What is the Baya Bar franchisee's obligation regarding constructing and equipping the shop?

ther matters pertaining to the franchise. (Franchise Agreement, Section 6.5.)

Site Selection: You must assume all costs, liabilities, expenses and responsibility for locating, obtaining and developing a site for the Shop and for constructing and equipping the Shop at the accepted site. You will select the site for the Shop subject to our acceptance and using our site selection criteria. Before you lease or purchase the site for the Shop, you must locate a site that satisfies our site selection guidelines. If we deem it necessary we will conduct one onsite evaluation, but before we conduct the evaluation you must submit to us in the form we specify a description of the site, including evidence that the site satisfies our site selection guidelines, together with other information and materials that we may reasonably require, including a letter of intent or other evidence that confirms your favorable prospects for obtaining the site. We have the right to approve deviations from our site selection standards based on the individual factors and components of a particular site.

You must have located and submitted to us, for our review, all information we require regarding the site you propose for your Shop no later than 90 days after you have signed the Franchise Agreement. We will have 30 days after we receive all required information and materials from you to accept or decline the proposed site as the location for your Baya Bar Shop. If we do not provide our specific acceptance of a proposed site, the site is deemed not accepted. We do not warrant or guarantee that your Shop will be successful at any site that we accept. Our acceptance only means that the site meets our minimum requirements for a Shop, subject to any deviation from our standards as we may permit.

We will provide you with our current written site selection guidelines and any other site selection counseling and assistance we think is advisable. Our criteria for site selection include: general location and neighborhood, proximity to competition, neighborhood demographics, traffic patterns, availability of parking, size of location, physical characteristics of existing buildings in the area, co-tenants in the shopping center or immediate area, condition of the premises and how much build-out or construction it will need, availability of utilities and the terms of the lease. We will use these and other factors in determining the

suitability of your proposed site for a Baya Bar Shop. You must provide us with a copy of the proposed lease for your Shop. We generally do not own the premises and lease it to you. We do not provide assistance with conforming the site to local ordinances and building codes, obtaining the permits and licenses for the construction and operation of the Shop, completing construction or remodeling, hiring and training your employees.

Once the location for your Shop has been determined, your Shop may not be relocated without our prior written consent. If you are not able to locate an acceptable site for your Shop within 180 days after we sign the Franchise Agreement, unless we agree to extend to you an additional amount of time, we may terminate your Franchise Agreement and the initial franchise fee will not be refunded.

Opening: We estimate that the time from when the Franchise Agreement is signed to the opening of the Shop will be approximately ten months. Your total timeframe may be shorter or longer depending on the time necessary to obtain an accepted site, to obtain financing, to obtain the permits and licenses for the construction and operation of the Shop, to complete construction or remodeling as it may be affected by weather conditions, shortages, delivery schedules and other similar factors, to complete the interior and exterior of the Shop, including decorating, purchasing and installing fixtures, equipment and signs, and to complete preparation for operating the Shop, including purchasing inventory and supplies. We do not provide assistance with equipment, signs, fixtures, opening inventory or supplies except by providing a list of approved suppliers and through our written specifications. We do not deliver or install these items. You must open the Shop and begin business within one year after you sign the Franchise Agreement. If you are not able to open your Shop within this period, we have the right to terminate your Franchise Agreement and the initial franchise fee will not be refunded, or in our discretion, we may extend the period of time for you to open. You may not open your Shop for business until we have approved you to do so.

If you are a multi-unit developer, you must sign your first Franchise Agreement at the same time you sign the MUDA. The typical length of time between the signing of the Franchise Agreement and the opening of your first Shop is the same as for an individual franchisee. Each additional Shop you develop must be opened according to the terms of your Minimum Performance Schedule.

Grand Opening Marketing: You must conduct a marketing campaign announcing the grand opening of your Shop, and you must spend at least $7,500 for this campaign. Your grand opening marketing campaign must be conducted in the 60 days before and the 30 days after the opening of the Franchised Business. We may designate a different time period for you to conduct the grand opening marketing campaign. Your grand opening marketing campaign must include the elements we require (giveaways of food samples, other promotions, etc.). We must approve of your grand opening marketing campaign before it is conducted.

Marketing Fund: You are required to contribute 1% of your Gross Sales weekly to our System, Baya Bar Shops and the products and services offered by Baya Bar Shops. (Franchise Agreement, Section 8.3.) Each Baya Bar outlet operated by our affiliates or us may, but is not obligated to, contribute to the Marketing Fund on the same basis as System franchisees. All franchisees will contribute the same percentage to the Fund.

The Marketing Fund is administered by our owner William Loesch. We may use Marketing Fund contributions to pay any and all costs for developing, producing and disseminating advertising, marketing, promotional and public relations materials, programs, campaigns, sales and marketing seminars and training programs of every kind and nature, through any media we determine; conducting marketing research and employing advertising agencies; developing, enhancing and maintaining our website, social media platforms, apps, and other technology for the benefit of the Marketing Fund image and/or Systemwide

improvements; and staff salaries and other personnel and departmental costs for advertising that we internally administer or prepare.

The Marketing Fund will not be used to defray any of our other general operating expenses. Marketing Fund contributions will not be used to solicit new franchise sales; provided however, we have the right to use the Marketing Fund for public relations, to explain the franchise system, and/or include "Franchises Available" or similar language and contact information in advertising produced with Marketing Fund contributions.

The Marketing Fund collects and expends contributions for the benefit of the System as a whole. We have the right to use the Marketing Fund contributions to place advertising in national, regional or local media (including broadcast, print, or other media) and to conduct marketing campaigns through any channel, in our discretion, including but not limited to, internet and direct-mail campaigns.

Source: Item 11 — FRANCHISOR'S ASSISTANCE, ADVERTISING, COMPUTER SYSTEMS, AND TRAINING (FDD pages 26–36)