What must a Bhc franchisee maintain to properly operate the Franchised BHC Restaurant?

t of the System but not on behalf of individual franchisees. Currently, there is no purchasing or distribution cooperative, but Franchisor reserves the right to create a cooperative and require Franchisee to participate. Franchisor may receive volume discounts for the System which Franchisor will pass through to the franchisees. Beyond these discounts, Franchisor do not provide material benefits to Franchisee because of Franchisee's use of approved suppliers.

8. OPERATION OF FRANCHISED BUSINESS

8.1 Operational Requirements.

• (a) At all times, and subject to applicable state law and regulations, Franchisee must be, or employ, a General Manager who will devote his or her entire time during normal business hours, as defined in the Operations Manual, to the management, operation, and development of the Franchised Business. The General Manager must ensure that Franchisee fulfils its obligations to Franchisee's customers in a timely and professional manner and he or she may not engage in any other business requiring his or her active participation during normal business hours. At least one Principal Equity Operator, with or through the General Manager, must participate personally in the direct operation of the Franchised BHC Restaurant.

• (b) Franchisee must sell to customers at Franchisee's Franchised BHC Restaurant BHC Products and other food and beverages specified in Franchisor's then authorized menu, and related products and accessories supplied by designated vendors and approved suppliers for resale by Franchisee at Franchisee's Franchised BHC Restaurant in accordance with this Agreement and the Operations Manual (as periodically amended by Franchisor). Franchisee must only operate the Franchised Business at Franchisee's Franchised BHC Restaurant, in strict accordance with the procedures set forth in the Operations Manual or otherwise provided to Franchisee by Franchisor in writing. Franchisee must maintain an adequate level of supplies and inventory in order to properly operate Franchisee's Franchised BHC Restaurant. Online ordering by customers of BHC Products may only be made through the authorized page on Franchisor's website. Franchisee must use the standard signs and formats that Franchisor prescribes in operating the Franchised BHC Restaurant and conducting the Franchised Business.

• (c) To protect and maintain the integrity, reputation and goodwill of the System and the Marks, Franchisor requires that Franchisee comply with the methodology Franchisor prescribes in providing BHC Products to customers. To enhance uniformity in the delivery of goods and services to retail customers by Franchisor's franchisees and the strength of Franchisor's Marks in inter-brand competition, and subject to applicable federal and state antitrust laws, Franchisor may recommend retail prices for specific BHC Products and other products and services Franchisor authorize for sale at Franchisee's Franchised BHC Restaurant. If Franchisor does so, Franchisee may not advertise or promote (whether by telephone, printed materials, or any other media, including social media) retail prices that are inconsistent with these recommended prices. Also, to the extent permitted by federal and state law applicable to the Franchised BHC Restaurant, Franchisor may designate maximum and minimum retail prices to be charged for BHC Products.

• (d) Franchisee's Franchised BHC Restaurant must be open on a full-time basis in accordance with the hours of operation as designated by Franchisor. The obligation to remain open will not apply if Franchisee experiences a Force Majeure.

• (e) If the Franchised BHC Restaurant is configured for the on-premises consumption of beer and wine, Franchisee must obtain and maintain the necessary licenses and permits from Franchisee's state or local agency regulating the on- premises sale and consumption of beer and wine to permit Franchisee to offer and sell at the Franchised BHC Restaurant beer and wine as authorized in the Operations Manual (or otherwise by Franchisor in writing). The costs of these licenses and permits vary, but it is Franchisee's responsibility to determine exactly what this liquor license will cost. Franchisee must always supervise its employees to make sure Franchisee's customers are served and consume alcoholic beverages responsibly. Franchisee must also always employ and maintain enough security personnel on and near the Franchised BHC Restaurant premises to provide adequate care and custody of Franchisee's customers.

• (f) Franchisee must promptly satisfy any bona fide indebtedness that Franchisee incurs in operating the Franchised BHC Restaurant and the Franchised Business. Contractors, subcontractors, vendors, and suppliers providing services to Franchisee must be paid in accordance with the terms of their agreements with Franchisee.

• (g) Franchisee must notify Franchisor in writing within 10 business days after Franchisee receives actual notice of the commencement of any investigation, action, suit, or other proceeding, or the issuance of any order, writ, injunction, award, or other decree of any court, agency, or other governmental authority that pertains to the Franchised BHC Restaurant or the Franchised Business, or that may adversely affect Franchisee's operations at the Franchised BHC Restaurant or Franchisee's ability to meet its obligations under this Agreement.

• (h) If anything occurs at the Franchised BHC Restaurant or in the Territory that causes or may cause harm or injury to retail customers or Franchisee's employees, or that may damage the System, Marks, or image or reputation of the Franchised Business or Franchisor or Franchisor's affiliates, Franchisee must immediately inform Franchisor's designated contact person by telephone, e-mail, text, or other electronic messaging medium authorized by Franchisor for this purpose.

Source: Item 23 — Receipts (FDD pages 52–230)