What standards are Master Franchisees required to maintain at their Bhc restaurants and ensure Subfranchisees maintain?

ll pass through to the Master Franchisees. Beyond these discounts, Franchisor do not provide material benefits to Master Franchisee because of Master 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, Master 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 Master Franchisee fulfill its obligations to Master 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 Master Franchise Business.
• (b) Master Franchisee must, and ensure that your Subfranchisees, sell to customers 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 at the BHC Restaurants in accordance with this Agreement and the Operations Manual (as periodically amended by Franchisor). Master Franchisee must only operate the Franchised Business at a Franchised BHC Restaurant, and ensure the Subfranchisees only operate their Business, in strict accordance with the procedures set forth in the Operations Manual or otherwise provided to Master Franchisee by Franchisor in writing. Master Franchisee must, and ensure the Subfranchisee, maintain an adequate level of supplies and inventory in order to properly operate the BHC Restaurant. Online ordering by customers of BHC

Products may only be made through the authorized page on Franchisor's website. Master Franchisee must, and ensure the Subfranchisee, use the standard signs and formats that Franchisor prescribes in operating the 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 Master Franchisee comply, and ensure that Subfranchisees 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 Master 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 a BHC Restaurant. If Franchisor does so, Master Franchisee may not, and ensure that Subfranchisees do 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 BHC Restaurant, Franchisor may designate maximum and minimum retail prices to be charged for BHC Products.

• (d) Master 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 Master Franchisee experiences a Force Majeure.

• (e) If the BHC Restaurant is configured for the on-premises consumption of beer and wine, Master Franchisee must, and ensure the Subfranchisees do, obtain and maintain the necessary licenses and permits from state or local agency regulating the on- premises sale and consumption of beer and wine to permit Subfranchisees to offer and sell at the 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 Master Franchisee's responsibility to determine exactly what this liquor license will cost. Master Franchisee must ensure that the Subfranchisees always supervise its employees to make sure Subfranchisee customers are served and consume alcoholic beverages responsibly. Master Franchisee must also ensure that the Sublicensees always employ and maintain enough security personnel on and near the BHC Restaurant premises to provide adequate care and custody of Master Franchisee's customers.

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

• (g) Master Franchisee must notify Franchisor in writing within 10 business days after Master 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 BHC Restaurant or the Franchised Business, or that may adversely affect Master Franchisee's operations at the BHC Restaurant or Master Franchisee's ability to meet its obligations under this Agreement.

• (h) If anything occurs at the BHC Restaurant or in the Development Area that causes or may cause harm or injury to retail customers or Master Franchisee's employees, Subfranchisees, or that may damage the System, Marks, or image or reputation of the Franchised Business or Franchisor or Franchisor's affiliates, Master 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. Master Franchisee must cooperate fully with Franchisor in any response to an incident described in this section 8.1(h).

• (i) If there is any bona fide dispute as to any liability for taxes assessed or other indebtedness, Master Franchisee may contest the validity of the amount of the tax or indebtedness in accordance with procedures of the taxing authority or applicable law. However, Master Franchisee may not permit a tax sale or seizure by levy or similar writ or warrant, or attachment by a creditor to occur against the premises of the BHC Restaurant or any of its improvements.

• (j) Without Franchisor's prior written consent, Master Franchisee may not, and ensure the Subfranchisees to not, engage in any "Co-branding" (as specified below) with other businesses nor allow subtenants in the BHC Restaurant. Franchisor is not required to approve any Co-branding chain or arrangement except in Franchisor's discretion, and only if Franchisor recognizes that Co-branding chain as an approved co-brand for operation within the System. "Co-branding" means the operation of an independent business, product line or operating system owned or licensed by another entity (not Franchisor) featured or incorporated within Master Franchised BHC Restaurant or the Franchised Business operated by Master Franchisee in the Development Area or adjacent to the BHC Restaurant and operated in a manner likely to cause the public to perceive it to be related to the BHC Restaurant and Franchised Business licensed to Master Franchisee hereunder.

• (k) Master Franchisee agrees to ensure that the Subfranchisees diligently consider customer reviews and respond to customer indications of dissatisfaction with services rendered by Master Franchisee or Subfranchisees in a diligent and professional manner and agrees to cooperate with representatives of Franchisor in any investigation undertaken by Franchisor of complaints respecting Master Franchisee's or Subfranchisee's activities.

8.2 Operations Manual.

• (a) Master Franchisee must operate, and ensure the Subfranchisees operate, the Franchised Business in accordance with the Operations Manual, a copy of which will be loaned to Master Franchisee (and Master Franchisee may be given access to a digital copy of the Operations Manual on or through Franchisor's website). Master Franchisee may also be provided with a hard copy of all or portions of the Operations Manual at Initial Training or afterwards. Franchisor has the right to modify the Operations Manual at any time by the addition, deletion, or other modification of the provisions thereof. All such additions, deletions or modifications are effective on such date as designated by Franchisor after delivery to Master Franchisee or the digital copy maintained on Franchisor's website is changed.
• (b) All additions, deletions or modifications to the Operations Manual are equally applicable to all similarly situated BHC Master Franchisees. As periodically modified by Franchisor, the Operations Manual will be deemed to be an integral part of this Agreement and references to the Operations Manual made in this Agreement, or in any amendments or exhibits hereto, are deemed to mean the Operations Manual. If there is any discrepancy or dispute about the version of the Operations Manual that Master Franchisee may have printed and maintain, the master copy of the Operations Manual that Franchisor maintains at its headquarters will be the controlling version and will supersede all prior versions.

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