What happens if an Annex Brands franchisee fails to pay amounts when due?

NT OF FEES. Franchisee will pay or enable Franchisor to collect any and all sums or amounts promptly as they became due. Franchisee's failure to pay amounts when due may constitute grounds for termination of the Franchise. Franchisee must authorize payment to Franchisor by automatic draft from Franchisee's designated bank account or otherwise establish a payment arrangement whereby Franchisor will be able to present a draft to Franchisee's financial institution and withdraw funds from Franchisee's bank account to pay royalty fees, marketing fees, national convention participation deposits, technology services fees, insurance premiums, or other fees under this Agreement and all other agreements between Franchisee and Franchisor and/or its affiliates, expenses, equipment lease or rental payments and/or supplies payments, purchases from Franchisor and/or its affiliates, interest, late fees, or any other indebtedness to Franchisor or its affiliates. Franchisee agrees to always keep sufficient funds in its designated account to ensure that any draft will be honored by its financial institution. Franchisor may specify periodic amounts for regular transfer to its account, based on past reports of sales by Franchisee and Franchisor's reasonable expectations of amounts to become due from Franchisee. Franchisee agrees to advise Franchisor in advance of any change in its financial institution or account. Payments are deemed made when received by Franchisor at Franchisor's Corporate Office. Franchisor has the sole discretion to apply any payments by Franchisee, and any credits received by Franchisor on the Franchisee's behalf from any third-party vendor or supplier, to any past due indebtedness of Franchisee for royalty fees, marketing fees, national convention participation deposits, technology services fees, insurance premiums, or other fees under this Agreement and all other agreements between Franchisee and Franchisor and its affiliates, expenses, equipment lease or rental payments and/or supplies payments, purchases from Franchisor and/or its affiliates, interest, late fees, or any other indebtedness to Franchisor or its affiliates. In its sole discretion, Franchisor may change Franchisee's schedule for making periodic fee payments, and for making related reports of Gross Receipts and other financial information, to an interval established by Franchisor, by giving advance written notice of the change and issuing an update to the Manuals.

• F. LATE FEE; INTEREST. If Franchisee fails to pay when due any royalty fees, marketing fees, national convention participation deposits, technology services fees, insurance premiums, or other fees under this Agreement and all other agreements between Franchisee and

Franchisor and its affiliates, expenses, equipment lease or rental payments and/or supplies payments, purchases from Franchisor and/or its affiliates, or any other indebtedness to Franchisor or its affiliates, Franchisor may charge Franchisee a late fee of the greater of $35 or 10% of the amount due (or the highest late fee allowed by law), plus interest at the rate of 1.5% per month (or the highest interest allowed by law) from the date that the payment was originally due until the date of payment. Franchisee must authorize payment by electronic funds transfer.

G. GROSS RECEIPTS. "Gross Receipts" means the total of all sales of products and services to customers of the Center, whether or not sold or performed at or from the Center, excluding: (i) sales, use or service taxes collected and paid to appropriate taxing authorities; (ii) customer refunds and adjustments; (iii) the cost of electronic funds transfers for resale; (iv) the cost of money orders for resale; (v) utility funds collected; (vi) the cost of lottery tickets for resale and phone cards for resale; (vii) the cost of third-party truck rental sales;

Source: Item 22 — Contracts (FDD pages 109–110)