What right does the Boulder Designs franchisor have regarding payments made by the franchisee?

the Franchisor up to the date of Franchisee's failure to timely commence operations of the Franchised Business and shall not be construed as nor considered to be a penalty

Section 3.2 Royalty Fees

Beginning on the date stated on the Key Terms Page and continuing on the first business day of each calendar month thereafter, for so long as this Agreement shall be in effect, Franchisee shall pay to Franchisor without offset, credit or deduction of any nature, Royalty Fees due to Franchisor. The first payment of the Royalty Fees will take place upon execution of this Agreement; the next monthly Royalty Fee payment will take place on the first business day of the calendar month which follows the month in which this Agreement was executed. Other than increases described in the Key Terms Page, Franchisor reserves the right to increase the Royalty Fee up to 30% over the Term of this Agreement. Franchisee shall have 30 days advance notice prior to the increased Royalty Fee taking effect.

Section 3.3 Taxes

If any taxes, fees, or assessments are imposed on Franchisee's payment of any fees (except taxes imposed on Franchisor's net taxable income), Franchisee shall also pay the amount of those taxes, fees, or assessments within 15 days after receipt of Franchisor's written notice to Franchisee.

Franchisee will promptly pay, when due, all taxes required by any federal, state or local tax authority including unemployment taxes, withholding taxes, sales taxes, use taxes, income taxes, tangible commercial personal property taxes, real estate taxes, intangible taxes and all other indebtedness incurred in the conduct of Franchisee's Boulder Designs Business. Franchisee agrees it will not permit a tax sale or seizure by levy or execution or similar writ or warrant or attachment by a creditor to occur against the location or any asset used in Franchisee's Boulder Designs Business.

Section 3.4 Electronic Transfer

Franchisor has sole discretion to determine and change the method by which Franchisee pays to Franchisor amounts due to Franchisor under this Agreement, which may include collecting payments through Franchisee's billing and collection agent. Currently, Franchisor requires all Royalty Fees and other amounts due from Franchisee to Franchisor to be paid either (a) through an Electronic Depository Transfer Account

or (b) by Franchisee electronically transferring to Franchisor any funds due Franchisor. Within 15 days after successfully completing training, but no later than 30 days prior to opening the Franchised Business, Franchisee shall open and maintain an Electronic Depository Transfer Account ("ACH") and shall provide Franchisor with continuous access to such account for the purpose of receiving any payments due to Franchisor, by signing and returning an ACH Withdrawal Form in the form prescribed by Franchisor. Franchisee will give its financial institution instructions, in a form Franchisor provides or approves, and will obtain the financial institutions agreement to follow these instructions. Franchisee will provide Franchisor with copies of these instructions and agreements. The financial institution's agreement may not be withdrawn or modified without Franchisor's written approval, which approval is within Franchisor's sole discretion. Franchisee will also sign all other forms for fund transfers as Franchisor or the financial institution may request.

Franchisor may require Franchisee's financial institution to send a monthly statement of all activity in the designated account to Franchisor at the same time it sends statements to the Franchisee.

Franchisor may further require Franchisee's financial institution to send any other reports of activity in the Franchisee's Operating Account to Franchisor as Franchisor reasonably determines and requests. Franchisee shall execute any documents Franchisor's or Franchisee's bank requires to establish and implement the Electronic Depository Transfer Account.

If Franchisee maintains any other bank accounts for the Franchised Business, Franchisee must identify these accounts to Franchisor and provide Franchisor with copies of the monthly statements for all of these accounts and the details of all deposits and withdrawals to those accounts along with access to those accounts as set forth in the above paragraphs.

Franchisee shall make timely deposits to the account sufficient to cover amounts owed to Franchisor prior to the date such amounts are due. Franchisee shall execute any documents Franchisor's or Franchisee's bank requires to establish and implement the Electronic Depository Transfer Account. Once established, Franchisee shall not close the Electronic Depository Transfer Account without Franchisor's written consent and the establishment of a replacement Electronic Depository Transfer Account.

Section 3.5 Technology Fee

Franchisee shall pay to Franchisor its then-current technology fee ("Technology Fee") on the first of every month, which is currently defined on the Key Terms page or as otherwise identified in Exhibit 1, as attached to this Agreement as of the Effective Date. Franchisor has the right to increase this fee at Franchisor's discretion upon providing Franchisee 30 days' notice of their intent to increase to the current monthly Technology Fee.

The Technology Fee will cover Franchisor's cost of providing BOULDER DESIGN franchisees technology and other technical resources, including, without limitation, certain internet resources, website, email, intranet address, software, and other technology to facilitate Franchisee's operation of the Franchised Business. The parties acknowledge and agree that the technological environment is rapidly changing and that it is difficult to anticipate the cost of developing, acquiring, implementing, and licensing Internet and communications technologies that may benefit franchisees of the System. Each calendar year, the Technology Fee shall increase automatically by an amount not to exceed 10% of the prior year's Technology Fee. Franchisee agrees to pay the Technology Fee according to the terms prescribed by the Franchisor.

In addition, Franchisor requires Franchisee to purchase, through an approved supplier, the approved point of sale system ("POS"). Franchisee will be responsible for any ongoing upgrades or updates to the POS, ongoing maintenance packages, and computer and software packages after installation. The computer system and/or POS for your Franchised Business will be dedicated to the operation of the Boulder Designs business and used for no other purpose.

Source: Item 22 — CONTRACTS (FDD page 50)