What standards and requirements does Browns Chicken have for suppliers?

ood And Beverage Products, Supplies and Materials.**

All food and beverage products, cooking materials, containers, packaging materials, other paper and plastic products, glassware, utensils, uniforms, menus, forms, cleaning and sanitation materials, and other materials and supplies used in the operation of the Store must conform to the standards and requirements Brown establishes from time to time. Brown has approved and will periodically approve types and/or brands of such products that meet its specifications, and suppliers and distributors of the foregoing products that meet its standards and requirements for suppliers, including standards and requirements relating to quality, prices, consistency, reliability, financial capability, labor relations and customer relations. Brown may from time to time modify its list of approved types and/or brands of products and of approved suppliers, and you must not (after receipt in writing of such modification) reorder any type or brand from any supplier which is no longer approved by Brown.

In order to obtain reduced margins, Brown has approved Wilkens Foodservice as the single distributor for all food, beverage, and dry goods products, other than bakery items. You must purchase all those items from Wilkens Foodservice. Wilkens Foodservice does not pay Brown

any rebates or other payments based on franchisee purchases. The contract with Wilkens Foodservice does not have a term. Upon termination of the contract with Wilkens Foodservice, Brown may approve one or more other distributors. Brown's approval may be conditioned on requirements relating to the frequency of delivery, standards of service, including prompt attention to complaints, or other criteria, and concentration of purchases, as set forth above, and may be temporary, pending a further evaluation of such distributor or other supplier by Brown.

Other than under our arrangement with Pepsi and Dr. Pepper/Seven Up, Inc. we do not currently derive any revenue or other material consideration from your purchases or leases from designated or approved suppliers, although we reserve the right to do so in the future.

There are currently 2 purchasing arrangements for franchisees. One is with Pepsi, which is an approved fountain beverage product supplier. Under the Pepsi agreement, you will have the right to purchase Pepsi fountain syrups from Wilkens at then-current published chain account prices, which prices are subject to change from time to time. The Pepsi agreement provides that Pepsi will pay a rebate into the Brown Advertising Fund based on Franchisees' purchases of Pepsi products. During the fiscal year 2024, Pepsi paid Brown rebates totaling $1,637 which was retained by Brown in its general operating budget.

A second purchasing arrangement is with Dr. Pepper/Seven Up, Inc., which is an approved fountain beverage product supplier. During the fiscal year 2024, Dr. Pepper/Snapple paid Brown rebates totaling $308.25, which was deposited into the Brown Advertising Fund.

If you propose to purchase and use in the operation of the Store, or to offer for sale at or from the Store any type or brand of product which is not then approved by Brown as meeting its specifications and standards, or to purchase any product from a supplier that is not then an approved supplier, you must first notify Brown. If any product is offered by Wilkens, then during the 3 year contract term described above, we will not consider any other suppliers. As for products not offered by Wilkens, we may consider your request to purchase them from other suppliers. Upon request by Brown, you must submit the information, specifications, and samples as Brown requests for examination and/or testing or to otherwise determine whether such type or brand of product or such proposed supplier meets its specifications and standards. Brown will notify you, within a reasonable time, whether it approves such proposed type or brand of product or such proposed supplier. The time in which Brown will approve or disapprove the proposed type or brand of product or supplier will be between 2 to 6 months, depending on the product, the supplier, the speed with which the supplier responds to Brown's requests, and other factors. Brown may from time to time prescribe procedures for the submission of requests for approved types or brands of products or approved suppliers and obligations which approved suppliers must assume.

Food Delivery Services

You must offer your customers the option of purchasing your products through third party food delivery services. Brown will provide you with a list of approved third party food delivery services that you may use for the sale of your products. These delivery services must agree to comply with our standards and requirements for quality, speed, pricing, payment arrangements, and service. You may not use any outside food delivery service providers that have not been approved by us.

The cost of all goods and services you are required to purchase from Brown, from suppliers approved by Brown, and/or under Brown's specifications will represent approximately 80% to 90% of initially establishing your Store, and approximately 50% to 75% of the continuing cost of operating your Store each year.

Lease Or Leaseback Terms.

If you lease the premises of the Store, you must obtain Brown's prior consent to the lease terms. The lease must provide that: (1) Brown will receive notice of any default not less than 10 days prior to the commencement of any action to evict you from the Premises; (2) Brown will have, at its option, 10 days after receipt of notice to cure such default and be substituted for you as lessee under the lease; and (3) the lease shall be assigned to Brown, at Brown's option, upon the termination of the Franchise Agreement by Brown in accordance with its terms, or by you without cause as provided in Paragraph A of Section 20 of the Franchise Agreement. You must sign and have the lessor sign the Collateral Assignment of Lease attached to the Franchise Agreement as Rider B.

You must furnish Brown a copy of the signed lease for your Store's premises within 10 days after it is signed.

If you own the real estate on which the Store is located, we have the right to require you to enter into a lease with Brown. Brown will then sublease the Premises back to you upon the same terms and conditions as the lease. So long as you are in compliance with your Franchise Agreement, Brown will continue to sublease you the Premises. If you default under your Franchise Agreement, Brown has the right to terminate the sublease and take possession of the Premises or sublease them to another party.

Insurance.

During the term of the Franchise, you must maintain in force, under policies of insurance issued by carriers approved by Brown: (1) comprehensive public and product liability insurance and motor vehicle liability insurance (including but not limited to hired and non-owned coverage) against claims brought during or after the term of the Franchise for bodily and personal injury, death and property damage caused by or occurring in conjunction with the operation of the Store or otherwise in conjunction with your conduct of business pursuant to the Franchise, under one or more policies of insurance containing minimum liability protection of $1,000,000 combined single limit; (2) general casualty insurance, including fire and extended coverage, vandalism, and malicious mischief insurance and plate glass and general theft insurance, for the replacement value of the Store and its contents; (3) Employment Practices Liability of no less than $500,000; (4) workmen's compensation insurance as required by law;

Source: Item 8 — RESTRICTIONS ON SOURCES OF PRODUCTS AND SERVICES (FDD pages 19–22)