B_Bops 2025 Franchise FAQ - FDD Ninja

Question 1

According to the B Bops franchise agreement, what does the company agree to provide the franchisee in connection with establishing the franchise?

Accepted Answer

o the assistance.
- 8. INITIAL OBLIGATIONS OF COMPANY. Subject to the terms and conditions of this Agreement, Company agrees to provide Franchisee with the following assistance in connection with the establishment of the Franchise:
  - A. Site Approval. Company shall undertake such on-site reviews as Company may in its discretion deem necessary to approve the site proposed by Franchisee for the Franchise Premises and to determine whether the Company will require Franchisee to include indoor seating in the Franchise Premises. Franchisee acknowledges and agrees that Company's approval of a site and determination of whether or not the Franchise Premises will include indoor seating shall not constitute any type of warranty by Company that such site, with or without indoor seating, will prove to be a successful location for the Franchise.
  - B. Construction Specifications. Company shall provide Franchisee with plans and specifications for construction of the Franchise Premises. Franchisee shall be responsible for paying the expense of transforming the plans and specifications into site specific plans and specifications for the Franchise Premise and ensuring that such plans and specifications comply with all codes, regulations or ordinances and any lease or deed requirements applicable to construction of the Franchise Premises or operation of the Franchise. The plans and specifications shall at all times remain the exclusive property of Company and shall be returned to Company after construction of the Franchise Premises is completed. Any modifications to the plans and specifications require the consent of Company and such consent will be subject to the person making the modifications executing and delivering to Company an assignment of such person's rights to the plans and specifications as modified.
  - C. Training Course. Company shall provide a training course in accordance with the provisions of Section 7(A) hereof.
  - D. Operations Manual. Company shall loan Franchisee its confidential Operations Manual describing the Licensed System and the standard operating policies and

![](_page_62_Picture_0.jpeg)

procedures to be used in connection therewith. The Operations Manual shall at all times remain the exclusive property of Company and shall be returned to Company immediately upon termination or expiration of this Agreement. Franchisee acknowledges that Company shall have the right to modify, add to or otherwise revise the operating policies and procedures contained in Operations Manual from time to time. Franchisee agrees to operate the Franchise at all times in strict compliance with the policies and procedures contained in the Operations Manual and to comply with any modifications, additions or revisions thereto as if they were a part of the Operations Manual on the effective date of this Agreement.

- E. Equipment and Supply Purchases.

Source: Item 22 — CONTRACTS (FDD page 53)

Question 2

What is the estimated total initial investment range for a B Bops franchise?

Accepted Answer

Estimated total initial \$1,128,200 to \$2,514,200

investment (excluding developmental fee, if applicable, and real estate)14,15

Source: Item 7 — ESTIMATED INITIAL INVESTMENT (FDD pages 18–21)

Question 3

What is the estimated total initial investment range for a B Bops franchise, excluding the developmental fee and real estate?

Accepted Answer

Estimated total initial \$1,128,200 to \$2,514,200

investment (excluding developmental fee, if applicable, and real estate)14,15

Source: Item 7 — ESTIMATED INITIAL INVESTMENT (FDD pages 18–21)

Question 4

Did any B Bops franchised outlets experience non-renewal in Iowa between 2022 and 2024?

Accepted Answer

| State | Year | Outlets at Start of Year | Outlets Opened | Terminations | Non- Renewal | Reacquired by Franchisor | Ceased Operations - Other Reasons | Outlets at End of the Year |
|---|---|---|---|---|---|---|---|---|
| Iowa | 2022 | 2 | 0 | 0 | 0 | 0 | 0 | 2 |
|  | 2023 | 2 | 0 | 0 | 0 | 0 | 0 | 2 |
|  | 2024 | 2 | 0 | 0 | 0 | 0 | 0 | 2 |
| Totals | 2022 | 2 | 0 | 0 | 0 | 0 | 0 | 2 |
|  | 2023 | 2 | 0 | 0 | 0 | 0 | 0 | 2 |
|  | 2024 | 2 | 0 | 0 | 0 | 0 | 0 | 2 |

Source: Item 20 — OUTLETS AND FRANCHISEE INFORMATION (FDD pages 50–52)

Question 5

How many new company-owned B Bops outlets are projected to open in the next fiscal year, according to the FDD?

Accepted Answer

| State | Franchise Agreements Signed But Outlet Not Opened | Projected New Franchised Outlet In the Next Fiscal Year | Projected New Company-Owned Outlet In the Next Fiscal Year |
|---|---|---|---|
| Iowa |  | 0 | 1 |
| Total |  | 0 | 1 |

Source: Item 20 — OUTLETS AND FRANCHISEE INFORMATION (FDD pages 50–52)

Question 6

In what state were all the B Bops franchised outlets located between 2022 and 2024?

Accepted Answer

| State | Year | Outlets at Start of Year | Outlets Opened | Outlets Reacquired from Franchisee | Outlets Closed | Outlets Sold to Franchisee | Outlets at End of the Year |
|---|---|---|---|---|---|---|---|
| Iowa | 2022 | 9 | 1 | 0 | 0 | 0 | 10 |
|  | 2023 | 10 | 0 | 0 | 0 | 0 | 10 |
|  | 2024 | 10 | 0 | 0 | 0 | 0 | 10 |
| Totals | 2022 | 9 | 1 | 0 | 0 | 0 | 10 |
|  | 2023 | 10 | 0 | 0 | 0 | 0 | 10 |
|  | 2024 | 10 | 0 | 0 | 0 | 0 | 10 |
Table No. 5

#### Projected Openings As Of December 31, 2025

| State | Franchise Agreements Signed But Outlet Not Opened | Projected New Franchised Outlet In the Next Fiscal Year | Projected New Company-Owned Outlet In the Next Fiscal Year |
|---|---|---|---|
| Iowa |  | 0 | 1 |
| Total |  | 0 | 1 |
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The following is a list of all franchisees and the addresses and telephone numbers of all of their stores.

B-CO Ames, Inc., 1112 South Duff, Ames, Iowa 50010; telephone number (515) 233- 5678.

B-CO Ames North, LLC, 2415 Grand Avenue, Ames, Iowa 50010; telephone number (515) 620-5038.

There were no franchisees who had an outlet terminated, cancelled, not renewed or otherwise voluntarily or involuntarily ceased to do business during the Company's most recently completed fiscal year or who have not communicated with the Company within ten weeks of the issuance date of this disclosure document.

Source: Item 20 — OUTLETS AND FRANCHISEE INFORMATION (FDD pages 50–52)

Question 7

What was the total number of B Bops outlets at the end of 2023?

Accepted Answer

| Outlet Type | Year | Outlets at the Start of the Year | Outlets at the End of the Year | Net Change |
|---|---|---|---|---|
| Franchised | 2022 | 2 | 2 | 0 |
|  | 2023 | 2 | 2 | 0 |
|  | 2024 | 2 | 2 | 0 |
| Company-Owned | 2022 | 9 | 10 | 1 |
|  | 2023 | 10 | 10 | 0 |
|  | 2024 | 10 | 10 | 0 |
| Total Outlets | 2022 | 11 | 12 | 1 |
|  | 2023 | 12 | 12 | 0 |
|  | 2024 | 12 | 12 | 0 |

Source: Item 20 — OUTLETS AND FRANCHISEE INFORMATION (FDD pages 50–52)

Question 8

What was the total number of B Bops outlets at the start of 2022?

Accepted Answer

| Outlet Type | Year | Outlets at the Start of the Year | Outlets at the End of the Year | Net Change |
|---|---|---|---|---|
| Franchised | 2022 | 2 | 2 | 0 |
|  | 2023 | 2 | 2 | 0 |
|  | 2024 | 2 | 2 | 0 |
| Company-Owned | 2022 | 9 | 10 | 1 |
|  | 2023 | 10 | 10 | 0 |
|  | 2024 | 10 | 10 | 0 |
| Total Outlets | 2022 | 11 | 12 | 1 |
|  | 2023 | 12 | 12 | 0 |
|  | 2024 | 12 | 12 | 0 |

Source: Item 20 — OUTLETS AND FRANCHISEE INFORMATION (FDD pages 50–52)

Question 9

What was the total number of B Bops outlets at the start of 2024?

Accepted Answer

| Outlet Type | Year | Outlets at the Start of the Year | Outlets at the End of the Year | Net Change |
|---|---|---|---|---| 
| Franchised | 2022 | 2 | 2 | 0 |
|  | 2023 | 2 | 2 | 0 |
|  | 2024 | 2 | 2 | 0 |
| Company-Owned | 2022 | 9 | 10 | 1 |
|  | 2023 | 10 | 10 | 0 |
|  | 2024 | 10 | 10 | 0 |
| Total Outlets | 2022 | 11 | 12 | 1 |
|  | 2023 | 12 | 12 | 0 |
|  | 2024 | 12 | 12 | 0 |

Source: Item 20 — OUTLETS AND FRANCHISEE INFORMATION (FDD pages 50–52)

Question 10

According to the B Bops application agreement, what are the two options an applicant can apply for?

Accepted Answer

| THIS APPLICATION AGREEMENT (the "Agreement") made and entered into as of the date set forth below, by and between B-Bop's Franchising Corp., an Iowa corporation with its |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| principal place of business located at 2900 100th St., Suite 302, Urbandale, Iowa 50322                                                                                      |
| ("Company"), |
| and |
| of |
| ("Applicant").                                                                                                                                                               |
| In consideration of the mutual covenants contained herein, Company and Applicant agree |
| as follows: |
| 1. |
| Applicant hereby applies to Company to be considered for the purchase of the |
| following (check one only): |
| the rights to own and operate one B-Bop's Restaurant in the trade area |
| described in Appendix I hereto. |
| the rights to develop on an exclusive basis a number of B-Bop's |
| Restaurants in the trade area described in Appendix I hereto.

Source: Item 23 — RECEIPTS (FDD pages 53–145)

Question 11

Does the B Bops FDD suggest that the comparative data for 2023, 2022, and 2021 provides a complete financial picture on its own?

Accepted Answer

The amounts shown for the years ended December 31, 2023, 2022, and 2021 in the accompanying financial statements are included to provide a basis for comparison with 2024. Accordingly, the 2023, 2022, and 2021 totals are not intended to present all information necessary for a fair presentation in conformity with accounting principles generally accepted in the United States of America. Such information should be read in conjunction with the Company's financial statements for the years ended December 31, 2023, 2022, and 2021 from which the information was derived.

Source: Item 21 — FINANCIAL STATEMENTS (FDD pages 52–53)

Question 12

What are all the fees a B Bops franchisee might pay, considering both Item 5 and Item 6?

Accepted Answer

- A.

Initial Franchise Fee.

In consideration of the Franchise granted hereunder, Franchisee shall pay Company upon execution of this Agreement an initial franchise fee of: (i) Thirty Thousand Dollars ($30,000) if Franchisee does not own an existing B-Bop's Restaurant at the time of entering into this Agreement; or (ii) Twenty-Five Thousand Dollars ($25,000) if Franchisee does own an existing B-Bop's Restaurant at the time of entering into this Agreement.

- B.

Royalty and Service Fee.

Franchisee agrees to pay Company a monthly royalty and service fee equal to five percent (5%) of gross sales (as defined in Section 9(D)

Franchisee or Franchisee's proposed manager shall, prior to the opening of the Franchise for business, attend and complete to the satisfaction of Company a training course to be conducted by Company at its principal office. The training course shall include on-site instruction regarding standard management procedures for operation of a B-Bop's Restaurant. The course and all materials necessary to conduct such training for up to two (2) persons will be provided by Company as part of the initial franchise fee. Franchisee shall pay all compensation, travel, lodging and other expenses

As noted in Item 6 of this disclosure document, you are required under the terms of the Franchise Agreement to pay the Company a monthly advertising fee equal to three percent (3%) of the gross sales of your Franchise. The Company, however, reserves the right to waive payment of all or part of the advertising fee by you and other franchisees for such period as the Company may in its discretion deem appropriate.

- 6. The Company will provide additional training to you or your employees. A fee of up to $2,000 may be charged by the Company for such additional training.

Situations in which the Company is entitled to reimbursement for the performance of your obligations include, without limitation: (a) your failure to procure insurance coverage for the Franchise; (b) your failure to maintain the Franchise in a clean, safe and attractive condition; or (c) your failure upon termination or expiration of the Franchise Agreement to cease all display of the Licensed Marks or to make such modifications and alterations to the Franchise premises as may reasonably be necessary to effectively distinguish the Franchise premises from the appearance of a B-Bop's Restaurant.

- E.

Franchisee pays to Company a nonrefundable renewal fee of Five Thousand Dollars ($5,000) payable in full upon execution of the then current franchise agreement;

Question 13

Will B Bops franchisees contribute to the advertising fund at the same rate as other franchisees?

Accepted Answer

It is anticipated that the B-Bop's Restaurants owned by B-Bop's will also be required to contribute to the advertising fund on the same basis and at the same rate as you and the other franchisees. Your contributions to the fund will be on the same basis and at the same rate as all other franchisees currently acquiring a Franchise from the Company.

Source: Item 11 — FRANCHISOR'S ASSISTANCE, ADVERTISING, COMPUTER SYSTEMS AND TRAINING (FDD pages 25–33)

Question 14

How does the initial B Bops franchise fee in Item 5 relate to the application deposit mentioned in Item 7?

Accepted Answer

[Item 5: INITIAL FEES]

Deposit on Application. To apply for purchase of an initial Franchise, you must sign and submit an Application Agreement to the Company, accompanied by a deposit of $5,000. The amount of the deposit is uniform as to all persons currently applying to purchase an initial Franchise. Upon submission of the deposit and an Application Agreement, the Company will provide certain services (specified in Item 11 hereof) to assist you in assessing the feasibility of purchasing a Franchise if Company determines that a Franchise should be granted. The Company has absolute discretion in determining whether a Franchise will be granted. You will be notified by the Company in writing within ninety (90) days of submitting the Application Agreement regarding its decision to grant a Franchise (unless such period is extended in the Company's discretion).

In the event the Company decides to grant you a Franchise, the deposit will be applied toward payment of the initial franchise fee. If, on the other hand, the Company determines that a Franchise will not be granted, or if either party terminates the Application Agreement before a decision on granting a Franchise has been made, a portion of the deposit will be refunded to you

![](_page_12_Picture_0.jpeg)

once you have returned any confidential information which may have been provided to you by the Company. The refund will be equal to the amount of deposit minus the lesser of: (i) $4,500; or (ii) the actual expenses (including travel and lodging expenses and a $100 hourly fee for office time) incurred by the Company in providing the services required under the Application Agreement. The Application Agreement may be terminated by either party at any time by written notice to the other, in which event you will be entitled to a refund of the deposit calculated in accordance with the method described above.

If you already own an existing Franchise, you will not be required to execute an Application Agreement or to pay a deposit in connection with the purchase of an additional Franchise from the Company.

#### MULTIPLE-UNIT ARRANGEMENT
[Item 22: CONTRACTS]
---

- 9.

FEES AND PAYMENTS BY FRANCHISEE.

Franchisee covenants and agrees to pay Company the following fees and amounts at the times specified below:

- A.

Initial Franchise Fee.

In consideration of the Franchise granted hereunder, Franchisee shall pay Company upon execution of this Agreement an initial franchise fee of: (i) Thirty Thousand Dollars ($30,000) if Franchisee does not own an existing B-Bop's Restaurant at the time of entering into this Agreement; or (ii) Twenty-Five Thousand Dollars ($25,000) if Franchisee does own an existing B-Bop's Restaurant at the time of entering into this Agreement.

The initial franchise fee shall be fully earned by Company upon payment thereof and shall not be refundable under any circumstances.

In the event Franchisee has paid Company any deposit prior to entering into this Agreement, the amount of such deposit shall be applied toward payment of the initial franchise fee.

Question 15

According to the B Bops Application Agreement, what happens to the deposit if the agreement is terminated by either party?

Accepted Answer

o negotiate.
- 7. If Company, in its sole discretion, determines to grant the Rights to Applicant, the Deposit shall be credited toward the amount required to be paid by Applicant as the initial

![](_page_117_Picture_0.jpeg)

franchise fee or the development fee (whichever shall be applicable). If Company determines that the Rights will not be granted to Applicant, or if either party terminates this Agreement, Applicant shall be entitled to a refund (upon return of all confidential information) equal to the Deposit minus the lesser of: (i) Four Thousand Five Hundred Dollars (\$4,500); or (ii) the actual expenses incurred by Company in providing the services identified in Section 2 hereof. For purposes of this Section 7, "actual expenses" shall be deemed to include all travel, lodging and other living expenses reasonably incurred by Company personnel, any other out of pocket expenses incurred by Company hereunder and a one hundred dollar (\$100.00) per hour charge for office time spent reviewing information submitted by Applicant or preparing information to be furnished to Applicant. Company shall forward any refund to Applicant within ten (10) days after Applicant has returned all confidential information to Company. Failure to return any confidential information shall result in forfeiture of the entire Deposit and in such other action as Company may in its discretion

Source: Item 23 — RECEIPTS (FDD pages 53–145)

Question 16

According to the B Bops Application Agreement, what happens if the company does not grant development rights or franchise rights within 90 days?

Accepted Answer

| Provision | Section in Application Agreement | Summary |
|---|---|---|
| A. Term of Agreement | Section 3 | The Company will inform you within 90 days from the effective date of the Application Agreement whether development rights or franchise rights will be granted. |

Source: Item 17 — RENEWAL, TERMINATION, TRANSFER AND DISPUTE RESOLUTION (FDD pages 40–49)

Question 17

According to the B Bops FDD, what happens if the developer does not comply with the terms of the agreement?

Accepted Answer

- B. Upon occurrence of any of the events set forth above, Company may, without prejudice to any other rights or remedies contained in this Agreement or provided by law or equity, terminate this Agreement by notice to Developer. Such termination shall be effective immediately upon receipt of written notice by Developer if the default is an event specified in paragraphs (1) through (6) above, to which no right of cure exists. Termination shall be effective thirty (30) days after receipt of written notice by Developer if the default is an event specified in paragraph (7) above and such default is not cured to Company's satisfaction within such period.
- C. Upon termination or expiration of this Agreement, the development rights granted hereunder shall become null and void and Developer shall immediately cease any further attempts to select or develop sites on which to construct Units. Developer shall have no right to establish or operate any Unit for which a Unit Franchise Agreement has not been executed by Company prior to termination or expiration hereof. Termination or expiration of this Agreement shall not affect the rights of Developer to operate any Unit in accordance with the terms of any Unit Franchise Agreement which Developer has entered into with Company, until and unless such Unit Franchise Agreement is terminated in accordance with its terms. Developer acknowledges that upon termination or expiration hereof, Company shall be entitled to: (i) retain the balance of the development fee not applied towards initial franchise fees prior to termination or expiration hereof; and (ii) establish, or license others to establish, B-Bop's Restaurants in the Trade Area, except to the extent limited by the terms of any Unit Franchise Agreement executed by Company and Developer.

Source: Item 23 — RECEIPTS (FDD pages 53–145)

Question 18

According to the B Bops franchise agreement receipt, what should an applicant not do if at least ten business days have not passed since receiving the Franchise Disclosure Document?

Accepted Answer

| APPLICANT                                                                                                     | B-BOP'S FRANCHISING CORP.                                                                                                                                                                                                                                                                                                                                                                                  |
|---------------------------------------------------------------------------------------------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  | By |
| (Print Name of Applicant) | Title: |
| Signature (If an individual) | Dated: |
| Dated: |  |
| By |  |
| Signature (If an Entity) |  |
| Title: |  |
| Dated: | IMPORTANT NOTICE TO APPLICANT |
| RECEIVED THE FRANCHISE PAYMENT TO COMPANY. IF ALTERNATIVE EXCEPT TO RETURN , | UNLESS AT LEAST TEN (10) BUSINESS DAYS HAVE PASSED SINCE YOU FIRST DISCLOSURE DOCUMENT PROVIDED BY COMPANY, YOU SHOULD NOT EXECUTE THIS AGREEMENT OR MAKE ANY YOU DO SO COMPANY WILL HAVE NO YOUR APPLICATION AND DEPOSIT WITHOUT HAVING PROCESSED THEM. PLEASE COMPLETE THE FOLLOWING: I RECEIVED THE FRANCHISE DISCLOSURE DOCUMENT FROM COMPANY ON |
| APPLICANT'S INITIALS: |  |

Source: Item 23 — RECEIPTS (FDD pages 53–145)

Question 19

Which agreement governs the franchise relationship for each B Bops unit, the Development Agreement or the Unit Franchise Agreement?

Accepted Answer

EXECUTION OF UNIT FRANCHISE AGREEMENT. Upon approval of a proposed site, Company shall grant Developer the right and license to own and operate a B-Bop's Restaurant at such site, provided that Developer is in compliance with the terms of this Agreement and the terms of all Unit Franchise Agreements between the parties. Subject to the foregoing, Company shall forward to Developer a Unit Franchise Agreement to be executed with respect to the approved site. The Unit Franchise Agreement shall be the standard form of franchise agreement being utilized by Company to grant franchises at the time of development of each Unit. Developer shall execute the Unit Franchise Agreement in accordance with Company's instructions within twenty (20) days of receipt thereof and return it, together with the initial franchise fee payable for the Unit (as specified in Appendix III), to Company. In the event Developer fails to return the Unit Franchise Agreement and the initial franchise fee to Company within such twenty (20) day period, Company's approval of the site shall be null and void and Developer shall have no rights with respect to such site. The parties hereby acknowledge and agree that the terms and conditions of the Unit Franchise Agreement executed for the Unit developed pursuant to this Agreement shall govern and control the franchise relationship for each such Unit, except to the extent that such terms and conditions conflict with the provisions of this Agreement, in which event the provisions of this Agreement shall control. The parties further acknowledge and agree that the terms and conditions of each Unit Franchise Agreement executed pursuant to this Agreement shall remain in full force and effect notwithstanding the expiration and termination of this Agreement.

Source: Item 23 — RECEIPTS (FDD pages 53–145)

Question 20

Does the B Bops agreement specify if the non-compete applies if the franchise agreement is not renewed?

Accepted Answer

nt with Company);
  - B. That for a period of two (2) years immediately following the termination or expiration of this Agreement, Franchisee, its directors, officers, shareholders, partners, members, employees and agents will not, directly or indirectly, enter into or engage in any business as a director, officer, shareholder, proprietor, partner, consultant, employee or in any other position or capacity, which business is engaged in a business the same as or substantially similar to that of a B-Bop's Restaurant within: (i) a twenty (20) mile radius of the Franchise Premises; or (ii) a twenty (20) mile radius of any other B-Bop's Restaurant then in operation or under development (except for any other B-Bop's Restaurant owned and operated by Franchisee pursuant to a franchise agreement with Company);
  - C. That during the Term of this Agreement and for a period of two (2) years thereafter, Franchisee, its directors, officers, shareholders, partners, members, employees or agents acting individually or through others, will not, directly or indirectly: (i) employ (or contact or solicit for the purpose of seeking to employ) any then current employee of Company or of any other franchisee; (ii) request that any customer of Company or any other franchisee cancel or terminate their business or their relationship with Company or such other franchisee; or (iii) request that any other authorized franchisee of Company cancel or terminate its relationship with Company;
  - D. For purposes of this Section 17, a business will be deemed to be the "same as or substantially similar to a B-Bop's Restaurant" if it is engaged in preparing and serving to the public any food item from time to time included as a standard menu item for a B-Bop's Restaurant.
  - E.

Source: Item 22 — CONTRACTS (FDD page 53)

Question 21

Does the B Bops agreement specify if the non-compete applies if the franchise agreement is terminated by the franchisor for cause?

Accepted Answer

nt with Company);
  - B. That for a period of two (2) years immediately following the termination or expiration of this Agreement, Franchisee, its directors, officers, shareholders, partners, members, employees and agents will not, directly or indirectly, enter into or engage in any business as a director, officer, shareholder, proprietor, partner, consultant, employee or in any other position or capacity, which business is engaged in a business the same as or substantially similar to that of a B-Bop's Restaurant within: (i) a twenty (20) mile radius of the Franchise Premises; or (ii) a twenty (20) mile radius of any other B-Bop's Restaurant then in operation or under development (except for any other B-Bop's Restaurant owned and operated by Franchisee pursuant to a franchise agreement with Company);
  - C. That during the Term of this Agreement and for a period of two (2) years thereafter, Franchisee, its directors, officers, shareholders, partners, members, employees or agents acting individually or through others, will not, directly or indirectly: (i) employ (or contact or solicit for the purpose of seeking to employ) any then current employee of Company or of any other franchisee; (ii) request that any customer of Company or any other franchisee cancel or terminate their business or their relationship with Company or such other franchisee; or (iii) request that any other authorized franchisee of Company cancel or terminate its relationship with Company;
  - D. For purposes of this Section 17, a business will be deemed to be the "same as or substantially similar to a B-Bop's Restaurant" if it is engaged in preparing and serving to the public any food item from time to time included as a standard menu item for a B-Bop's Restaurant.
  - E.

Source: Item 22 — CONTRACTS (FDD page 53)

Question 22

Does the B Bops Application Agreement guarantee the applicant will be granted the rights if they meet all the listed factors?

Accepted Answer

APPLICANT UNDERSTANDS AND AGREES THAT NOTHING CONTAINED IN THIS AGREEMENT OBLIGATES COMPANY TO GRANT APPLICANT THE RIGHTS.

THE PARTIES HERETO ACKNOWLEDGE THAT COMPANY AND APPLICANT EACH HAVE THE RIGHT TO TERMINATE THIS AGREEMENT, WITHOUT CAUSE, AT ANY TIME BY WRITTEN NOTICE TO THE OTHER, IN WHICH CASE, THE DEPOSIT, OR A PORTION THEREOF, SHALL BE RETURNED IN ACCORDANCE WITH THE PROVISIONS OF SECTION 7 HEREOF.

A DECISION BY COMPANY NOT TO GRANT THE RIGHTS TO APPLICANT, WHEN COMMUNICATED TO APPLICANT IN WRITING, SHALL BE DEEMED TO IMMEDIATELY TERMINATE THIS AGREEMENT, WHEREUPON APPLICANT SHALL HAVE NO FURTHER INTEREST IN THE TRADE AREA.

Source: Item 23 — RECEIPTS (FDD pages 53–145)

Question 23

Does the B Bops Application Agreement require the applicant to attend an interview?

Accepted Answer

ICATION AGREEMENT

| THIS APPLICATION AGREEMENT (the "Agreement") made and entered into as of the date set forth below, by and between B-Bop's Franchising Corp., an Iowa corporation with its |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| principal place of business located at 2900 100th St., Suite 302, Urbandale, Iowa 50322                                                                                      |
| ("Company"), |
| and |
| of |
| ("Applicant").                                                                                                                                                               |
| In consideration of the mutual covenants contained herein, Company and Applicant agree |
| as follows: |
| 1. |
| Applicant hereby applies to Company to be considered for the purchase of the |
| following (check one only): |
| the rights to own and operate one B-Bop's Restaurant in the trade area |
| described in Appendix I hereto. |
| the rights to develop on an exclusive basis a number of B-Bop's |
| Restaurants in the trade area described in Appendix I hereto. |

For purposes of this Agreement, the rights applied for in this Section 1 shall be referred to as the "Rights" and the trade area described in Appendix I hereto shall be referred to as the "Trade Area".

- 2. Applicant has deposited with Company the sum of \$5,000 to cover certain expenses to be incurred by Company in: (i) reviewing Applicant's application for the Rights; (ii) reviewing prospective sites submitted by Applicant for approval; and (iii) providing such additional assistance or information as Company may in its discretion deem appropriate to enable Applicant to determine its interest in providing the Rights. For purposes of this Agreement, the deposit specified above shall be referred to as the "Deposit". Applicant agrees that the Deposit shall not bear interest and that it may be co-mingled with other Company funds.
- 3. Company agrees that within ninety (90) days of the effective date of this Agreement (which period may be extended by Company in its sole discretion), Company will inform Applicant in writing whether Applicant will be granted the Rights. Applicant acknowledges and understands that while Company agrees to consider Applicant for the Rights, Company shall have absolute discretion in determining whether to grant the Rights to Applicant. Applicant further acknowledges that Company's determination of whether to grant the Rights to Applicant will depend on a number of factors, including, but not limited to: (i) Applicant's character and business background; (ii) Applicant's financial resources and ability to obtain acceptable financing;

Source: Item 23 — RECEIPTS (FDD pages 53–145)

Question 24

Does the B Bops Application Agreement require the applicant to personally guarantee any financing?

Accepted Answer

PERSONAL GUARANTY OF OBLIGATIONS UNDER MULTIPLE-UNIT DEVELOPMENT AGREEMENT

- 1. The undersigned persons hereby represent to B-Bop's Franchising Corp. ("Company") that they are partners or shareholders of the developer ("Developer") entering into the within and foregoing Multiple-Unit Development Agreement (the "Agreement"), of which this Personal Guaranty shall be deemed an integral part.
- 2. In consideration of the development rights granted to Developer hereunder and in order to induce Company to grant such development rights to Developer, each of the undersigned hereby agrees, jointly, individually and severally, for themselves, their heirs, legal representatives and assigns as follows: (a) that they, and each of them, shall be personally bound by and agree to perform all of the terms, provisions and conditions of this Agreement; (b) that they, and each of them, do hereby personally and unconditionally guarantee full and prompt payment to Company of any indebtedness of Developer arising under or by virtue of this Agreement; (c) that they, and each of them, will not sell, assign or otherwise permit or cause a transfer of the development rights or any partnership or stock interest in Developer without complying with the requirements of Section 13 of the Agreement; (d) that they, and each of them, shall be personally bound by the nondisclosure and noncompete covenants of this Agreement; and (e) that they, and each of them, shall be personally liable for the breach of any provision of this Agreement, including both monetary obligations and any obligation to take or refrain from taking specific actions or activities.

Source: Item 23 — RECEIPTS (FDD pages 53–145)

Question 25

Does the B Bops Application Agreement require the applicant to have prior restaurant experience?

Accepted Answer

WHEREAS, the terms and conditions contained in this Agreement have been negotiated in reliance upon the unique financial and management ability of Developer to establish a multiple-unit franchise system.

Source: Item 23 — RECEIPTS (FDD pages 53–145)

Question 26

Does the B Bops Application Agreement require the applicant to provide a business plan?

Accepted Answer

l be applicable). If Company determines that the Rights will not be granted to Applicant, or if either party terminates this Agreement, Applicant shall be entitled to a refund (upon return of all confidential information) equal to the Deposit minus the lesser of: (i) Four Thousand Five Hundred Dollars (\$4,500); or (ii) the actual expenses incurred by Company in providing the services identified in Section 2 hereof. For purposes of this Section 7, "actual expenses" shall be deemed to include all travel, lodging and other living expenses reasonably incurred by Company personnel, any other out of pocket expenses incurred by Company hereunder and a one hundred dollar (\$100.00) per hour charge for office time spent reviewing information submitted by Applicant or preparing information to be furnished to Applicant. Company shall forward any refund to Applicant within ten (10) days after Applicant has returned all confidential information to Company. Failure to return any confidential information shall result in forfeiture of the entire Deposit and in such other action as Company may in its discretion

Source: Item 23 — RECEIPTS (FDD pages 53–145)

Question 27

Does the B Bops Application Agreement specify the consequences of failing to secure necessary permits?

Accepted Answer

Applicant further acknowledges that Company's determination of whether to grant the Rights to Applicant will depend on a number of factors, including, but not limited to: (i) Applicant's character and business background; (ii) Applicant's financial resources and ability to obtain acceptable financing; (iii) location of an acceptable premises for operation of the business; (iv) negotiation of an acceptable agreement for the lease or purchase of such premises; and (v) Applicant's ability to secure all necessary permits and/or licenses for operation of the business. Applicant agrees to use Applicant's best efforts during the term of this Agreement to arrange

AA/MN/04/25/25

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financing, to select proposed sites to be submitted to Company for approval and to take such other actions as may be necessary to place Applicant in a position to purchase the Rights, if the Rights are granted by Company. Applicant acknowledges that Applicant shall be solely responsible for arranging all financing and selecting and securing sites acceptable to Company.

Source: Item 23 — RECEIPTS (FDD pages 53–145)

Question 28

Does the B Bops Application Agreement specify the criteria for an acceptable premises?

Accepted Answer

f this Agreement.
- 14. Applicant agrees not to enter into any binding agreement for lease or purchase of a site prior to receiving Company's written approval of such site and of the terms of such agreement. Company's approval of a site (or its assistance in selecting a site) shall in no manner constitute a representation or guaranty by Company that such site will prove to be a successful location for a B-Bop's Restaurant.
- 15. This Agreement constitutes the entire agreement of the parties pertaining to the subject matter hereof and there are no other oral or written understandings or agreements with respect hereto.

Source: Item 23 — RECEIPTS (FDD pages 53–145)

Question 29

Does the B Bops Application Agreement specify a deadline for submitting proposed sites?

Accepted Answer

o this Agreement. Developer agrees to submit a written report to Company of each proposed site for a Unit in the Trade Area, containing such information or material as Company may reasonably request. Company shall review the submitted materials, conduct such other investigation of the proposed site it determines may be necessary to properly evaluate the same and, in its sole discretion, either approve or reject such site by written notice to Developer within thirty (30) days after receipt of such materials, but such approval is not to be unreasonably withheld. If the proposed site is approved, the Company will also advise you, within the same thirty (30) day period, whether or not you will be required to include indoor seating in the construction and operation of the B-Bop's Restaurant. Developer agrees that Developer will not enter into any binding agreement with respect to lease or purchase of a proposed site prior to receiving Company's written approval of such site. Developer acknowledges and agrees that approval of a proposed site by Company does not constitute a representation or warranty by Company that such site, with or without indoor seating, will prove to be a successful location for the Unit, and Developer assumes all risks associated with establishing the Unit at such location.

- 6. EXECUTION OF UNIT FRANCHISE AGREEMENT. Upon approval of a proposed site, Company shall grant Developer the right and license to own and operate a B-Bop's Restaurant at such site, provided that Developer is in compliance with the terms of this Agreement and the terms of all Unit Franchise Agreements between the parties. Subject to the foregoing, Company shall forward to Developer a Unit Franchise Agreement to be executed with respect to the approved site. The Unit Franchise Agreement shall be the standard form of franchise agreement being utilized by Company to grant franchises at the time of development of each Unit. Developer shall execute the Unit Franchise Agreement in accordance with Company's instructions within twenty (20) days of receipt thereof and return it, together with the initial franchise fee payable for the Unit (as specified in Appendix III), to Company. In the event Developer fails to return the Unit Franchise Agreement and the initial franchise fee to Company within such twenty (20) day period, Company's approval of the site shall be null and void and Developer shall have no rights with respect to such site.

Source: Item 23 — RECEIPTS (FDD pages 53–145)

Question 30

Does the B Bops Application Agreement specify a maximum number of sites an applicant can submit for approval?

Accepted Answer

Developer agrees to submit a written report to Company of each proposed site for a Unit in the Trade Area, containing such information or material as Company may reasonably request. Company shall review the submitted materials, conduct such other investigation of the proposed site it determines may be necessary to properly evaluate the same and, in its sole discretion, either approve or reject such site by written notice to Developer within thirty (30) days after receipt of such materials, but such approval is not to be unreasonably withheld. If the proposed site is approved, the Company will also advise you, within the same thirty (30) day period, whether or not you will be required to include indoor seating in the construction and operation of the B-Bop's Restaurant. Developer agrees that Developer will not enter into any binding agreement with respect to lease or purchase of a proposed site prior to receiving Company's written approval of such site. Developer acknowledges and agrees that approval of a proposed site by Company does not constitute a representation or warranty by Company that such site, with or without indoor seating, will prove to be a successful location for the Unit, and Developer assumes all risks associated with establishing the Unit at such location.

Source: Item 23 — RECEIPTS (FDD pages 53–145)

Question 31

Does the B Bops Application Agreement specify the method of payment for the deposit?

Accepted Answer

Trade Area".

- 2. Applicant has deposited with Company the sum of \$5,000 to cover certain expenses to be incurred by Company in: (i) reviewing Applicant's application for the Rights; (ii) reviewing prospective sites submitted by Applicant for approval; and (iii) providing such additional assistance or information as Company may in its discretion deem appropriate to enable Applicant to determine its interest in providing the Rights. For purposes of this Agreement, the deposit specified above shall be referred to as the "Deposit". Applicant agrees that the Deposit shall not bear interest and that it may be co-mingled with ot

Source: Item 23 — RECEIPTS (FDD pages 53–145)

Question 32

Does the B Bops Application Agreement specify a minimum credit score requirement for the applicant?

Accepted Answer

APPLICANT UNDERSTANDS AND AGREES THAT NOTHING CONTAINED IN THIS AGREEMENT OBLIGATES COMPANY TO GRANT APPLICANT THE RIGHTS.

THE PARTIES HERETO ACKNOWLEDGE THAT COMPANY AND APPLICANT EACH HAVE THE RIGHT TO TERMINATE THIS AGREEMENT, WITHOUT CAUSE, AT ANY TIME BY WRITTEN NOTICE TO THE OTHER, IN WHICH CASE, THE DEPOSIT, OR A PORTION THEREOF, SHALL BE RETURNED IN ACCORDANCE WITH THE PROVISIONS OF SECTION 7 HEREOF.

A DECISION BY COMPANY NOT TO GRANT THE RIGHTS TO APPLICANT, WHEN COMMUNICATED TO APPLICANT IN WRITING, SHALL BE DEEMED TO IMMEDIATELY TERMINATE THIS AGREEMENT, WHEREUPON APPLICANT SHALL HAVE NO FURTHER INTEREST IN THE TRADE AREA.

Source: Item 23 — RECEIPTS (FDD pages 53–145)

Question 33

Is the application of Iowa law in the B Bops Development Agreement subject to any other state laws?

Accepted Answer

¹ To the extent that Minnesota Statutes Section 80C.14 is applicable to the Development Agreement, the Company will comply with Section 80C.14, subdivisions 3, 4 and 5 which require, except in certain specified cases, that you be given ninety (90) days notice of termination (with sixty (60) days to cure) and one hundred eighty days (180) days notice for non-renewal. ² Pursuant to Minnesota Statutes Section 80C.21 and Minnesota Rule Part 2860.4400J, these provisions shall not in any way abrogate or reduce any of your rights as provided for in Minnesota Statutes, Chapter 80C. Source: Item 17 — RENEWAL, TERMINATION, TRANSFER AND DISPUTE RESOLUTION (FDD pages 40–49)

Question 34

Is the application of Iowa law in the B Bops Franchise Agreement subject to any other state laws?

Accepted Answer

#### NOTES:

- 1 With respect to Franchises governed by Minnesota law, the Company will comply with Minnesota Statutes Section 80C.14, subdivisions 3, 4 and 5 which require, except in certain specified cases, that you be given ninety (90) days notice of termination (with sixty (60) days to cure) and one hundred eighty days (180) days notice for non-renewal of the Franchise Agreement.
- 2 Pursuant to Minnesota Statutes Section 80C.21 and Minnesota Rule Part 2860.4400J, these provisions shall not in any way abrogate or reduce any of your rights as provided for in Minnesota Statutes, Chapter 80C.

Source: Item 17 — RENEWAL, TERMINATION, TRANSFER AND DISPUTE RESOLUTION (FDD pages 40–49)

Question 35

Are the choice of forum and choice of law provisions in the B Bops agreements subject to any state laws?

Accepted Answer

| W. Choice of Law | Section 16 | Iowa law applies (subject to state law). |

| W. Choice of law2 | Section 25 | Iowa law applies (subject to state law). |

| W. Choice of law2 | Section 35 | Iowa law applies (subject to state law)|

- 2 Pursuant to Minnesota Statutes Section 80C.21 and Minnesota Rule Part 2860.4400J, these provisions shall not in any way abrogate or reduce any of your rights as provided for in Minnesota Statutes, Chapter 80C.

Source: Item 17 — RENEWAL, TERMINATION, TRANSFER AND DISPUTE RESOLUTION (FDD pages 40–49)

Question 36

Does the B Bops company have to approve a transfer of development rights if the conditions are met?

Accepted Answer

any third person. Company shall not unreasonably withhold its consent to any transfer when requested, provided that such transfer complies with the following requirements that may be applicable to the particular type of transfer:
  - A. Transfer to Successor Entity. If Franchisee is an individual and desires to transfer the Franchise to a partnership, corporation or limited liability company, Company will not unreasonably withhold its consent to such transfer upon satisfaction of the following conditions: (i) such entity shall comply with each of the requirements specified in Section 20 hereof pertaining to ownership of the Franchise by a an entity; (ii) Franchisee shall be the owner of a majority of the equity and voting securities or interests issued by such entity; (iii) Franchisee shall be the principal executive of such entity; (iv) all accrued money obligations of Franchisee to Company shall be satisfied prior to the transfer and Franchisee shall otherwise be in full compliance with the terms of this Agreement; and (v) the entity agrees,

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in writing satisfactory to Company, to assume all Franchisee's obligations hereunder. Any assignment to an entity as provided herein shall not release Franchisee from any obligations imposed by this Agreement and Franchisee shall remain liable for all such obligations.

- B. Death or Disability of Franchisee. In the event of death or permanent mental or physical disability of Franchisee, or any partner, shareholder or member owning a controlling interest in Franchisee, the legal representative of Franchisee, or such partner, shareholder or member thereof, together with all surviving partners, shareholders or members, if any, jointly, shall, within six (6) months of such event apply in writing for the right to transfer the Franchise, or the controlling ownership interest of the deceased or disabled partner, shareholder or member in Franchisee, to such person or persons as the legal representative may specify. Consent to such transfer (including transfers by devise or inheritance) will not unreasonably be withheld by Company, provided that Company may in its discretion require that such transfer comply with one or more of the conditions set forth in Section 19(C) hereof, except that: (i) payment of the transfer fee shall not be required; and (ii) the legal representative need not comply with Company's right of first refusal if the transferee is a member of the immediate family of Franchisee or to a member of the immediate family of the deceased or disabled partner, shareholder or member. If the legal representative and any surviving partners, shareholders or members fail to comply with the provisions of this Section 19(B), or do not propose a transferee acceptable to Company, this Agreement and the Franchise granted hereunder may be terminated in accordance with the provisions of Section 23 hereof. Any transfer of a noncontrolling ownership interest in Franchisee upon the death or disability of a partner, shareholder or member shall be deemed approved by Company upon receipt by Company of written notice of such transfer.
- C. Other Transfers. Company will not unreasonably withhold its consent to any transfer not falling within the scope of Sections 19(A) or 19(B) above, provided that Company may in its discretion require that one or more of the following conditions be satisfied prior to, or concurrently with, the effective date of such transfer:
  - (1) The transferee shall be of good moral character and reputation, have the financial capacity to own and operate the Franchise, have business and professional qualifications reasonably acceptance to Company and otherwise meet Company's then current standards for franchisees. Franchisee shall provide Company with such information as Company may reasonably require to make such a determination regarding the proposed transferee.
  - (2) The transferee or such individual as will be responsible for management of the Franchise shall have successfully completed the training course then in effect for new franchisees (for which Company shall be entitled to impose a reasonable charge);
  - (3) The transferee, including such partners or shareholders thereof as Company may direct, shall jointly and severally execute one of the following (as Company may direct):

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- (a) a written assignment and assumption agreement, in a form satisfactory to Company, whereby the transferee assumes all of Franchisee's obligations under this Agreement; or
- (b) the standard form of franchise agreement then being used by Company to grant new franchises; provided, however, that the term of such agreement shall be for the unexpired portion of the Term of this Agreement and that no greater payments than those required by Sections 9(B) and 9(C) of this Agreement shall be required.

Source: Item 23 — RECEIPTS (FDD pages 53–145)

Question 37

Can the B Bops company extend the 90-day period to inform the applicant of their decision at their discretion?

Accepted Answer

- 3. Company agrees that within ninety (90) days of the effective date of this Agreement (which period may be extended by Company in its sole discretion), Company will inform Applicant in writing whether Applicant will be granted the Rights. Applicant acknowledges and understands that while Company agrees to consider Applicant for the Rights, Company shall have absolute discretion in determining whether to grant the Rights to Applicant. Applicant further acknowledges that Company's determination of whether to grant the Rights to Applicant will depend on a number of factors, including, but not limited to: (i) Applicant's character and business background; (ii) Applicant's financial resources and ability to obtain acceptable financing; (iii) location of an acceptable premises for operation of the business; (iv) negotiation of an acceptable agreement for the lease or purchase of such premises; and (v) Applicant's ability to secure all necessary permits and/or licenses for operation of the business. Applicant agrees to use Applicant's best efforts during the term of this Agreement to arrange

Source: Item 23 — RECEIPTS (FDD pages 53–145)

Question 38

Is the Company obligated to indemnify a B Bops franchisee against claims of infringement or unfair competition?

Accepted Answer

The Franchise Agreement obligates the Company to indemnify you against claims of infringement or unfair competition with respect to your use of the Licensed Marks, provided that you have complied with the material terms and conditions of the Franchise Agreement in using the Licensed Marks. The Company will have exclusive control over any administrative proceeding or litigation initiated in connection with any of the Licensed Marks. In the event the Franchise Agreement is terminated for any reason whatsoever or expires without renewal, the Company has the right to prohibit you from further use or display of the Licensed Marks.

Source: Item 13 — TRADEMARKS (FDD pages 35–37)

Question 39

Is the B Bops company obligated to provide an equipment package?

Accepted Answer

To maintain uniformity in use of the Licensed System, Franchisee agrees to purchase equipment, fixtures, signage, supplies and food and beverage products necessary to establish and operate the Franchise in accordance with Company's specifications and standards in effect from time to time and, at the option of the Company, to purchase certain of such items through suppliers from time to time approved or designated by Company (which may include Company or its affiliates). Company reserves the right to substitute or add new items to the Licensed System from time to time and to require that such items be purchased in accordance with specifications established by Company or, at the option of the Company, through suppliers approved or designated by Company (which may include Company or its affiliates).

Source: Item 22 — CONTRACTS (FDD page 53)

Question 40

Does the B Bops company have to provide a reason if they withhold consent for a transfer?

Accepted Answer

of such transfer.
- C. Other Transfers. Company will not unreasonably withhold its consent to any transfer not falling within the scope of Sections 19(A) or 19(B) above, provided that Company may in its discretion require that one or more of the following conditions be satisfied prior to, or concurrently with, the effective date of such transfer:
  - (1) The transferee shall be of good moral character and reputation, have the financial capacity to own and operate the Franchise, have business and professional qualifications reasonably acceptance to Company and otherwise meet Company's then current standards for franchisees. Franchisee shall provide Company with such information as Company may reasonably require to make such a determination regarding the proposed transferee.
  - (2) The transferee or such individual as will be responsible for management of the Franchise shall have successfully completed the training course then in effect for new franchisees (for which Company shall be entitled to impose a reasonable charge);
  - (3) The transferee, including such partners or shareholders thereof as Company may direct, shall jointly and severally execute one of the following (as Company may direct):

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- (a) a written assignment and assumption agreement, in a form satisfactory to Company, whereby the transferee assumes all of Franchisee's obligations under this Agreement; or
- (b) the standard form of franchise agreement then being used by Company to grant new franchises; provided, however, that the term of such agreement shall be for the unexpired portion of the Term of this Agreement and that no greater payments than those required by Sections 9(B) and 9(C) of this Agreement shall be required.
  - (4) Franchisee (and such partners, shareholders or members thereof as Company may direct), or the individual partner, shareholder or members thereof proposing to make such transfer, shall execute a general release of all claims against Company and its affiliates and their respective directors, officers, agents and employees;
  - (5) Franchisee (and such partners, shareholders or members thereof as Company may direct), or the individual partner, shareholder or member proposing to make the transfer, shall execute a nondisclosure and noncompetition agreement in favor of Company containing the restrictions set forth in Sections 16 and 17 of this Agreement;
  - (6) Franchisee shall be in full compliance with the terms of this Agreement, shall have fully paid and satisfied all of Franchisee's obligations owing to Company under this Agreement and any other agreement relating to the Franchise, and shall have fully paid a transfer fee of Three Thousand Dollars (\$3,000) to Company for supervisory, administrative, accounting, legal and other expenses incurred by Company in connection with such transfer;
  - (7) If transferee is a partnership, corporation or limited liability company, such entity shall have complied with each of the requirements specified in Section 20 hereof pertaining to ownership of the Franchise by an entity;
  - (8) Franchisee, or the partner, shareholder or member proposing to make such transfer, shall have complied with the right of first refusal provisions set forth in Section 19(D) hereof.

Source: Item 23 — RECEIPTS (FDD pages 53–145)

Question 41

Does the Company's obligation to protect B Bops franchisees from copyright claims depend on whether the claims are brought in an administrative, judicial or other proceeding?

Accepted Answer

The Company does not make any representations or warranties to you regarding any of the Company's copyrights, including that the copyrights do not infringe upon the rights of any other person. The Company is not required to protect your right to use any of the Company's copyrights or to participate in your defense or to indemnify or otherwise protect you against any claims regarding any of the Company's

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copyrights or your use of those copyrights, including claims of infringement or unfair competition, and whether or not the claims are brought in an administrative, judicial or other proceeding.

Source: Item 14 — PATENTS, COPYRIGHTS AND PROPRIETARY INFORMATION (FDD pages 37–39)

Question 42

What is the condition for the Company to grant the exclusive right to develop B Bops Restaurants in the Trade Area?

Accepted Answer

VELOPMENT RIGHTS. Company hereby grants to Developer, subject to the terms and conditions of this Agreement, the exclusive right to develop B-Bop's Restaurants in the Trade Area in compliance with the Development Schedule. Developer hereby agrees to develop, construct and open for business B-Bop's

DA/04/25/25 1

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Restaurants within the Trade Area in accordance with the Development Schedule and with the terms and conditions of this Agreement. Developer further agrees to develop, own, operate, maintain and promote each B-Bop's Restaurant (hereinafter referred to as a "Unit") in accordance with the terms and conditions contained in the standard form of franchise agreement being utilized by Company to grant B-Bop's Restaurant franchises at the time of development of each such Unit (hereinafter referred to as a "Unit Franchise Agreement"), to be executed by Developer as specified in Section 6 hereof. Company agrees that it shall not establish, or license any third party to establish, a B-Bop's Restaurant in the Trade Area prior to the termination or expiration of this Agreement.

- 2. TERM.

Source: Item 23 — RECEIPTS (FDD pages 53–145)

Question 43

What is the condition for the Developer to develop, construct, and open B Bops Restaurants?

Accepted Answer

Restaurants within the Trade Area in accordance with the Development Schedule and with the terms and conditions of this Agreement. Developer further agrees to develop, own, operate, maintain and promote each B-Bop's Restaurant (hereinafter referred to as a "Unit") in accordance with the terms and conditions contained in the standard form of franchise agreement being utilized by Company to grant B-Bop's Restaurant franchises at the time of development of each such Unit (hereinafter referred to as a "Unit Franchise Agreement"), to be executed by Developer as specified in Section 6 hereof. Company agrees that it shall not establish, or license any third party to establish, a B-Bop's Restaurant in the Trade Area prior to the termination or expiration of this Agreement.

Source: Item 23 — RECEIPTS (FDD pages 53–145)

Question 44

What is the condition that triggers B Bops to provide refresher training?

Accepted Answer

If, during the term of Franchise, you request a refresher training course, the Company will provide such training upon the payment of a fee not to exceed \$2,000. The material to be covered in a refresher training course will depend on your needs as expressed to the Company. In addition, if you hire a new manager during the term of the Franchise, the Company will provide an initial training course for such manager, upon payment of a fee not to exceed \$2,000. Such training course will be structured in the same manner and cover the same material as the training course provided prior to the opening of the Franchise as described above. You will, in either event, be responsible for paying all compensation, travel, lodging and other expenses incurred while participating in either a refresher-training course or an initial training course for a new manager.

Source: Item 11 — FRANCHISOR'S ASSISTANCE, ADVERTISING, COMPUTER SYSTEMS AND TRAINING (FDD pages 25–33)

Question 45

What are the conditions for appointing a manager to operate the B Bops Franchise?

Accepted Answer

nt and Operation. Franchisee agrees to devote Franchisee's fulltime and best efforts to the active management and operation of the Franchise, or to appoint a manager to devote such manager's full-time and best efforts to operation of the business. Franchisee shall have the right to appoint a full-time manager to operate the Franchise on a day-to-day basis, provided that: (i) Company shall have the right to approve the qualifications of such manager; and (ii) Franchisee shall remain active in the business by monitoring such manager's performance in operating the Franchise. Company's approval of Franchisee's manager shall not be unreasonably withheld, provided such manager has completed the training course (to the satisfaction of Company) required pursuant to Section 7(A) of this Agreement. The individual responsible for the daily management and supervision of the Franchise shall assume such responsibilities on a full-time basis and shall not engage in any other business or activity that requires significant time commitments or that may otherwise be detrimental to or interfere with the management obligations imposed hereunder. If Franchisee is a partnership, corporation or limited liability company, Franchisee shall not be involved in any business or activities apart from ownership and operation of the Franchise (and the ownership of any other B-Bop's Restaurant pursuant to a franchise agreement between Company and Franchisee).

Franchisee shall operate the Franchise only on the Franchise Premises and only in accordance with the business standards, procedures and policies set forth in the Operations Manual, as modified from time to time, or as specified in other manuals or written material provided by Company. Franchisee acknowledges that Franchisee shall be required to sell each of the items contained in the standard B-Bop's Restaurant menu as established from time to time by Company, and that each of such items will be prepared, packaged and sold in strict conformance with Company's standard operating procedures set forth in the Operations Manual.

- B. Employees. Franchisee shall hire a sufficient number of qualified employees to operate the Franchise in an efficient manner, and shall train and supervise such employees in accordance with the Company's standards and policies as contained in the Operations Manual to ensure that such employees at all times provide competent, prompt and courteous service to all patrons of the Franchise. Franchisee shall comply with all federal, state and local equal opportunity, labor and employment laws applicable to its employment relationship with each employee. Franchisee shall require all employees performing managerial or supervisory functions and all personnel receiving special training from Company to execute nondisclosure and noncompetition agreements on forms provided by Company.
- C. Operations Manual. Franchisee shall diligently and thoroughly review and study the Operations Manual and become knowledgeable with respect to the contents thereof. Franchisee covenants and agrees to operate the Franchise at all times in accordance with the procedures and policies contained therein (including, but not limited to, compliance with the prescribed menu of food and beverage items to be old at the Franchise). Franchisee shall also diligently and thoroughly review and study all updates to the Operations Manual, such that Franchisee shall be knowledgeable concerning all additions or modifications to the Licensed System.

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- D. Independent Advertising.

Source: Item 15 — OBLIGATION TO PARTICIPATE IN THE ACTUAL OPERATION OF THE FRANCHISE (FDD page 39)

Question 46

What conditions must a B Bops franchisee meet to be indemnified against claims of infringement or unfair competition?

Accepted Answer

Unauthorized Use and Protection of Franchisee. You are obligated under the Franchise Agreement to immediately notify the Company in writing of any of the following: (i) any challenge to your use of the Licensed Marks; (ii) any claim by a third party to rights in any of the

Licensed Marks (or confusingly similar marks) that comes to your attention; and (iii) any apparent infringement of the Licensed Marks that comes to your attention. The Company has absolute discretion in taking such action as it may deem appropriate upon notification of any such challenge, claim or infringement. You are required to cooperate with the Company and its affiliates in investigating, prosecuting or defending any action involving any of the Licensed Marks, but at the sole expense of the Company. Although not expressly obligated by the Franchise Agreement, the Company considers the Licensed Marks to be valuable property rights and intends to protect them against infringement by others. The Franchise Agreement obligates the Company to indemnify you against claims of infringement or unfair competition with respect to your use of the Licensed Marks, provided that you have complied with the material terms and conditions of the Franchise Agreement in using the Licensed Marks. The Company will have exclusive control over any administrative proceeding or litigation initiated in connection with any of the Licensed Marks. In the event the Franchise Agreement is terminated for any reason whatsoever or expires without renewal, the Company has the right to prohibit you from further use or display of the Licensed Marks.

Source: Item 13 — TRADEMARKS (FDD pages 35–37)

Question 47

What are the conditions under which the B Bops development rights may be renewed?

Accepted Answer

The term of this Agreement and of the development rights granted hereunder shall commence upon the effective date of this Agreement and shall continue until the date specified in Appendix II attached hereto, unless terminated earlier in accordance with Section 11 hereof. Termination or expiration of this Agreement shall constitute a termination or expiration of the development rights granted hereunder. This Agreement and the development rights may be renewed upon such terms and conditions as Company and Developer may mutually agree upon expiration of the term hereof.

Source: Item 23 — RECEIPTS (FDD pages 53–145)

Question 48

What is the consequence if a B Bops developer fails to notify the company of a significant ownership change?

Accepted Answer

If Developer is a corporation, partnership or limited liability company, Developer agrees to notify Company of any change in ownership interests in Developer which, when taken alone or together with all previous or simultaneous changes of ownership during the term hereof, constitutes a change of ten percent (10%) or more of the ownership interests in Developer.

Any change in ownership interests which, when taken alone or together with all previous or simultaneous changes in ownership during the term hereof, constitutes a change of fifty percent (50%) or more of the ownership interests in Developer shall be considered a transfer subject to the provisions of Section 13(C) and 13(D) hereof.

Source: Item 23 — RECEIPTS (FDD pages 53–145)

Question 49

What are the consequences if the B Bops franchisee or their manager is not available during the time that Company's representatives are at the Franchise Premises?

Accepted Answer

Company shall have the right from time to time to enter the Franchise Premises during business hours, without prior notice, for the purpose of making periodic inspections of the Franchise to ensure compliance of Franchisee's operations with the standards and policies of the Operations Manual and with the terms of this Agreement.

Franchisee agrees to cooperate with Company's representatives in all such inspections and render such assistance as may reasonably be requested.

Franchisee acknowledges that Company shall be entitled during any inspection to interview Franchisee's employees or customers.

Franchisee agrees to remedy any noncompliance with Company policies or standards noted during any inspection within ten (10) days of the date of inspection, or within such longer period as Company may in its discretion grant.

Franchisee acknowledges that continuous noncompliance with Company standards and policies, even though remedied after each inspection, shall constitute grounds for termination of this Agreement.

Source: Item 22 — CONTRACTS (FDD page 53)

Question 50

What are the consequences if the B Bops franchisee modifies the plans and specifications without the Company's consent?

Accepted Answer

Prior to commencement of construction of any improvements, Franchisee shall obtain Company's written approval of the site specific plans and specifications for the Franchise Premises. Upon receipt of such approval, Franchisee shall enter into a contract with a responsible contractor providing for construction of improvements to the Franchise Premises in accordance with site specific plans and specifications, all at the expense of Franchisee. Franchisee shall be responsible for obtaining all building, zoning, utility and other permits necessary for construction of the Franchise Premises and for obtaining all landlord consents for said construction required under any applicable lease or other governing document, all at the expense of Franchisee.

Company shall conduct a pre-opening inspection of the Franchise Premises to confirm that construction of the improvements has been undertaken in accordance with the site specific plans and specifications. If Company, in its sole discretion, determines that construction of the improvements or installation of the equipment, fixtures, furnishings or signage has failed in any material respect to comply with the site specific plans and specifications Company shall be entitled to delay of the opening of the Franchise until such time as the necessary corrections in design or installation have been made to Company's reasonable satisfaction. All corrections and modifications to the Franchise Premises required by Company shall be undertaken at the expense of Franchisee. After completion of construction, Franchisee will make no alteration or modification of the facilities, equipment, fixtures, furnishings, appearance or signage (interior or exterior) of the Franchise Premises, except with the prior written approval of Company. Company may in its discretion conduct periodic inspections of the Franchise Premises during the construction phase of the project for compliance with the site specific plans and specifications.

Source: Item 22 — CONTRACTS (FDD page 53)

Question 51

Is B Bops currently invoking payment of the advertising fee from franchisees?

Accepted Answer

Company Advertising Program. As noted in Item 6 of this disclosure document, you are required under the terms of the Franchise Agreement to pay the Company a monthly advertising fee equal to three percent (3%) of the gross sales of your Franchise. The Company, however, reserves the right to waive payment of all or part of the advertising fee by you and other franchisees for such period as the Company may in its discretion deem appropriate. Any waiver will be communicated to you, in writing, and may be revoked at such time as the Company, in its sole discretion, deems appropriate. Upon revocation of any waiver, you and the other franchisees will be required to commence payment of the advertising fee. The Company currently plans to waive payment of the advertising fee in whole until such time as the number of franchises sold will provide advertising fee income sufficient to finance the development of advertising and promotional campaigns. During any period that the Company has determined to waive payment of the advertising fee in whole, the Company will not be obligated to develop or produce advertising on behalf of you or the other franchisees. You will, however, be required to continue to observe the independent advertising expenditure discussed below. No assurances can be given that the Company will sell a sufficient number of Franchises to commence operation of the advertising fund.

If and when the Company determines to invoke payment of the advertising fee by you and other franchisees, such fees will be deposited by the Company into a special fund to be administered by the Company and used to finance the development and production of advertising for the B-Bop's Restaurant system. The Company will thereafter be responsible for developing and producing advertising materials to be made available to you and other franchisees for dissemination at your own expense as part of the independent advertising expenditure requirement. All decisions regarding the content, concepts, materials and media utilized in such advertising will be made by the Company in its sole discretion. It is currently anticipated that advertising will be developed for dissemination over radio and television and through print. Since you will be responsible for the expense of disseminating the advertising (including all

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media, printing and mailing expenses), the coverage of the advertising presumably will be local in nature to directly benefit your Franchise. It is anticipated that the B-Bop's Restaurants owned by B-Bop's will also be required to contribute to the advertising fund on the same basis and at the same rate as you and the other franchisees.

Source: Item 11 — FRANCHISOR'S ASSISTANCE, ADVERTISING, COMPUTER SYSTEMS AND TRAINING (FDD pages 25–33)

Question 52

What is the dependency between the Application Agreement and the Development Agreement for B Bops?

Accepted Answer

To apply for purchase of development rights, you must sign and submit an Application Agreement to the Company, accompanied by a deposit of \$5,000. The amount of the deposit is uniform as to all persons currently applying to purchase development rights from the Company. Upon submission of the deposit and Application Agreement, the Company will provide certain services (specified in Item 11 hereof) to assist you in assessing the feasibility of purchasing the development rights if Company determines that such rights should be granted. The Company has absolute discretion in determining whether the development rights will be granted. You will be notified by the Company in writing within ninety (90) days of submitting the Application Agreement regarding its decision to grant the development rights (unless such period is extended in the Company's discretion).

In the event the Company decides to grant you the development rights, the deposit will be applied toward payment of the development fee. If, on the other hand, the Company determines not to grant such rights, or if the Application Agreement is terminated by either party before a decision on granting the developments rights has been made, a portion of the deposit will be refunded upon return of any confidential information which may have been provided to you by the Company. The refund will be equal to the amount of the deposit minus the lesser of: (i) \$4,500; or (ii) the actual expenses (including travel and lodging expenses and a \$100 hourly fee for office time) incurred by the Company in providing the services required under the Application Agreement. The Application Agreement may be terminated by either party at any time by written notice to the other, in which event the applicant will be entitled to a refund of the deposit calculated in accordance with the method described above.

### 6. OTHER FEES

#### SINGLE-UNIT ARRANGEMENT

| Type of Fee1 | Amount | Due Date | Remarks |
|---|---|---|---|
| Royalty and service fee | 5% of gross sales.2, | Payable monthly on the 20th day of each month. |  |![](_page_14_Picture_0.jpeg)

| Late fee and interest on past due payments                              | \$200 plus interest at 1.5% per month (or, if less, the maximum rate permitted by applicable state law) on amounts past due.                                                                                                                                                                                          | As incurred.                                                                                                | Any payment not received by the Company on or before its due date is deemed to be past due.

Source: Item 5 — INITIAL FEES (FDD pages 12–14)

Question 53

What is the dependency for the deposit to be applied toward the initial franchise fee for a B Bops franchise?

Accepted Answer

Deposit on Application. To apply for purchase of an initial Franchise, you must sign and submit an Application Agreement to the Company, accompanied by a deposit of \$5,000. The amount of the deposit is uniform as to all persons currently applying to purchase an initial Franchise. Upon submission of the deposit and an Application Agreement, the Company will provide certain services (specified in Item 11 hereof) to assist you in assessing the feasibility of purchasing a Franchise if Company determines that a Franchise should be granted. The Company has absolute discretion in determining whether a Franchise will be granted. You will be notified by the Company in writing within ninety (90) days of submitting the Application Agreement regarding its decision to grant a Franchise (unless such period is extended in the Company's discretion).

In the event the Company decides to grant you a Franchise, the deposit will be applied toward payment of the initial franchise fee. If, on the other hand, the Company determines that a Franchise will not be granted, or if either party terminates the Application Agreement before a decision on granting a Franchise has been made, a portion of the deposit will be refunded to you

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once you have returned any confidential information which may have been provided to you by the Company. The refund will be equal to the amount of deposit minus the lesser of: (i) \$4,500; or (ii) the actual expenses (including travel and lodging expenses and a \$100 hourly fee for office time) incurred by the Company in providing the services required under the Application Agreement. The Application Agreement may be terminated by either party at any time by written notice to the other, in which event you will be entitled to a refund of the deposit calculated in accordance with the method described above.

If you already own an existing Franchise, you will not be required to execute an Application Agreement or to pay a deposit in connection with the purchase of an additional Franchise from the Company.

#### MULTIPLE-UNIT ARRANGEMENT

Development Fee.

Source: Item 5 — INITIAL FEES (FDD pages 12–14)

Question 54

What is the dependency between the franchisee's compliance and their ability to terminate the B Bops agreement?

Accepted Answer

WAL OF FRANCHISE. The Franchise granted hereunder may be renewed at the option of Franchisee upon the expiration of the Term of this Agreement for one (1) additional ten (10) year term upon the same terms and conditions as for initial franchises being offered by Company at the time of such expiration, provided that:
  - A. Franchisee gives Company written notice of its election to renew not less than six (6) months, nor more than twelve (12) months, prior to the expiration of the Term;
  - B. Franchisee, when notice is given and at the time of renewal, is not in breach of any material provision of this Agreement, or of any other agreement between Franchisee and Company or any affiliate thereof, and has substantially complied with the material terms and conditions of this Agreement and all such other agreements during the Term hereof;
  - C. All monetary obligations owed to Company or any affiliate thereof have been satisfied prior to renewal;
  - D. Franchisee executes Company's standard form of franchise agreement being utilized by Company on the date of renewal to grant new B-Bop's Restaurant franchises;
  - E. Franchisee pays to Company a nonrefundable renewal fee of Five Thousand Dollars (\$5,000) payable in full upon execution of the then current franchise agreement;
  - F. Franchisee performs such remodeling, repairs and/or redecoration as Company may reasonably require to cause the Franchise Premises and the equipment, fixtures, furniture, signs and other improvements to conform with the specifications being used for new B-Bop's Restaurants being franchised on th

Source: Item 22 — CONTRACTS (FDD page 53)

Question 55

What is the dependency between the franchisee's use of Licensed Marks and B Bops' obligation to indemnify in Minnesota?

Accepted Answer

Company hereby agrees to indemnify and hold Franchisee harmless from and against any and all liabilities, damages, losses, costs or expenses arising out of any claim, suit or demand asserted by any third party concerning the use of the Licensed Marks by Franchisee, provided that Franchisee's use of the Licensed Marks has complied with the material terms and conditions of this Agreement.

Source: Item 22 — CONTRACTS (FDD page 53)

Question 56

What is the dependency between ownership changes and transfer restrictions for B Bops developers?

Accepted Answer

ts in Franchisee. Any change in ownership interests which, when taken alone or together with all previous or simultaneous changes in ownership during the Term hereof, constitutes a change of fifty percent (50%) or more of the ownership interests in Franchisee shall be considered a transfer subject to the provisions of Section 19(C) and 19(D) hereof.
- 20. ENTITY FRANCHISEE. In the event Franchisee is a partnership (general or limited), corporation or limited liability company on the effective date of this Agreement, or if the Franchise or any ownership interest in Franchisee is thereafter transferred to a partnership,

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corporation or limited liability company in accordance with the provisions of Section 19(A) hereof, such entity shall comply with the following:

- (1) The entity shall be newly organized and its activities shall be confined exclusively to the development and operation of B-Bop's Restaurants pursuant to the terms of this Agreement or other franchise agreements with Company;
- (2) The governing documents of such entity shall provide that the issuance or transfer of any ownership interests in such entity shall be subject to the restrictions contained in this Agreement;
- (3) Any stock certificate or other evidence of ownership issued by such entity, shall have conspicuously endorsed upon it a statement that it is held subject to, and that further assignment or transfer thereof is subject to, all restrictions imposed upon transfer by this Agreement;
- (4) Any person who is or becomes the holder of a controlling interest in such entity or who has any responsibility for management of Franchisee, shall at the direction of Company execute a guaranty agreeing to be personally bound by the provisions of this Agreement; and
- (5) At the request of Company, such entity shall furnish to Company a certified copy of its governing documents and/or a list of all owners indicating their respective ownership interests in the entity.
- 21. ASSIGNMENT BY COMPANY. Company shall have the right to assign this Agreement to any person or entity without the consent of Franchisee, provided that the transferee agrees in writing to assume all Company's obligations imposed by this Agreement.
- 22. TERMINATION BY FRANCHISEE.

Source: Item 23 — RECEIPTS (FDD pages 53–145)

Question 57

What is the dependency between owning an existing B Bops restaurant and the initial franchise fee?

Accepted Answer

al Franchise Fee. In consideration of the Franchise granted hereunder, Franchisee shall pay Company upon execution of this Agreement an initial franchise fee of: (i) Thirty Thousand Dollars (\$30,000) if Franchisee does not own an existing B-Bop's Restaurant at the time of entering into this Agreement; or (ii) Twenty-Five Thousand Dollars (\$25,000) if Franchisee does own an existing B-Bop's Restaurant at the time of entering into this Agreement. The initial franchise fee shall be fully earned by Company upon payment thereof and shall not be refundable under any circumstances. In the event Franchisee has paid Company any deposit prior to entering into this Agreement, the amount of such deposit shall be applied toward payment of the init

Source: Item 22 — CONTRACTS (FDD page 53)

Question 58

What is the dependency for receiving a refund of the deposit from B Bops?

Accepted Answer

Deposit on Application. To apply for purchase of an initial Franchise, you must sign and submit an Application Agreement to the Company, accompanied by a deposit of \$5,000. The amount of the deposit is uniform as to all persons currently applying to purchase an initial Franchise. Upon submission of the deposit and an Application Agreement, the Company will provide certain services (specified in Item 11 hereof) to assist you in assessing the feasibility of purchasing a Franchise if Company determines that a Franchise should be granted. The Company has absolute discretion in determining whether a Franchise will be granted. You will be notified by the Company in writing within ninety (90) days of submitting the Application Agreement regarding its decision to grant a Franchise (unless such period is extended in the Company's discretion).

In the event the Company decides to grant you a Franchise, the deposit will be applied toward payment of the initial franchise fee. If, on the other hand, the Company determines that a Franchise will not be granted, or if either party terminates the Application Agreement before a decision on granting a Franchise has been made, a portion of the deposit will be refunded to you

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once you have returned any confidential information which may have been provided to you by the Company. The refund will be equal to the amount of deposit minus the lesser of: (i) \$4,500; or (ii) the actual expenses (including travel and lodging expenses and a \$100 hourly fee for office time) incurred by the Company in providing the services required under the Application Agreement. The Application Agreement may be terminated by either party at any time by written notice to the other, in which event you will be entitled to a refund of the deposit calculated in accordance with the method described above.

Source: Item 5 — INITIAL FEES (FDD pages 12–14)

Question 59

What is the dependency between the transferee's agreement and the B Bops company's right to assign the agreement?

Accepted Answer

Company shall have the right to assign this Agreement to any person or entity without the consent of Developer, provided that the transferee agrees in writing to assume all Company's obligations imposed by this Agreement.

Source: Item 23 — RECEIPTS (FDD pages 53–145)

Question 60

Is the B Bops development fee refundable, and if so, under what circumstances?

Accepted Answer

Development Fee. If you elect to purchase development rights under the multiple-unit arrangement, you must pay the Company a development fee. The amount of the development fee will vary and will be determined by multiplying \$5,000 times the number of Franchises to be developed according to the development schedule. The sum of \$5,000 of the development fee will be allocated towards satisfaction of the initial franchise fee payable for each Franchise established under the Development Agreement. If you establish all of the Franchises specified in the development schedule, the entire development fee will be applied towards payment of the initial franchise fees due to the Company. If you fail to comply with the development schedule (or otherwise default under the Development Agreement) and the Development Agreement is terminated, the Company will be entitled to retain that portion of the development fee that has not been applied towards payment of initial franchise fees prior to such termination. The development fee must be paid upon execution of the Development Agreement. You will receive a credit of \$5,000 toward payment of such fee from the deposit paid upon execution of the Application Agreement (see below). Except as noted below, the development fee is not refundable in whole or in part under any circumstances.

Initial Franchise Fee. The initial franchise fee payable for the first Franchise established under the multiple-unit arrangement is \$30,000. The Company's opening assistance for a period of between three and five days prior to the opening of the Franchise and for a period of four to six days immediately following the opening of the Franchise (other than the Company's out-ofpocket costs for airline and hotel expenses for the people provided by the Company for the opening assistance) is provided by the Company as a part of the initial franchise fee. See Item 11 for more information on opening assistance. Each additional Franchise established under the multiple-unit arrangement requires payment of an initial franchise fee of \$20,000. The initial franchise fee for each Franchise is required to be paid to the Company upon execution of the then current franchise agreement granting you the right to establish the Franchise. As noted above, \$5,000 of the development fee will be applied by the Company toward the initial franchise fee payable for each Franchise established under the Development Agreement. The initial franchise fee for Franchises purchased under the multiple-unit arrangement is uniform in all cases.

Source: Item 5 — INITIAL FEES (FDD pages 12–14)

Question 61

In the event of a breach of the B Bops franchise agreement, what is the condition for the Company to be entitled to reimbursement for costs, including attorneys' fees?

Accepted Answer

If Company or any affiliate thereof is required to institute any legal or arbitration proceeding to collect any amounts owing from Franchisee or to enforce the terms of this Agreement and if Company or such affiliate prevails in such proceeding, Company or such affiliate shall be entitled to reimbursement from Franchisee of its costs and expenses incurred in connection therewith, including attorneys' or accountants' fees, court costs and costs of investigation.

Source: Item 22 — CONTRACTS (FDD page 53)

Question 62

What is the exception to the prohibition of B Bops developing the defined trade area?

Accepted Answer

Under the multiple-unit arrangement, the Company utilizes the Multiple-Unit Development Agreement attached hereto as Exhibit D (the "Development Agreement") to grant development rights. If the Company approves your application for development rights, you will sign a Development Agreement and be granted the right to establish a specified number of Franchises in a defined trade area in accordance with a development schedule negotiated between you and the Company. So long as you comply with the development schedule (and the Development Agreement otherwise remains in effect), the Company and its affiliates cannot develop the defined trade area through the establishment of Company-owned units or through the sale of Franchises to other persons. Each Franchise established in the trade area will be governed by a separate franchise agreement you must sign, with such franchise agreement to be in the form of the standard franchise agreement being utilized by the Company at the time to grant new Franchises. The multiple-unit arrangement will be used only in larger metropolitan areas that are capable of supporting a number of Franchises. In the event you are a corporation, limited liability company or partnership, your shareholders, members or partners will be required to personally guaranty your obligations under the Development Agreement and each franchise agreement executed with the Company.

Source: Item 1 — THE FRANCHISOR AND ANY PARENTS, PREDECESSORS AND AFFILIATES (FDD pages 9–11)

Question 63

What factors can affect the actual costs of operating a B Bops franchise?

Accepted Answer

Your costs will depend on a variety of factors such as your management skill and experience, economic conditions, the local market for the Franchise, competition and the performance of your Franchise.

The estimated expenses in the table were prepared by the Company in reliance on the experience of its affiliate, B-Bop's, in establishing and operating ten B-Bop's Restaurants.

You should review these figures carefully with a business advisor before making any decision to purchase a Franchise.

Neither the Company, nor any of its affiliates, offers financing in connection with the initial investment as described above.

You should be aware that the availability and terms of financing will depend on a number of factors, such as the availability of financing generally, your credit history and credit worthiness, the amount and type of collateral that you may have available to pledge as security and the policies followed by lending institutions in your area concerning the type of business you will be operating.

Source: Item 7 — ESTIMATED INITIAL INVESTMENT (FDD pages 18–21)

Question 64

What factors affect the availability and terms of financing for a B Bops franchise?

Accepted Answer

- ¹⁵Neither the Company, nor any of its affiliates, offers financing in connection with the initial investment as described above. You should be aware that the availability and terms of financing will depend on a number of factors, such as the availability of financing generally, your credit history and credit worthiness, the amount and type of collateral that you may have available to pledge as security and the policies followed by lending institutions in your area concerning the type of business you will be operating. Source: Item 7 — ESTIMATED INITIAL INVESTMENT (FDD pages 18–21)

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