standards and specifications for products, equipment, materials, and supplies; uniform standards, specifications, and procedures for operations; purchasing and sourcing procedures; procedures for inventory and management control; training and assistance; and marketing and promotional programs; all of which may be changed, improved, and further developed by Franchisor from time to time.

     C. The System is identified by means of certain trade names, service marks, trademarks, logos, emblems, and indicia of origin as are now designated and may hereafter be designated by Franchisor in writing for use in connection with the System including the mark “Cosi” and other marks (the “Proprietary Marks”).

     D. Franchisee desires to enter into the business of operating a restaurant as a Cosi Restaurant under the System and using the Proprietary Marks, and wishes to enter into this agreement with Franchisor for that purpose, and to receive the training and other assistance provided by Franchisor in connection therewith.

     E. Franchisee understands and acknowledges the importance of the high standards of Franchisor for quality, cleanliness, appearance, and service and the necessity of operating the business franchised hereunder in conformity with the standards and specifications of Franchisor.

     NOW, THEREFORE, the parties agree as follows:

GRANT

     Grant and Acceptance. Franchisor grants to Franchisee the right, and Franchisee hereby undertakes the obligation, upon the terms and conditions set forth in this Agreement to: (a) establish and operate a Cosi Restaurant (the “Franchised Restaurant”), (b) use, only in connection therewith, the Proprietary Marks and the System, as they may be changed, improved, or further developed from time to time by Franchisor; and (c) operate the Franchised Restaurant only at the Approved Location (as defined in Section 1.2 below) in accordance with this Agreement.

     Approved Location. Franchisee shall develop and operate the Franchised Restaurant only at the site specified in Exhibit A to this Agreement as the “Approved Location” (which shall have been identified pursuant to a Site Selection Agreement between Franchisor and Franchisee, unless Franchisee possessed such site at the time Franchisee applied to Franchisor for franchise rights for the Franchised Restaurant). Franchisee shall not relocate the Franchised Restaurant without Franchisor’s prior written consent and/or otherwise in writing by Franchisor, as provided in Section 8.19 below.

     Limit on Sales. Franchisee’s rights hereunder shall be limited to offering and selling Products at the Franchised Restaurant, and only to retail customers of the Franchised Restaurant for (a) customer consumption on the premises of

the Franchised Restaurant at the Approved Location (the “Premises”); and (b) for customer carry-out consumption of Products sold at the Franchised Restaurant; provided that all such activities shall be conducted only in accordance with the requirements of this Agreement and the procedures set forth in the Manuals (as defined in Section 10 below) and all applicable laws. Franchisee may apply in writing for Franchisor’s approval to engage in off-Premises delivery or off-Premises catering activities, and if approved by Franchisor, Franchisee may engage in such activities pursuant to such programs, policies terms, and conditions as Franchisor may establish from time to time. Franchisee shall not, without the prior written approval of Franchisor, engage in any other type of sale of, or offer to sell, or distribution of Products, including, but not limited to: selling, distributing or otherwise providing, any Products to third parties at wholesale, or for resale or distribution by any third party; and selling, distributing or otherwise providing any Products through catalogs, mail order, toll free numbers for delivery, or electronic means (e.g., the Internet).

     Territory and Reserved Rights. Except as otherwise provided in this Agreement, during the term of this Agreement, Franchisor shall not establish or operate, nor license any other person to establish or operate, a Cosi Restaurant at any location within the territory specified in Exhibit A (the “Territory”). Franchisor retains the rights, among others, on any terms and conditions Franchisor deems advisable, and without granting Franchisee any rights therein:

          To own, acquire, establish, and/or operate and license others to establish and operate, Cosi Restaurants under the System at any location outside the Territory notwithstanding their proximity to the Territory or the Approved Location or their actual or threatened impact on sales of the Franchised Restaurant;

          To own, acquire, establish and/or operate and license others to establish and operate, non-restaurant businesses under the Proprietary Marks, at any location within or outside the Territory.

          To own, acquire, establish and/or operate, and license others to establish and operate, businesses under proprietary marks other than the Proprietary Marks, whether such businesses are similar or different from the Franchised Restaurant, at any location within or outside the Territory notwithstanding their proximity to the Territory or the Approved Location or their actual or threatened impact on sales of the Franchised Restaurant;

          To own, acquire, establish, and/or operate and license others to establish and operate, Cosi Restaurants under the Proprietary Marks at Institutional Accounts (as defined below) at any location within or outside the Territory. As used in this Agreement, “Institutional Accounts” shall mean outlets that serve primarily the customers located within the facility, such as captive audience facilities (examples include, but are not limited to, parks charging admission, stadiums, amusement parks and centers, theaters and art centers), limited purpose facilities (examples include, but are not limited to, airports, transportation centers, department stores, in-door shopping centers, business and industrial complexes, museums, educational facilities, hospitals, art centers, and recreational parks), limited access facilities (examples include, but are not limited to, military complexes, buyer club businesses, educational facilities, business and industrial complexes), and other types of institutional accounts.

          To sell and to distribute, directly or indirectly, or to license others to sell and to distribute, directly or indirectly, any products (including the Products) through grocery or convenience stores or through outlets that are primarily retail in nature, or through mail order, toll free numbers, or the Internet, including those products bearing Franchisor’s Proprietary Marks provided that distribution within the Territory shall not be from a Cosi Restaurant established under the System that is operated from within the Territory (except from a Cosi Restaurant at an Institutional Account);

          To (i) acquire one or more retail businesses that are the same as, or similar to, Cosi Restaurants then operating under the System (each an “Acquired Business”), which may be at any location within or outside the Territory notwithstanding their proximity to the Territory or the Approved Location or their actual or threatened impact on sales of the Franchised Restaurant, and to (ii) operate and/or license others to operate any Acquired Business under its existing name or as a Cosi Restaurant under the System, subject to the following conditions that apply to each Acquired Business located within the Territory:

               Except as provided in Section 1.4.6.2 below, and provided that Franchisee is in compliance with this Agreement and any other agreement with Franchisor, Franchisor shall offer to Franchisee the option to purchase and operate, as a Cosi Restaurant, an Acquired Business that is purchased by Franchisor for operation by Franchisor or its affiliates. Franchisor shall provide Franchisee with written notice of Franchisor’s purchase of the Acquired Business(es), the terms and conditions applicable to the Franchisee’s option to purchase such Acquired Business(es), and such other information that Franchisor deems necessary to include in the notice. The terms and conditions offered to Franchisee shall include, without limitation, the

following: (a) the purchase price will be based on Franchisor’s purchase price for such Acquired Business, and if the Acquired Business was part of an Acquired System (as defined below in Section 1.4.6.2), then Franchisee’s purchase price for such Acquired Business shall be determined using a ratio equal to the sales during the prior year of such Acquired Business as compared to the total sales in such prior year of all Acquired Businesses purchased by Franchisor in the same transaction; and (b) the requirement that Franchisee enter into Franchisor’s then-current form of System franchise agreement for the Acquired Business. If Franchisee does not elect to purchase, or fails to complete the purchase of, an Acquired Business, Franchisor shall have the right to operate itself, or through its affiliates or third party licensees or franchisees, the Acquired Business under any trade name or trademarks including the Proprietary Marks.

               If an Acquired Business is part of a system of retail businesses that Franchisor acquires (an “Acquired System”), Franchisee shall have no right to purchase, and Franchisor shall not be obligated to offer Franchisee any option to purchase, any Acquired Business that is operated by a licensee or franchisee under the Acquired System. Franchisor may license such unit to be operated under any trade name or trademarks including the Proprietary Marks, and may also license to the licensee or franchisee additional units of the Acquired System that the licensee or franchisee has the right to develop and operate within the Territory.

TERM AND RENEWAL

     Initial Term. This Agreement shall be in effect upon its acceptance and execution by Franchisor and, except as otherwise provided herein, this Agreement shall expire ten (10) years from the Effective Date.

     Renewal. Franchisee may apply to operate the Franchised Restaurant for two (2) additional consecutive terms of five (5) years each if the following conditions are met prior to each renewal:

          Franchisee shall give Franchisor written notice of Franchisee’s election to renew at least six (6) months, but not more than twelve (12) months, prior to the end of the term of this Agreement;

          Franchisee shall not have any past due monetary obligations or other outstanding obligations to Franchisor and its affiliates, the approved suppliers of the System, or the lessor of the Premises;

          Franchisee shall not be in default of any provision of this Agreement, or successor hereto, or any other agreement between Franchisee and Franchisor or its affiliates, the approved suppliers of the System, or the lessor of the Premises; and Franchisee shall have substantially complied with all the terms and conditions of such agreements during the terms thereof;

          Franchisee and Franchisor shall execute a mutual general release, in a form prescribed by Franchisor, of any and all claims against Franchisor and its affiliates, and their respective officers, directors, agents, and employees;

          Franchisee shall execute the then-current form of franchise agreement offered by Franchisor, which shall supersede this Agreement in all respects, and the terms of which may differ from the terms of this Agreement including requirements to pay additional and/or higher fees, except that Franchisee shall not be required to pay any initial franchise fee;

          Franchisee shall comply with the then-current qualification and training requirements of Franchisor;

          Franchisee shall make or provide for, in a manner satisfactory to Franchisor, such renovation and modernization of the Premises as Franchisor may reasonably require, including installation of new equipment and renovation of signs, furnishings, fixtures, and decor to reflect the then-current standards and image of the System;

          Franchisee shall present evidence satisfactory to Franchisor that Franchisee has the right to remain in possession of the Premises (or such other location acceptable to Franchisor) for the duration of the renewal term;

          Franchisee shall not be required to pay an initial franchise fee, and instead shall pay Franchisor a renewal fee equal to Seven Thousand Five Hundred Dollars ($7,500).

          Franchisee, at the time of renewal, satisfies Franchisor’s standards of financial responsibility and, if requested by Franchisor, Franchisee demonstrates to Franchisor that Franchisee has sufficient financial resources and means to continue to operate the Franchised Restaurant during the renewal term.

DUTIES OF FRANCHISOR

     Franchisor’s Prototype Plans. Franchisor shall make available, at no charge to Franchisee, prototype design plans and specifications for the construction of a Cosi Restaurant and for the exterior and interior design and layout, fixtures, furnishings, equipment, and signs. Franchisee acknowledges that such standard design plans and specifications shall not contain the requirements of any federal, state or local law, code or regulation (including without limitation those concerning the Americans with Disabilities Act (the “ADA”) or similar rules governing public accommodations or commercial facilities for persons with disabilities), nor shall such plans contain the requirements of, or be used for, construction drawings or other documentation necessary to obtain permits or authorization to build a specific Cosi Restaurant, compliance with all of which shall be Franchisee’s responsibility and at Franchisee’s expense. Franchisee understands and acknowledges that Franchisor has the right to modify the prototype design plans and specifications, and develop additional prototype design plans and specifications, as Franchisor deems appropriate from time to time (however Franchisor will not modify the prototype plans and specifications for the Franchised Restaurant developed pursuant to this Agreement once those prototype architectural plans and specifications have been given to Franchisee). Franchisee shall adapt the standard plans to the Franchised Restaurant’s location, as provided in Section 5.1 hereof, subject to Franchisor’s approval.

     Initial Training. Franchisor shall provide its initial training for operators and managers (“Initial Training”), as described in Section 6 of this Agreement, for up to four (4) trainees (unless this Agreement is for the third or subsequent Cosi Restaurant being developed pursuant to a Cosi Area Development Agreement between Franchisor and Franchisee (or an affiliate of Franchisee), in which event the terms set forth in Section 6.1.3 below shall apply with respect to the pre-opening training of Franchisee, the Designated Principal and any General Manager). Franchisor shall also provide such ongoing training as it may, from time to time, deem appropriate.

     Opening Training. Franchisor will furnish to Franchisee, at Franchisee’s premises and at Franchisor’s expense, one (1) or more of Franchisor’s representatives for the purpose of facilitating the opening of the Franchised Restaurant. During this training, such representative will also assist Franchisee in establishing and standardizing procedures and techniques essential to the operation of a Cosi Restaurant and shall assist in training personnel; however, Franchisee acknowledges that Franchisor shall not be responsible for training or offering guidance with respect to compliance with any laws, ordinances or other legal matters. Prior to the arrival of Franchisor’s representative(s), Franchisee shall have completed all training of Franchisee’s initial staff of employees for the Franchised Restaurant, as shall be necessary for Franchisee to comply with its staffing obligations under Section 8.4 below. Should Franchisee request additional assistance from Franchisor in order to facilitate the opening of the Franchised Restaurant, and should Franchisor deem it necessary and appropriate to comply with the request, Franchisee shall pay Franchisor’s per diem charges and Franchisor’s out of pocket expenses in providing such additional assistance as set forth from time to time in the Manuals.

     Loan of Manuals. Franchisor shall provide Franchisee, on loan, copies of the Franchisor’s confidential operations manuals and other manuals, instructional materials, and written policies and correspondence (collectively, th