What is the B Bops Company's responsibility regarding the Franchisee's use of the Licensed System?

| | RECITALS: | |

WHEREAS, Company is engaged in the business of licensing the operation by others of double drive-through fast food restaurants known as "B-Bop's", which sell, among other items, hamburgers, french fries and beverages (hereinafter referred to as a "B-Bop's Restaurant"); and

WHEREAS, Company has designed a distinctive system for establishing, operating and promoting a B-Bop's Restaurant, which system includes, but is not limited to, a unique and readily recognizable design, color scheme, decor, layout and signage for the business premises, equipment selection and installation, accounting methods, advertising and promotional techniques, personnel training and a confidential manual of operating procedures containing specially designed methods for operation of a B-Bop's Restaurant (hereinafter collectively referred to as the "Licensed System"); and

WHEREAS, each B-Bop's Restaurant is operated in connection with and through use of the "B-Bop's" name and through the use of certain related logos (hereinafter collectively referred to as "Licensed Marks"); and

WHEREAS, Company and its affiliates have made a substantial investment in developing and perfecting the Licensed System and in advertising and promoting the Licensed Marks, both of which are recognized as representing the highest standards of quality and service; and

WHEREAS, Franchisee desires to establish and operate a B-Bop's Restaurant at the location hereinafter designated, to use in connection therewith the Licensed System and the Licensed Marks and to derive the benefits of Company's information, experience, advice, guidance and customer goodwill; and

WHEREAS, Franchisee recognizes the importance to Company and to the public of maintaining the integrity, qualities and attributes of products associated with the Licensed Marks and is willing to adhere to certain uniform standards, policies and procedures to maintain such integrity, qualities and attributes.

NOW, THEREFORE, in consideration of the foregoing recitals and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

1. GRANT AND ACCEPTANCE OF FRANCHISE. Company hereby grants to Franchisee, and Franchisee hereby accepts from Company, a nonexclusive right, license and franchise to establish and operate a B-Bop's Restaurant (the "Franchise") at the following location only:

(the "Franchise Premises"), and to use only in connection therewith the Licensed System and Licensed Marks, together with such other confidential and valuable information and trade secrets as may now or hereafter exist and constitute a portion of the Licensed System, all upon the terms and conditions set forth in this Agreement. Franchisee agrees to establish, maintain, operate and promote the Franchise in compliance with the provisions of this Agreement and with Company's standards, policies and procedures as prescribed from time to time by Company in the confidential operations manual provided by Company (the "Operations Manual"). Franchisee may not directly or indirectly subfranchise, sublicense or in any other manner authorize any other person to own or operate a B-Bop's Restaurant or to utilize in any manner all or any portion of the Licensed System or the Licensed Marks. Franchisee acknowledges that the rights granted hereunder are limited to operation of a B-Bop's Restaurant on the Franchise Premises exclusively and that Franchisee shall have no right to operate a B-Bop's Restaurant at any other location, whether on a permanent or temporary basis.

• 1. TERM. The term of this Agreement and of the nonexclusive right, license and franchise granted hereunder shall commence upon the effective date of this Agreement and shall continue until the fifteenth (15th) anniversary thereof, or until the termination of this Agreement in accordance with the provisions hereof, whichever shall first occur (hereinafter the "Term"). Franchisee agrees to operate the Franchise on a continual basis throughout the Term, subject to the terms and conditions of this Agreement. Any renewal of the Franchise shall be governed by Section 18 of this Agreement.
• 1. EXCLUSIVITY. Company shall not during the Term of this Agreement open or franchise another B-Bop's Restaurant or any other restaurant business serving similar items within a two (2) mile radius of the Franchise Premises. Company reserves the right to grant and sell franchises to others to operate, and to own and operate for its own account or with others, a B-Bop's Restaurant at any location other than as restricted in this Section 3.
• 1. COMMENCEMENT OF OPERATIONS. Franchisee agrees to open and commence operation of the Franchise as soon as practicable after the effective date of this Agreement. In no event shall such opening and commencement of operations be delayed beyond eight (8) months from the effective date of this Agreement, unless an extension of time is granted in writing by Company. Where Franchisee has exhibited due diligence in complying with this Section 4, Company may, in its sole discretion, consent to an extension of the eight (8) month time period specified herein. Company shall not unreasonably withhold its consent when the delay results from circumstances beyond the reasonable control of Franchisee.
• 1. DEVELOPMENT OF FRANCHISE PREMISES. Franchisee agrees to secure, at its sole expense, a site for the Franchise Premises which shall be approved in writing by Company as being suitable for use as a B-Bop's Restaurant. Using the construction plans and specifications

provided by Company, Franchisee shall be responsible, at its sole cost, for selecting an architect to transform such specifications into site specific plans and specifications which shall comply with all local codes, regulations and ordinances applicable to construction of the Franchise Premises and operation of the Franchise. 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.

1. PURCHASE OF EQUIPMENT AND SUPPLIES. 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).

7. TRAINING COURSE; COOPERATION FOR OPENING ASSISTANCE.

A. Training Course. 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.

Source: Item 22 — CONTRACTS (FDD page 53)