What are the mandatory standards, specifications, operating procedures, and rules that Cicis franchisees must comply with, also known as the 'System Standards'?

OURCES OF PRODUCTS AND SERVICES**

Standards and Specifications: In order to maintain the quality and uniformity of all food products, menu items, ingredients, services, products, materials, forms, items, supplies, fixtures, furnishings and equipment utilized in or by Cicis Restaurants, we may, at our discretion, issue certain mandatory standards, specifications, operating procedures and rules (the "System Standards"). You must strictly comply with all System Standards. In constructing and operating the Restaurant, you must use only those types of food and beverage items, condiments, construction and decorative materials, fixtures, equipment, furniture and signs and other products and services ("Operating Assets") that we have approved according to our System Standards for appearance, function and performance. We will not issue to you or to our approved suppliers (except as we deem necessary for purposes of production) the System Standards for proprietary Operating Assets. We will otherwise communicate our System Standards and the approved Operating Assets to you in the

prototype architectural plans for a Cicis Restaurant, in the Operations Manual and otherwise in writing.

Approved or Designated Suppliers; Restricted Purchases: To further facilitate consistency and quality among Cicis Restaurants and our ability to leverage volume purchasing power, we may approve or designate vendors and suppliers for some or all the Operating Assets. We are not approved suppliers of any Operating Asset but as noted in Item 5 above, our affiliate, JMC, is the sole approved supplier of certain items that you will use in the development and operation of your Cicis Restaurant. You will be required to participate in our gift and loyalty card programs that are currently conducted by and through our affiliate, CiCi Services. We will provide a list of approved and designated suppliers in the Operations Manuals or otherwise in writing.

We have designated third-party suppliers for the following Operating Assets and you must purchase such goods and services from those suppliers: food and beverage products; the initial restaurant equipment, furniture, fixture, supplies & décor package; smallwares; branded merchandise; the point-of-sale system; digital menu boards; game room card readers; computer system and other technology infrastructure requirements; vehicles for delivery; third-party delivery service providers; construction contractor; marketing materials; and insurance.

The total amount of required purchases of goods and services by franchisees constitute 90% to 95% of the total cost incurred by you in establishing your Cicis Restaurant and 90% to 95% of the total cost incurred by you in operating your Cicis Restaurant.

Insurance: Before your Cicis Restaurant opens for business and throughout its operation, you must secure and maintain the insurance coverage required by us, which includes the following:

• (1) Commercial General Liability Insurance, personal injury, advertising injury, completed operations, products liability, and fire damage coverage, in the amount of $1,000,000 per occurrence limit with a $2,000,000 general aggregate and a $2,000,000 product aggregate limit; fire legal liability of $50,000, and a premises medical limit of $2,500.
• (2) "All Risks" coverage for the full cost of replacement of your Cicis Restaurant premises and all other property in which we may have an interest and business income insurance in an amount sufficient to cover continuing obligations to us in the event of a covered loss.
• (3) Automobile liability coverage, including coverage of owned, non-owned, and hired vehicles, with coverage in amounts not less than $1,000,000 combined single limit.
• (4) An "umbrella" policy providing excess coverage of the automobile liability, general liability, and employers liability policies with limits of not less than $1,000,000.
• (5) Worker's compensation insurance to provide statutory coverage in the applicable state, and employers liability coverage with limits of $500,000/$500,000/$500,000 or, if permissible under applicable law, any legally appropriate alternative, provided that you (i) maintain an excess indemnity or "umbrella" policy covering employer's liability and a medical/disability policy covering medical expenses for on-the-job accidents, which policy or policies will be written by a responsible carrier meeting the requirements set forth above and which will contain such coverage amounts as you and we mutually agree upon and (ii) conduct

and maintain a risk management and safety program for your employees that you and we mutually agree is appropriate.

• (6) Cyber insurance policy with a coverage of $500,000 per occurrence and $500,000 in aggregate.
• (7) Liquor liability/dram shop insurance policy with a coverage of $1,000,000 per occurrence and $2,000,000 in aggregate, if you sell alcoholic beverages.
• (8) Such other insurance as may be required by the landlord of the premises and by the state or locality in which the Restaurant is located and operated.

You must obtain coverage from responsible carriers rated "A VII" or better by the A.M. Best Company, Inc. and who are reasonably acceptable to us. You must keep this coverage in effect during the term of the Franchise Agreement. You may elect reasonable deductibles. All of the policies must name us, our affiliates and the officers, directors, shareholders, partners, agents, representatives, and employees of each of them, as additional insureds and must include a waiver of subrogation in favor of all those parties. Policies must provide the additional insureds a 30-day advance notice in the event of policy cancellation. We may change the types of insurance and coverage amounts you are required to obtain in our sole discretion.

Supplier Approval Procedure

We must approve any supplier in writing before you purchase any Operating Asset from such supplier. Our grant or denial of approval to use a particular supplier is based in part on our determination of whether the supplier and its products meet or exceed our strict specifications and standards for reliability. We will not be required to consider an alternative to any supplier that we have designated as the sole supplier of a particular product or service. With that exception, if you wish to purchase, lease, or use any Operating Asset from a supplier we have not approved, you must submit a written request for approval, or must ask the supplier to do so. You must permit our representatives to inspect the supplier's facilities and that samples from the supplier be delivered to us or to an independent laboratory for testing. You or the supplier must pay the cost of the inspection and the cost of the test. This procedure does not obligate us to approve any particular supplier. We will notify you of our approval or disapproval of any proposed supplier within 15 days after we complete our inspection and evaluation process. We reserve the right to re-inspect the facilities and products of any approved supplier and to revoke our approval if the supplier fails to continue to meet our standards. We may revoke our approval of any supplier at any time and may designate ourselves, our affiliate, or a third party as the exclusive source for any particular item. We do not provide our criteria for approvin

Source: Item 8 — RESTRICTIONS ON SOURCES OF PRODUCTS AND SERVICES (FDD pages 25–28)