Does Cost Cutters Family Hair Salon have any liability for taxes related to the franchisee's business?

[Item 23: RECEIPT]

COST CUTTERS will have no liability for these or any other taxes and the FRANCHISEE will indemnify COST CUTTERS for any such taxes that may be assessed or levied against COST CUTTERS which arise or result from the FRANCHISEE'S Cost Cutters Business.

It is expressly understood and agreed by the Personal Guarantors to this Agreement that their personal guaranty applies to the prompt filing of all returns and the prompt payment of all taxes which arise or result from the FRANCHISEE'S Cost Cutters Business.

• 7.17 REIMBURSEMENT OF COST CUTTERS FOR TAXES. In the event any "franchise" or other tax (other than income taxes) which is based upon the Gross Revenues, receipts, sales, business activities or operation of the FRANCHISEE'S Business or any payments by the FRANCHISEE to COST CUTTERS (including without limitation, Continuing Fees and Advertising Fees) is imposed upon COST CUTTERS by any taxing authority, then the FRANCHISEE will reimburse COST CUTTERS in an amount equal to the amount of such taxes and related costs imposed upon and paid by COST CUTTERS.

The FRANCHISEE will be notified in writing when COST CUTTERS is entitled to reimbursement for the payment of such taxes and, in that event, the FRANCHISEE will pay COST CUTTERS the amount specified in the written notice within ten (10) days of receipt of the written notice.

• 7.18 BUSINESS HOURS; PERSONNEL. The FRANCHISEE'S Cost Cutters Business will be open for business on such days and for such hours as COST CUTTERS may designate.

The FRANCHISEE will, during business hours, have a salon manager on duty who is responsible for supervising the employees and the business operations of the FRANCHISEE'S Business.

The FRANCHISEE will have a sufficient number of adequately trained and competent personnel on duty at all times to guarantee efficient service to the FRANCHISEE'S customers.

The FRANCHISEE will require its employees to wear the standard attire or uniforms approved by COST CUTTERS.

All persons employed by the FRANCHISEE must practice good personal hygiene and must wear clean and neat attire or uniforms.

COST CUTTERS encourages the FRANCHISEE to employ at least one (1) full-time person (a "District Manager") for each six (6) Cost Cutters Businesses owned and operated by the FRANCHISEE. [Item 23: RECEIPT]

All equipment will be kept in good working order by the FRANCHISEE at all times and will meet COST CUTTERS' quality standards.

All replacement equipment must comply with COST CUTTERS' then-current standards and specifications.

• 7.14 COMPLIANCE WITH APPLICABLE LAWS. The FRANCHISEE will, at its expense, comply with all applicable federal, state, city, local and municipal laws, ordinances, rules and regulations pertaining to the operation of the FRANCHISEE'S Business, including all laws relating to employees and to the regulation of barbers and cosmetologists and all applicable federal and state environmental laws.

The FRANCHISEE will, at its expense, be absolutely and exclusively responsible for determining the licenses and permits required by law for the FRANCHISEE'S Business, for qualifying for and obtaining all such licenses and permits, and for maintaining all such licenses and permits in full force and effect.

The FRANCHISEE has had an opportunity to obtain legal advice regarding, and currently complies with,

all applicable legal requirements that prohibit unfair, fraudulent or corrupt business practices, including U.S. and other legal requirements that are designed to combat terrorism and terrorist activities. In addition, neither the FRANCHISEE nor any holder of an ownership interest in the FRANCHISEE is named as a 'specially designated national" or "blocked person" as designated by the United States Department of the Treasury's Office of Foreign Assets control under the U.S. PATRIOT Act.

• 7.15 PAYMENT OF OBLIGATIONS. The FRANCHISEE must timely pay all of its noncontested and liquidated obligations and liabilities due and payable to COST CUTTERS, and to suppliers, lessors and creditors of the FRANCHISEE.

The FRANCHISEE'S failure to timely pay all such obligations will be a material breach of this Agreement.

• 7.16 PAYMENT OF TAXES. The FRANCHISEE will be absolutely and exclusively responsible and liable for filing all required tax returns and for the prompt payment of all federal, state, city and local taxes including, but not limited to, individual and corporate income taxes sales and use taxes, franchise taxes, gross receipts taxes, employee withholding taxes, F.I.C.A. taxes and personal property and real estate taxes payable in connection with the FRANCHISEE'S Business.

Source: Item 23 — RECEIPT (FDD pages 76–439)