How does the Baya Bar initial investment (Item 7) relate to the pre-opening obligations (Item 11)?

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.

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.

You will need capital to support ongoing expenses, such as payroll, utilities, rent, royalty fees, and marketing fund fees, if these costs are not covered by sales revenue for your first three months of operation.

• 1. Utility Security Deposit. You may need to provide one to two months of security deposits for your utilities (such as gas, water and/or electric).
• 1. Design & Architect Fees. You must obtain construction plans for the build-out of your Shop according to our specifications. We have the right to designate and/or approve of the designer and/or architect you use.
• 1. Leasehold Improvements. The cost of leasehold improvements will vary depending on many factors, including: (a) the size and configuration of the premises; (b) pre-construction costs (including demolition of existing walls and removal of existing improvements and fixtures); and (c) cost of materials and labor, which may vary based on geography and location or whether you must use union labor for the build-out of your location. These figures are our principals' best estimate based on remodeling/finish-out rates in the metropolitan New York area. These amounts may vary substantially based on local conditions, including the availability and prices of labor and materials. These costs may also vary depending on whether certain of these costs will be incurred by the landlord or through landlord tenant improvement contributions, and the condition of the space before you take possession of the premises. The low end of our estimate assumes that you have leased space that previously operated as a restaurant and that you will convert to a Baya Bar Shop. The high end of our estimate assumes that you have leased a "vanilla box" space and that more improvements are required. Our estimate does not include any tenant improvement allowance that you may negotiate.
• 1. Signage. These amounts represent your cost for interior and exterior signage. Your landlord or your local ordinances may have different restrictions they place on interior and exterior signage which may affect your costs.
• 1. Equipment, Furniture and Fixtures. The equipment you will need includes freezer, refrigerators, mixers, prep tables and small wares. The furniture and fixtures you will need for your Shop include tables and chairs, menu boards, and "branding" décor items.

Before you open your Franchised Business, we will provide the following assistance and services:

1. Our written site selection guidelines and the site selection assistance we deem advisable. (Franchise Agreement, Section 5.1.) We will also describe your designated territory when we have accepted a proposed location.