If I propose to use Alternative Supplies for my Bhc restaurant, what information must I submit to Bhc?

Except where we identify a sole single source, if you, your Affiliate Franchisee and/or your Subfranchisees propose to use in the operation of your Affiliate Franchisee and/or your Subfranchisee's BHC Restaurant any product, supply, material, furnishing or equipment which has not yet been approved by us as conforming to our specifications and quality and system standards ("Alternative Supplies") and/or from a supplier not yet approved in writing by us ("Alternative Supplier"), you must first notify us in writing and must submit to us, upon request, sufficient information, specifications, and samples so that we can determine whether the item or service complies with System standards or the supplier meets our supplier criteria.

We will provide you with written approval or disapproval within a reasonable time period (typically 30 days).

You may not, and must ensure that your Affiliate Franchisee your Subfranchisees not, use any product, supply, material, furnishing or equipment that we have not approved. Supplier approval will depend on product quality, delivery frequency and reliability, service standards, financial capability, customer

relations, concentration of purchases with limited suppliers to obtain better prices and service, and/or a supplier's willingness to pay us or our affiliates for the right to do business with our System. We may inspect or re-inspect the facilities and products of any approved supplier and revoke our approval if the supplier fails to continue to meet our criteria and specifications.

As a condition of approval, you, your Affiliate Franchisee and your Subfranchisees, and/or any supplier must reimburse us for all costs and expenses incurred by us associated with any testing, including travel and lodging expenses together with daily allowance incurred where we deem it necessary to visit a supplier's facilities.

Nothing contained in this Disclosure Document or in the MFA requires us to approve an inordinate number of suppliers of a given item or approve suppliers, which, in our reasonable judgment, would result in higher costs to our franchisees or prevent, in our sole judgment, our effective and economical supervision of suppliers.

We and our affiliates have the right to receive payments, rebates, and other forms of consideration from suppliers based upon your, your Affiliate Franchisee and your Subfranchisees (and other franchisees') purchases of goods, products, and services as described in this Item 8, as well as in connection with any future purchases of any goods, products, and services. Most of these payments are calculated as an amount based on products sold to you, your Affiliate Franchisee and your Subfranchisees. We will retain and use such payments as we deem appropriate or as required by the vendor or by manufacturers.

Source: Item 8 — Restrictions on Sources of Products and Services (FDD pages 25–28)