What is the Big Apple Bagels franchisee's obligation regarding their lease for the store premises?

oyalty fee in the amount of seven percent (7%) of the Gross Revenues of the Store (as defined in Paragraph 8.c. hereof).

3. LOCATION AND DEVELOPMENT OF STORE

a. Location and Lease.

• i. The location of Franchisee's Store must be approved by Franchisor. Franchisee may operate the Store only at the location specified in Paragraph 1.a. and Rider A to this Agreement and may not relocate the Store except with Franchisor's prior written consent. If the site for the Store has not been located by Franchisee at the time of execution of this Agreement, Franchisee agrees to locate and submit to Franchisor for approval, within ninety (90) days after the date of execution of this Agreement, a site suitable for the operation of a BAGELS Store and acceptable to Franchisor. Franchisee must use a licensed real estate broker who specializes in commercial real estate. Franchisee must locate the site for his Store and provide written detailed site information to Franchisor as Franchisor prescribes. Franchisor shall assist Franchisee in the selection of the site. Franchisor has the right to withhold its approval of a site.
• ii. Franchisee shall submit the lease for the premises of the Store to Franchisor prior to its execution for Franchisor's examination and approval. The lease for the premises of the Store shall state that the premises shall be used only for a BAGELS Store and contain substantially the following provisions:

"Anything contained in this lease to the contrary notwithstanding, Lessor agrees that, without its consent, this lease and the right, title and interest of the Lessee thereunder, may be assigned by the Lessee to BAB Systems, Inc., an Illinois Corporation, or its designee, provided that said BAB Systems, Inc. or its designee shall execute such documents evidencing its agreement to thereafter keep and perform, or cause to be kept or performed, all of the obligations of the Lessee arising under this lease from and after the time of such assignment."

"Lessor agrees that Lessor shall, upon written request of BAB Systems, Inc., disclose to said corporation, all reports, information or data in Lessor's possession with respect to sales made in, upon or from the leased premises."

"Lessor shall give written notice to BAB Systems, Inc., an Illinois corporation (concurrently with the giving of such notice to Lessee), of any default by Lessee under the lease and the said BAB Systems, Inc. shall have, after the expiration of the period during which the Lessee may cure such default, an additional thirty (30) days to cure, at its sole option, any such default."

"Lessor agrees it will not, without the prior written consent of BAB Systems, Inc., modify or terminate this lease. Lessor further agrees it will not grant its consent to the assignment by Lessee of this lease without the prior written consent of BAB Systems, Inc."

"BAB Systems, Inc. or its appointed representatives have the right to enter the leased premises to make any modification necessary to protect the Trademarks of BAB Systems, Inc., or to cure any default under the Franchise Agreement or the Lease."

"In the event the Lessee does not exercise any options or rights to renew or extend the Lease, Lessor shall give BAB Systems, Inc. notice of such failure by Lessee to exercise such options or rights."

• iii. Franchisee agrees that he will not execute a lease which has for any reason been disapproved by Franchisor. Franchisee shall deliver a copy of the signed lease to Franchisor within fifteen (15) days of execution thereof.

• iv. Franchisee shall execute a Collateral Assignment of Lease, attached hereto as Rider B, by which Franchisee assigns to Franchisor all of his right, title and interest as tenant under the lease for the BAGELS Store premises. The assignment is for collateral purposes and may be exercised only upon a default by Franchisee under his lease or under this Agreement. Franchisor's approval of Franchisee's lease is conditioned on receipt of the signed Collateral Assignment.

• v. Franchisee's execution of a lease for a site for the BAGELS Store shall constitute acceptance by Franchisee of such site and location and of the terms of such lease, sublease or purchase.

• vi. Franchisor's approval of the lease or sublease does not constitute a warranty or representation of any kind, express or implied, as to its fairness, suitability or profitability or as to Franchisee's ability to comply with its terms.

• b. Store Development. Franchisee agrees that prior to obtaining possession of the site for the BAGELS Store, he shall secure all financing required to fully develop the BAGELS Store.

Source: Item 22 — CONTRACTS (FDD pages 86–87)