HACHI-BAN CO.,LTD.

The Company operates as the franchise chain headquarters for Hachiban Ramen, expanding domestically (Hokuriku, Chugoku, and Chubu regions) and overseas (Southeast Asia including Thailand and Vietnam). If the Company is unable to secure new franchisees as planned, or if the brand image is damaged by misconduct at franchise stores, this may affect business performance. Since the franchise business is the core operation, managing both the quality and quantity of franchisees is fundamental to business performance.

The Company competes broadly not only with other ramen operators but also with Japanese, Western, and Chinese restaurants, fast food chains, convenience stores, and delivery services. In recent years, competition has intensified in securing new store locations and acquiring capable personnel. The emergence of competitors offering higher added value may lead to decreased sales, and cost increases associated with improving quality and service may affect business performance. The Group is working to enhance customer satisfaction through community-based operations and to acquire new and repeat customers.

The head office plant has obtained ISO22000:2018 certification, and HACCP is implemented at all stores as part of food safety measures. However, hygiene issues specific to the Company, chain reputational damage arising from hygiene problems at other companies in the industry, unauthorized additives mixed in by raw material manufacturers, or outbreaks of BSE, foot-and-mouth disease, highly pathogenic avian influenza, or African swine fever may affect business performance. In the event of food poisoning or similar incidents, there is also a risk of administrative sanctions such as suspension or revocation of business licenses under the Food Sanitation Act.

Outbreaks of diseases such as BSE, foot-and-mouth disease, highly pathogenic avian influenza, and African swine fever, the spread of new infectious diseases, and poor crop harvests due to abnormal weather or cool summers may disrupt the supply-demand balance, leading to soaring purchase prices or difficulty procuring ingredients. The Group addresses this by changing production areas and procurement routes, but significant price increases or difficulty securing necessary volumes could materially affect business performance.

Noodles, sauce, and gyoza are manufactured at a single head office plant, and frozen ramen soup is procured from a single affiliated company plant in Thailand. Logistics for ingredients and business consumables are consolidated and outsourced to a single transportation company. If unforeseen events such as major earthquakes, floods, heavy snowfall, typhoons, or restrictions on employee work due to new infectious diseases occur, this may reduce production capacity or disrupt logistics, affecting business performance.

Securing and developing supervisors and store operation personnel is a key challenge for the expansion of directly operated stores and franchise stores, and the Company is engaged in active recruitment and hiring activities as well as enhancing OJT and training programs. If personnel recruitment and development do not proceed as planned, maintaining store service quality or executing planned store expansion may be affected, impacting business performance. Given the high proportion of part-time employees in the Company's structure, there are also concerns about increased labor cost burdens due to minimum wage increases and expanded social insurance coverage.

The Company is subject to a wide range of laws and regulations, including the Food Sanitation Act, food labeling-related laws, the Act on Promotion of Small and Medium Retail Business, the Antimonopoly Act, the Food Recycling Act, the Energy Conservation Act, the Act on Promotion of Resource Circulation for Plastics, the Act against Delay in Payment of Subcontract Proceeds, the Act against Unjustifiable Premiums and Misleading Representations, and the Product Liability Act. A decline in social credibility due to legal violations, or new expenses such as capital investment arising from future regulatory tightening, may affect business performance. There is also inherent risk of damages liability in the event of personal information leaks or labor-related issues.

In overseas countries such as Thailand and Vietnam, the Company operates the Hachiban Ramen franchise chain, exports and sells food products and seasonings, and conducts soup manufacturing, ingredient development, and raw material purchasing at local joint venture companies. If country risks specific to each nation—such as social conditions, political systems, economic conditions, legal regulations, and business customs—materialize, this may affect business performance. This also entails effects on royalty income and dividend income from extreme currency fluctuations (a portion of the risk related to dividend income is hedged through forward exchange contracts).

A wide range of operations—including store operations, franchise headquarters management, ingredient procurement, factory manufacturing, and ingredient delivery—depend on information systems, and the Company has implemented measures to prevent and recover from system troubles. If a difficult-to-recover failure occurs due to natural disasters, program malfunctions, computer viruses, or external cyberattacks, this may disrupt operations broadly and affect business performance.

For directly operated stores, there is a risk that impairment losses or penalty payments for early termination of lease contracts may arise if planned revenues cannot be secured due to changes in location conditions or intensifying competition, or if a new business format fails to gain customer support and the store is closed or withdrawn. In addition, upon contract termination due to the bankruptcy of a lessor or similar events, there is a possibility that leasehold deposits (security deposits, guarantee deposits, construction cooperation funds) may become uncollectible. Under the application of the