O'Charley's Signs 50-Store Franchise Agreement with Covelli Enterprises

O'Charley's Inc. (NASDAQ/NM:CHUX) announced the signing of a franchise agreement with Covelli Enterprises to develop and operate up to 50 O'Charley's restaurants in the states of Florida, Ohio, Pennsylvania and West Virginia. With this announcement, the Company has extended its franchising agreements to a total of 11 states, and has more than doubled its expected franchise development.

Covelli Enterprises, one of the largest U.S. franchisees of Panera Bread Bakery-Cafes, plans to open its first O'Charley's restaurants in 2006. Initial development plans will focus on the Tampa, Orlando, Pittsburgh, and Cleveland markets. Other territories for expansion by the group include northwest Ohio, central Pennsylvania, and northern West Virginia. A minimum of eight O'Charley's restaurants are expected to open by 2007.

Restaurant industry veteran Sam Covelli first achieved success as one of the largest McDonald's franchisees worldwide, operating 43 units. In 1998, following the sale of those units, Mr. Covelli opened his first Panera Bread location, and the Covelli family currently owns and operates over 100 cafes throughout Ohio, Pennsylvania, West Virginia, and Florida.

Zeb Hastings, vice president of franchising for O'Charley's Inc. stated, "This represents significant progress for the O'Charley's franchising program and we are excited to welcome Sam Covelli and his team into the O'Charley's family. The addition of one of the top franchise operators in the country, with over 30 years of experience and a strong track record, clearly demonstrates O'Charley's ability to identify and attract the most experienced and qualified franchisees in the business. This agreement also expands the O'Charley's brand into new markets, adds depth in key states, and continues our momentum to build a national platform for the O'Charley's concept."

Mr. Covelli stated, "Few casual dining concepts offer franchisees the positioning and level of support that O'Charley's provides. This agreement allows us to develop a leading casual dining concept in exclusive territories. We reviewed a number of different concepts and found the O'Charley's opportunity to be the most compelling."

Covelli Enterprises is the fifth franchisee for O'Charley's and joins Meritage Hospitality Group, Inc. of Michigan, JFC Enterprises, LLC of Louisiana, Wi-Tenn Restaurants, LLC of Wisconsin, and Four Star Restaurant Group of Iowa, Nebraska, Kansas, and South Dakota. JFC Enterprises and Wi-Tenn Restaurants are joint ventures in which the Company has an ownership interest. Since announcing its franchise program, the Company continues to be successful in its efforts to broaden the geographic reach of the O'Charley's brand.

O'Charley's Inc. operates 224 company-owned O'Charley's restaurants in 16 states in the Southeast and Midwest, and has three franchised O'Charley's restaurants in Michigan and one joint venture O'Charley's restaurant in Louisiana.


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