What are Benihana licensees required to do in order to maintain brand integrity and reputation?

urant constructed, furnished, and equipped in accordance with this Agreement.

ARTICLE 3. COMPLIANCE WITH BENIHANA SYSTEM; BENIHANA STANDARDS

• 3.1 BNC will make the BENIHANA Standards available to Franchisee in the Operations Manual and in other forms of communications, all of which BNC may modify in its sole discretion at any time during the Franchise Term.
• 3.2 Franchisee acknowledges that Franchisee's adherence to the BENIHANA System, the BENIHANA Standards, and the provisions of the Operations Manual are reasonably necessary, and essential to BNC, to Franchisee and to other franchisees of BENIHANA Restaurants, in order to promote the goodwill associated with the BENIHANA System and the Marks. Notwithstanding that the parties acknowledge that many of the BENIHANA Standards will be inapplicable to the design, format, operation,

and products sold at the Restaurant, Franchisee shall comply with all applicable BENIHANA Standards and operate the Restaurant in accordance with the BENIHANA System as applicable to the Restaurant. SCHEDULES 1-A, 1-B, and 1-C to this Agreement will set forth modifications to the BENIHANA System as to menu, equipment, and training that the parties agree will apply to the operation of the Restaurant.

• 3.2.1 Franchisee further acknowledges that complete uniformity may not always be possible or practical throughout all BENIHANA Restaurants, and BNC may, from time to time, permit certain deviations from the BENIHANA System or the BENIHANA Standards as BNC deems appropriate in its sole discretion. The parties agree and acknowledge that the service format of the Restaurant will necessarily require certain deviations from the BENIHANA System or the BENIHANA Standards as approved by BNC in its sole discretion.
• 3.3 Franchisee shall use the Location solely for the operation of the Restaurant in strict accordance with the applicable BENIHANA Standards. The Restaurant shall be open and in operation for such minimum hours and days specified or approved by BNC in writing, which hours may be changed from time to time by BNC.
• 3.4 Franchisee must designate and retain in its employment at all times a person to serve as the "General Manager" of the Restaurant. Franchisee shall at all times otherwise staff the Restaurant with a sufficient number of employees trained in the BENIHANA System as required by BNC. The General Manager must satisfy BNC's educational and business criteria and must be individually acceptable to BNC. In addition, the General Manager must be responsible for the supervision and management of the Restaurant, and must devote full time and best efforts to this activity. The General Manager also must satisfy BNC's applicable training requirements. If the General Manager ceases to be employed by Franchisee and available to manage the Restaurant, Franchisee must promptly, and in no event more than 120 days later, designate another person as General Manager, and that person must meet all criteria for a General Manager and be acceptable and approved by BNC.
• 3.5 During the entire Franchise Term, Franchisee shall not carry on or conduct, or permit others to carry on or conduct, any other business activity or operation at the Restaurant or the Location other than the operation of the Restaurant permitted under this Agreement.
• 3.6 Franchisee shall not operate, permit or grant any concession or license to operate at the Restaurant or the Location any vending machines, video or entertainment machines, games of skill, games of chance, or other similar device, without the prior written consent of BNC in each instance.
• 3.7 Franchisee shall, at its expense, continuously throughout the Franchise Term, maintain the Restaurant in good condition and repair in accordance with the BENIHANA Standards. Such maintenance shall include, without limitation, the repainting of walls, floors, flooring, or ceilings, as needed, or the repair, refurbishment, or replacement of any damaged or worn fixtures, furniture, equipment, or decorative

items or components of BNC's trade dress.

• 3.8 Franchisee shall use in the Restaurant only those brands, types and models of signs displaying the Marks, equipment, or fixtures that are approved by BNC and meet all specifications established by BNC. Franchisee must purchase approved brands, types, and models of equipment, fixtures, and signs which meet BNC's specifications only from approved suppliers, unless otherwise agreed in writing by BNC.
• 3.9 Franchisee agrees to purchase, install, and maintain, at its expense, a point of sale data processing system and software as designated or approved from time to time by BNC (the "POS System"). The POS System shall contain a device to record accumulated sales that cannot be turned back or reset, and a back-up power system for memory storage in the event of power loss. The POS System will provide a record of products sold, a menu mix report, and other reports required by BNC. BNC shall have the right to retrieve such data and information directly from Franchisee's POS System as BNC shall deem necessary. Franchisee shall be responsible for the telephonic or transmission costs of such retrieval. Franchisee will install any new or upgraded software programs and equipment whenever BNC adopts such new programs for all franchisees to ensure full operational efficiency and communications capability. Franchisee shall update and upgrade the POS System as designated by BNC. BNC may require Franchisee to enter into a separate maintenance agreement for the POS System at any time.
• 3.10 Franchisee will only use advertising and promotional materials or items that are authorized and approved in writing by BNC in advance of their use by Franchisee.

Source: Item 22 — CONTRACTS (FDD pages 73–74)