When developing a Black Bear Diner franchised restaurant, what standards must the franchisee comply with?

aurant Build-Out

You are responsible for developing the Franchised Restaurant in compliance with our system and ensuring that all plans and specifications comply with our requirements, applicable laws, and lease requirements. We will give you standard specifications and layouts for a Black Bear Diner restaurant. You must hire an architect acceptable to us to prepare your plans and make any necessary changes to our standard specifications and layout. Our acceptance of your architect will not in any way be our endorsement of your architect or render us liable for your adherence to any federal, state or local codes. You must give us, and we have the right to review and approve all plans and specifications before you begin constructing the Restaurant. You or your architect must certify to us that the architectural renderings, plans, and specifications comply with all applicable federal, state and local codes including the Americans with Disabilities Act. We will perform a final inspection and provide you with a written sign-off if the build-out meets our approval. We must sign off on the final build out prior to your beginning operation of the Franchised Restaurant.

You must hire a general contractor to complete the build-out of your Black Bear Diner restaurant. You must purchase, at your expense, all fixtures, furnishing and signs as we may periodically approve. To ensure a uniform image throughout the Black Bear Diner system, you must utilize a proprietary Décor Package and Carved Bear Package in the build out of your Franchised Restaurant. The Décor Package includes items used for the decoration of your Franchised Restaurant and includes bear-themed posters, photographs, signs, silhouettes and wallpaper. A list of items included in the standard Décor Package is included as Exhibit B to the Franchise Agreement. The Carved Bear Package includes a grouping of colorful, wood-carved

bears depicted in playful, inviting poses which are designed to welcome customers to your Franchised Restaurant. A list of items included in the Carved Bear Package is included as Exhibit C to the Franchise Agreement. Both the Décor Package and the Carved Bear Package must be purchased from designated suppliers and installed by your general contractor. We will assist you in placing your order with the designated suppliers of these packages.

We are currently an approved supplier of Development Services for your Franchised Restaurant build-out. See Items 1 and 5.

Franchised Restaurant Operation

Purchases and Suppliers. You must buy all food and beverage items including produce and dry goods, ingredients, kitchen and other equipment, furnishings, supplies, materials, paper products, and other items used or offered for sale at the Franchised Restaurant only from suppliers (including manufacturers, distributors, and other sources) that satisfy our then-current standards and specifications; possess adequate quality controls and capacity to supply your needs promptly and reliably; and have received our approval. We reserve the right to approve and/or designate, from time to time, contractors, manufacturers, vendors, distributors, suppliers, producers, terms, and distribution methods for any goods and services, which include insurance, products, equipment, supplies, and materials. You must purchase all goods and services required for the operation of your Black Bear Diner Restaurant from an approved supplier (which may be only one supplier for any given good or service) under the terms and in the manner we designate. If we or our affiliates designate that such goods and/or services are to be purchased through approved third party suppliers, then you must purchase such goods and/or services from such suppliers according to the terms and in the manner which we approve. We may designate only one exclusive supplier for any product and/or service.

If we designate one or more exclusive suppliers for a particular good or service, you may not request to utilize an alternative supplier. However, if an exclusive supplier has not been designated and you desire to use any item, service or supplier in operating the Franchised Restaurant that we have not approved (for items or services that must meet our specifications or require supplier approval), you will first send us sufficient information, specifications and/or samples for us to determine whether the item or service complies with our standards and specifications or the supplier meets our criteria. We may charge a reasonable fee for inspection and/or testing, not to exceed $1,000, and will decide within a reasonable time, typically 30 days, after receiving all requested information whether any proposed item or service meets our specifications or if you may purchase or lease items or services from a proposed supplier. We apply the following general criteria in approving a proposed supplier: ability to provide sufficient quantity of product; quality of products and/or services at competitive prices; production and delivery capability; dependability and general reputation of the supplier and willingness to pay us a fee to join our key vendor network. In addition, suppliers of food products must meet our standards for testing and auditing to assure quality, safety and nutrition. We will notify you in writing of our decision regarding the approval or disapproval of any supplier or item or service. In addition, we will notify you in writing of our revocation of approval of any supplier, or of any item or service no longer meeting our specifications. You may be required to sign contracts with third party suppliers in the form they specify.

Fountain Beverages. We currently maintain purchasing and pricing arrangements for the supply of fountain and packaged beverages including soft drinks, teas, waters, isotonics, energy drinks, juices, juice drinks, dairy-based and coffee-based beverages. Pepsi and Dr. Pepper are the only approved beverage lines for your Franchised Restaurant. You must feature and exclusively purchase your requirements of beverage products from full-line suppliers of Pepsi and Dr. Pepper

products. Certain funds will be paid by beverage suppliers directly to qualifying franchisees and others to us. These funds may be designated for general and in-store advertising, system-wide promotions and/ or franchise conventions.

Merchant and Gift Cards. We require all franchisees to accept major credit cards for customer purchases. You may be required to invest in additional equipment and incur fees from the credit card vendors that we designate. We also have an electronic gift card program and you must participate in this program. As part of the gift card program you and other franchisees will issue stored value cards to customers for use as gift certificates, promotional cards and restaurant credit. When a gift card is redeemed we will pay the redeeming franchisee the amount of the purchase from a central gift card fund that we maintain.

Digital Jukebox Lease & Music Royalty Licenses. We have a sole supplier for the installation and maintenance of the digital jukebox you will use in your Franchised Restaurant. You will lease your digital jukebox and procure the appropriate music rights licenses from our supplier. Our supplier currently leases the jukebox and music to you at $350 a month, but the amount is subject to change at the supplier's discretion. In order to install the jukebox, you must provide a suitable prewired location within your Franchised Restaurant. In addition, you will need to maintain DSL and phone lines in order to download music and for its ongoing operation.

Computer System. You are required to purchase and utilize a computer system including digital kitchen display system, point-of-sale system, including hardware and software, as more fully described in Item 11. You will purchase the Computer System and enter into license agreements for software with approved supplier(s). Under the terms of certain license agreements we have negotiated with third party suppliers of software used in the operation of the Computer System, you are required to pay the monthly licensing fee directly to us for your use of the software. We then remit your and other franchisees' license fees to the software licensor. During our most recent fiscal year ended December 25, 2024, we collected license fees from franchisees totaling $467,624 for software licenses. Because we serve only as a conduit for these payments they do not appear as revenue on our financial statements. As noted in Item 6, you must use an approved online ordering and delivery service that integrates with the Computer System.

Insurance. You must purchase insurance and provide us copies of all insurance policies with the minimum coverages and limits specified below or otherwise stated in the Manual.

Source: Item 8 — RESTRICTIONS ON SOURCES OF PRODUCTS AND SERVICES (FDD pages 22–26)