What are the restrictions on using Chop5 Salad Kitchen's Intellectual Property as a franchisee?

System" means our system developed for the operation of a Restaurant, the distinctive characteristics of which include: (a) proprietary recipes and methods of preparing food and beverage items, including made-to-order salads, bowls and soups; (b) distinctive interior and exterior designs, décor and color schemes; (c) standards and specifications for the furniture, fixtures and equipment utilized by a CHOP5 Salad Kitchen; (d) sales techniques and merchandising, marketing, advertising and inventory management systems; and (e) standardized procedures for operating and managing a CHOP5 Salad Kitchen.

2. Background. In your capacity as an owner (or the spouse of an owner) of Franchisee, you may gain knowledge of our System and Know-how. You understand that protecting the Intellectual Property is vital to our success and that of our franchisees and that you could seriously jeopardize our franchise system if you were to unfairly compete with us or misuse our Intellectual Property. In addition, you understand that certain terms of the Franchise Agreement apply to "owners" and not just Franchisee. You agree to comply with this Agreement to: (a) avoid damaging our System by engaging in unfair competition; and (b) bind yourself to the terms of the Franchise Agreement applicable to owners.

3. Brand Protection Covenants.

• (a) Intellectual Property and Confidential Information. You agree to:
  • (i) refrain from using the Intellectual Property or Confidential Information in any capacity or for any purpose other than the operation of Franchisee's Restaurant in compliance with the Franchise Agreement and Manual;
  • (ii) maintain the confidentiality of Confidential Information at all times;
  • (iii) refrain from making unauthorized copies of documents containing Confidential Information;
  • (iv) take all steps we reasonably require to prevent unauthorized use or disclosure of Confidential Information; and
  • (v) immediately stop using the Intellectual Property and Confidential Information at such time that you are (or your spouse is) no longer an owner of Franchisee.

System" means our system developed for the operation of a Restaurant, the distinctive characteristics of which include: (a) proprietary recipes and methods of preparing food and beverage items, including made-to-order salads, bowls and soups; (b) distinctive interior and exterior designs, décor and color schemes; (c) standards and specifications for the furniture, fixtures and equipment utilized by a CHOP5 Salad Kitchen; (d) sales techniques and merchandising, marketing, advertising and inventory management systems; and (e) standardized procedures for operating and managing a CHOP5 Salad Kitchen.

2. Background. You are an officer, director, employee or independent contractor of Franchisee. As a result of this association, you may gain knowledge of our System and Know-how. You understand that protecting the Intellectual Property is vital to our success and that of our franchisees and that you could seriously jeopardize our franchise system if you were to unfairly compete with us or misuse our Intellectual Property. To avoid such damage, you agree to comply with the terms of this Agreement.

3. Brand Protection Covenants.

• (a) Intellectual Property and Confidential Information. You agree to:
  • (i) refrain from using the Intellectual Property or Confidential Information in any business or for any purpose other than the operation of Franchisee's Restaurant;
  • (ii) maintain the confidentiality of all Confidential Information at all times;
  • (iii) refrain from making unauthorized copies of documents containing Confidential Information;
  • (iv) take all steps we reasonably require to prevent unauthorized use or disclosure of Confidential

Information; and

(v) immediately stop using the Intellectual Property and Confidential Information at such time that you are no longer an officer, director, employee or independent contractor of Franchisee.

You agree to assign to us or our designee, without charge, all rights to any Improvement developed by you, including the right to grant sublicenses. If applicable law precludes you from assigning ownership of any Improvement to us, then such Improvement shall be perpetually licensed by you to us free of charge, with full rights to use, commercialize and sublicense the same.

• (b) Unfair Competition.

• "Franchisee" means the CHOP5 Salad Kitchen franchisee for whom you are an officer, director, employee or independent contractor.

• "Improvement" means any idea, addition, modification or improvement to the (a) goods or services offered or sold at a Restaurant, (b) method of operation of a Restaurant, (c) processes, systems or procedures utilized by a Restaurant, (d) marketing, advertising or promotional materials, programs or strategies utilized by a Restaurant or (e) trademarks, service marks, logos or other intellectual property utilized by a Restaurant, whether developed by you, Franchisee, us or any other person.

• "Intellectual Property" means, collectively or individually, the Business Data, Copyrighted Materials, Improvements, Know-how, Marks and System.

• "Know-how" means and includes our (and our affiliates') trade secrets and other proprietary information relating to the design, construction, development, marketing or operation of a Restaurant including, but not limited to: architectural plans, drawings and specifications for a prototype Restaurant; site selection criteria; recipes; methods and techniques; standards and specifications; policies and procedures; supplier

lists and information; marketing strategies; merchandising strategies; financial information; and information comprising the System or included in the Manual.

"Manual" means our confidential brand standards manual for the operation of a Restaurant.

Source: Item 23 — RECEIPT (FDD pages 50–178)