From what sources can an Anago franchisee purchase supplies and equipment?

• (a) Purchases from Us or Our Affiliates. We do not allow You to use Our tools, equipment or supplies to perform the work of Your Unit Franchise.

You must own Your own tools, equipment and supplies necessary to perform the work for which the Account has contracted.

However, You must purchase only from Us or an approved supplier the items stated in Exhibits 3, 4, and 5 (The items described on Exhibits 3 and 4 are included in the Initial Fee for programs I through X+.

Purchasers of programs 0 and 500 will not receive these supplies as part of the Initial Fee and must purchase them separately).

This is in addition to Your ongoing needs for cleaning supplies and other items that We require, if implemented on a System-wide basis.

• (b) Authorized Specifications and Suppliers. You must purchase or lease equipment, supplies, advertising materials, and other products and services used for the operation of the Anago Unit Franchise only from authorized manufacturers, contractors and other suppliers who demonstrate, to Our continuing satisfaction: the ability to meet Our standards and specifications for these items; possess adequate quality controls and capacity to supply Your needs promptly and reliably; and have been approved in writing by Us and not later disapproved.

We may approve a single supplier for any brand and may approve a supplier only as to a certain brand or brands.

In approving suppliers for the System, We may take into consideration factors like the price and quality of the products or services and the supplier's reliability.

We may concentrate purchases with 1 or more suppliers to obtain the lowest prices and/or the best advertising support and/or services for any group of Franchised Units or Company Units within the System.

Approval of a supplier may be conditioned on requirements on the frequency of delivery, standards of service, warranty policies including prompt attention to complaints, and concentration of purchases, as stated above, and may be temporary, pending Our additional evaluation of the supplier.

We in no way warrant the use of approved vendors or supplies when they are utilized outside the Anago System.

We may designate a supplier where a Franchisee may go and buy supplies and charge the supplies to the House Account.

If you use the House Account to purchase supplies and elect to have your purchases deducted from your statement each month, we will charge you a financing fee of 5.25% of the amount charged.

• (c) Approval of New Specifications and Suppliers. If You propose to purchase or lease any equipment, supplies, advertising materials, or other products or services, for use within the Anago System, from an unapproved supplier, You must submit to Us a written request for approval, or request the supplier to do so.

We will have the right to require, as a condition of Our approval that Our representatives be permitted to inspect the supplier's facilities, and that samples from the supplier be delivered, at Our option, either to Us or to an independent, certified laboratory We designate for testing.

We are not liable for damage to any sample that results from the testing

process. You will pay a charge not to exceed the reasonable cost of the inspection and the actual cost of the testing. We reserve the right, at Our option, to re-inspect the facilities and products of any approved supplier and continue to sample the products at the supplier's expense and to revoke approval upon the supplier's failure to continue to meet Our standards and specifications. We may also require as a condition to Our approval, that the supplier present satisfactory evidence of insurance, for example, product liability insurance, protecting Us and Our Unit Franchisees against all claims from the use of the item within the System.

Source: Item 23 — RECEIPTS (FDD pages 62–298)