What are the 'System Standards' for a Beverly Anns Cookie franchise, as defined in the FDD?

System Standards

To ensure the highest degree of quality and service is maintained, you must operate the Beverly Ann's Business in strict conformity with the methods, standards, and specifications ("System Standards") we list in our proprietary and confidential operating manual ("Brand Manual"), which may exist in various parts, locations, and formats, and may include a combination of audio, video, written material, electronic media, website content, and/or software components. Our Brand Manual will include our "Success Guide" and may also include other written components.

System Standards may regulate, among other things, the types, models, and brands of supplies, equipment, furnishings, and signs; services, products, and supplies the Beverly Ann's Cookie Franchise must offer; unauthorized and prohibited services and products; inventory requirements; and designated and approved suppliers of these items. You must not: (i) deviate from these methods, standards, and specifications without our prior written consent, or (ii) otherwise operate in any manner which reflects adversely on our Marks or the System. Your Beverly Ann's Cookie Franchise must prepare and sell only the products that we designate and approve. We have the right to periodically make modifications to these products and you agree to comply with these modifications. You may not offer or sell any other product or service without our prior written consent. Establishing and enforcing System Standards are the mechanism by which we maintain the quality and consistency of the Beverly Ann's brand. If any product dispensed at your Beverly Ann's Business violates our System Standards or any applicable laws or regulations, or poses a health risk to the public, we may require that you immediately close your Beverly Ann's Business and not reopen until approved to do so by us after our inspection. In order to protect the public from any risk of harm and to protect the goodwill and reputation of the System, we may seek

immediate injunctive relief seeking an order to close your Beverly Ann's Business if you fail to close your Beverly Ann's Business upon our request.

We will notify you of new or modified specifications, standards, and guidelines through periodic amendments or supplements to the Brand Manual or through written communication (including electronic communication). We will issue copies of our standards and specifications to you unless these standards and specifications contain our confidential information. We may require you to remodel and modernize the GRM/GRT, at your sole expense, so that the GRM/GRT reflects our then-current System Standards as to image and quality.

You must use the computer hardware and software, including the point-of-sale system and vendor that we periodically designate to operate your Beverly Ann's Cookie Franchise (currently Square). You must obtain the computer hardware, software licenses, maintenance and support services, and other related services that meet our specifications from the suppliers we specify.

GRM/GRT

You must maintain the appearance of the GRM/GRT in accordance with our System Standards which will require updates and the purchase of a new GRM/GRT based on the age and condition of the GRM/GRT. You will be required to update the GRM/GRT appearance as follows: (1) every seven years; (2) upon the execution of successor franchise agreement for a Beverly Ann's Cookie Franchise with a GRM/GRT that has not completed the required remodels or is not in compliance with current standards; (3) for the transfer of a Beverly Ann's Business with a GRM/GRT that has not completed the required remodels; or (4) for a GRM/GRT that is not in compliance with current standards. See Item 11 for more information. You must use our approved supplier for the window tinting, wrapping and upfitting of your GRM/GRT. You will be required to purchase a new GRM/GRT depending on age, condition and wear of the GRM/GRT, but no later than 28 years after its manufacture.

Additional Equipment

You must maintain the appearance of any Additional Equipment in accordance with our System Standards, including a rewrapping, at your expense, as required by us based on the condition of Additional Equipment (but no later than seven years after you purchase Additional Equipment). See Item 11 for more information. You must use our approved supplier for the window tinting, wrapping and upfitting of your Additional Equipment.

Insurance

You must obtain and maintain at your own expense and from a supplier rated "A-" or better by Best's Insurance Reports, the insurance coverage that we periodically require, and satisfy other insurancerelated obligations. You currently must have the following coverage:

• A. If you have employees, workers' compensation insurance in an amount not less than $500,000 or a higher amount as required by state statute or rule in the state in which your Beverly Ann's Business is located;
• B. Comprehensive business automobile insurance, including physical damage for the GRM/GRT in an amount of $144,451 or greater, except that an appropriate deductible clause (maximum $5,000 deductible) will be permitted. Also including any ancillary equipment and any other property used in the operation of Beverly Ann's;

• C. Comprehensive general liability insurance and product liability insurance coverage in such amounts and upon such terms as may generally be customary for a mobile cookie business located in your Protected Territory, but not less than $1,000,000, insuring both you and us against all claims, suits, obligations, liabilities and damage, including attorney fees, based upon or arising out of actual or alleged personal injuries or property damage relating to the use or condition of the Franchise;
• D. You must procure, maintain and provide evidence of automobile (truck) vehicle liability insurance covering the driving of the GRM/GRT, Hire/Non-Owned Autos and any Additional Equipment or vehicles used in your business in an amount of not less than $1,000,000; and
• E. Such additional insurance as may be required by the terms of any lease or mortgage for the Franchise.

We may periodically increase the amounts of coverage required under these insurance policies and/or require different or additional insurance coverage at any time. You may purchase all of your insurance through the captive insurance program offered by our affiliate, Kona Insurance. The captive insurance program is a comprehensive property and casualty insurance program covering the Beverly Ann's Cookie franchisees in the following areas: Commercial Auto Liability; Commercial Auto Physical Damage; Commercial General Liability; Property Coverage and Inland Marine; Workers Compensation; and Commercial Umbrella. The program is underwritten by Great American Insurance Group and administered by Cornerstone Insurance.

All insurance policies, except for employment liability insurance policies, must name us and any affiliates we designate as additional named insured parties and provide for 30 days prior written notice to us of a policy's material modification, cancellation, or expiration. You must furnish us with a copy of your Certificate of Insurance within ten days after the policy is issued or renewed.

Approved Products and Services

We may develop proprietary food products ("Products") and may develop and own proprietary recipes ("Proprietary Recipes").

Source: Item 8 — RESTRICTIONS ON SOURCES OF SERVICES AND PRODUCTS (FDD pages 29–32)