What federal regulations must a Buff City Soap franchisee comply with?

A franchisee will be required to comply with all federal, state and local laws and regulations that generally apply to private businesses. These include, but are not limited to, the Americans with Disabilities Act (the "ADA"); the Fair Labor Standards Act (the "FLSA"); the rules and regulations of the Equal Employment Opportunity Commission (the "EEOC"); OSHA; Gramm-Leach-Bliley Act; the USA PATRIOT Act; Federal Truth in Lending and other laws dealing with credit transactions and collections; Digital Millennium Copyright Act; regulations governing MMS, SMS, emails and telemarketing; the payment of license fees; general location rules and regulations; and, any advertising or content related rules and regulations. As a public accommodation, your Makery must be accessible to persons with disabilities. Seehttps://www.ada.gov/smbusgd.pdf for more information. Your Franchised Business must accept credit cards and will be obligated to comply with the Payment Card Industry Data Security Standard. The Standard includes twelve requirements for any business that stores, processes or transmits payment cardholder data. For more information see https://www.pcicomplianceguide.org/.

We encourage you to make additional inquiries into those laws and regulations and obtain the assistance of your own legal counsel in that regard. Neither we, nor our affiliates, will be responsible for ascertaining your initial and continuing legal responsibilities. It is your responsibility, on an on-going basis, to investigate and satisfy all local, state, and federal laws and regulations since these can vary from place to place and can change over time.

BCS Makeries sell personal body care products that fall into two regulatory categories: (1) US Food and Drug Administration ("FDA") regulated cosmetics, and (2) non-FDA regulated consumer products, subject to regulation by the Consumer Products Safety Commission ("CPSC").

Advertising of products may also be subject to regulation and enforcement by the Federal Trade Commission ("FTC").

FDA has mandated certain cosmetic labeling requirements.

Cosmetic labels must include: (1) a statement of identity (e.g., lotion); (2) the name and place of business of the manufacturer, packer, or distributor of the cosmetic; (3) a declaration of the net quantity of the product's contents; and (4) ingredients listed in descending order of predominance.

Cosmetics which may be hazardous to consumers when misused must bear, prominently and conspicuously, appropriate label warnings and adequate directions for safe use.

Additional specific label warnings or cautions prescribed by regulation may be required for some cosmetics (e.g., aerosol products, children's bubble bath).

The Tariff Act of 1930 requires that all imported articles state on the label the English name of the country of origin.

The majority of products offered and sold at BCS Makeries are subject to FDA regulations related to product labeling because they are intended for consumer use as cosmetics and are applied to the body.

Personal body care products offered by BCS Makeries intended for consumer use that are not applied to the body are subject to regulation by the CPSC, including, for example, the laundry soaps, soap sleeves, soap dish, and any other non-contact cleaning or related products offered and sold at BCS Makeries.

Those non-FDA regulated, general use consumer products must comply with the Fair Packaging and Labeling Act ("FPLA"), which requires products to contain a statement identifying the commodity, the name and place of the manufacturer, packager, or distributor, and the net quantity of contents.

If any products

qualify as children's products, such products are also subject to applicable children's product laws and regulations.

We provide the required labels for products to be offered and sold at BCS Makeries to franchisees.

You must use only the labels that we provide in connection with packaging and labeling personal body care products offered and sold at BCS Makeries but it will be your responsibility to ensure that all products are properly labelled and meet all appropriate weights and measures.

You must also comply with applicable environmental regulations related to disposal of containers used for storage of lye used in making the products.

Specifically, under the Occupation Safety and Health Administration ("OSHA"); you must comply with requirements relating to worker safety when handling hazardous materials such as lye and making sure that the Makery has sufficient personal protection equipment ("PPE") for workers and such employees are properly trained on use of PPE and safety procedures.

In addition, as most of our body products are produced on the premises of the BCS Makery, you must manufacture products in accordance with the Clean Air Act, specifically as it relates to the pH level, the content of oil and grease in wastewater and disposal of hazardous waste. A franchisee will be required to satisfy all federal regulations and all state and local requirements relating to the disposal of wastewater, including but not limited to, consulting with local authorities, installing appropriate grease traps, obtaining permits where necessary and adhering to on-going monitoring requirements.

Source: Item 1 — THE FRANCHISOR AND ANY PARENTS, PREDECESSORS, AND AFFILIATES (FDD pages 9–12)