What obligation does a Beggars Pizza franchisee undertake regarding the operation of the restaurant?

WHEREAS, Franchisee desires to enter into the business of operating a Beggars Pizza® restaurant under the System and Proprietary Marks, and wishes to enter into an agreement with Franchisor for that purpose, and to receive the training and other assistance provided by Franchisor in connection therewith; and

WHEREAS, Franchisee understands and acknowledges the importance of Franchisor's high standards of quality, cleanliness, appearances, and service and the necessity of operating the business franchised hereunder in conformity with Franchisor's standards and specifications.

NOW, THEREFORE, in consideration of the terms and conditions hereinafter set forth, and other good and valuable consideration, the receipt, adequacy and sufficiency of which are hereby acknowledged, the parties, intending to be legally bound, agree as follows:

1. GRANT

• 1.1 Grant of Franchise.

Franchisor grants to Franchisee the right and Franchisee undertakes the obligation, upon the express terms and conditions set forth in the Agreement, to establish and operate a Beggars Pizza® restaurant under the Proprietary Marks and System (the "Restaurant") and to use the Proprietary Marks and the System, as they may be changed and improved from time to time at Franchisor's sole discretion, solely in connection therewith.Approved Location.

Franchisee must operate the Restaurant only at the location identified in Exhibit A (the "Approved Location").

If, at the time of execution of the Agreement, a location for the Restaurant has not been obtained by Franchisee and approved by Franchisor, Franchisee must lease or acquire a location within ninety (90) days after the date of the Agreement, subject to Franchisor's approval, as provided for in the Site Selection Addendum attached hereto as Exhibit B.

Franchisee will not relocate the Restaurant without the prior written approval of Franchisor.

Franchisor may withhold approval of relocation in Franchisor's sole discretion.

• 1.3 Franchisee's Territory.

7. DUTIES OF FRANCHISEE

• 7.1 Operating Standards. Franchisee understands and acknowledges that every detail of the Restaurant is important to Franchisee, Franchisor and other franchisees in order to develop and maintain high operating standards, to increase the demand for the products sold by all Beggars Pizza® restaurants operating under the System, and to protect Franchisor's reputation and goodwill.
• 7.2 Shop Operations. Franchisee must use the Premises solely for the operation of the business franchised hereunder; must keep the Restaurant open and in normal operation for such minimum hours and days as Franchisor may specify; must refrain from using or permitting the use of the Premises for any other purpose or activity at any time without first obtaining the written consent of Franchisor; and must operate the Restaurant in strict conformity with such methods, standards, and specifications as Franchisor may from time to time prescribe in the Manual or

otherwise in writing. Franchisee must refrain from deviating from such standards, specifications, and procedures without Franchisor's prior written consent.

• 7.3 Trade Secret Items, Commissary Items, and Other Items.

Franchisor has developed certain proprietary, confidential and trade secret recipes that are part of the System including, without limitation, pizza dough, spaghetti and pizza sauces, sausage, and secret spice blends, and may develop additional such recipes and products from time to time.

Franchisor sells such products through Begcom or other designated suppliers.

Franchisee acknowledges and agrees that such items are essential to the operation of the Restaurant.

Begcom is the designated supplier of certain additional food items and supplies (including, without limitation, cheeses, sausages, and paper products), some of which bear the Proprietary Marks and some of which do not bear the Proprietary Marks, and Franchisor may from time to time specify in the Manual or otherwise in writing certain other parties that will be designated suppliers for specified products, materials, supplies, paper goods, fixtures, furnishings and equipment used or sold at the Restaurant.

Franchisee acknowledges and agrees that it must purchase such items from Begcom or such other designated suppliers in order to assure the uniform quality and image associated with the Restaurant.

• 7.4 Adherence to Standards and Specifications.

regarding the construction, design and operation of the Restaurant and applicable provisions of Section 4205 of the Patient Protection and Affordable Care Act of 2010 and related regulations regarding disclosure of nutritional information on menus and menu boards), and must timely obtain any permits, certificates, or licenses necessary for the full and proper conduct of the Restaurant including, without limitation, licenses to serve alcohol, licenses to do business, fictitious name registrations, sales tax permits, health permits, building permits, handicap permits, and fire clearances. Franchisee must comply with all federal and state laws requiring disclosure of nutritional information on menus and menu boards including, without limitation, the requirements of Section 4205 of the Patient Protection and Affordable Care Act of 2010 and related regulations.

19.4 Notification of Adverse Action. Franchisee must immediately notify Franchisor in writing of the commencement of any action, suit, or proceeding, and of the issuance of any order, writ, injunction, award, or decree of any court, agency, or other governmental instrumentality, which may adversely affect the operation or financial condition of the Restaurant.

16. OBLIGATIONS UPON TERMINATION OR EXPIRATION

Upon termination or expiration of the Agreement, all rights granted hereunder to Franchisee will forthwith terminate, and:

• 16.1 Cease Operations. Franchisee must immediately cease to operate the Restaurant, and will not thereafter, directly or indirectly, represent to the public or hold itself out as a present or former franchisee of Franchisor. Immediately upon the expiration or termination hereof, Franchisee must dispose of, and not sell, any proprietary or trade secret products sold hereunder including, without limitation, any products bearing the Proprietary Marks or contained in packaging bearing the Proprietary Marks.
• 16.2 Cease Use of Confidential Information and Marks. Franchisee must immediately and permanently cease to use, in any manner whatsoever, any confidential methods, procedures and techniques associated with the System; any Confidential Information; the Proprietary Mark "Beggars Pizza®" and all other Proprietary Marks and distinctive forms, slogans, signs, symbols, and devices associated with the System. In particular, Franchisee must cease to use, without limitation, all signs, advertising materials, displays, stationery, forms, products, and any other articles which display the Proprietary Marks.

Source: Item 22 — CONTRACTS (FDD page 39)