Does the Costa Vida Fresh Mexican Grill franchise agreement specify quality standards?

s and sample layouts; equipment; ingredients, specifications, and recipes for authorized food products; methods of inventory control; training programs; and certain operational and business standards and policies, all of which we may improve, further develop or otherwise modify.

B. YOUR ACKNOWLEDGEMENTS.

You acknowledge that you have read and understood this Agreement, our Franchise Disclosure Document, and agreements relating hereto, if any. You acknowledge that you have had ample time and opportunity to consult advisors of your own choosing about the potential benefits and risks of entering into this Agreement. By signing this Agreement, you understand that the Costa Vida concept offers a high-quality, quick-casual dining experience. You accept the proposition that to deliver that experience requires a different approach to the quality of food products, level of design, environment, and customer experience (impacted by the quality of people and training) not typically found in quick-service food establishments. You understand the terms, conditions, and covenants of this Agreement and accept them as being reasonably necessary to maintain the uniformity of our high-quality standards at all Costa Vida Restaurants to protect and preserve the goodwill of the Marks and the integrity of the System. You have conducted an independent investigation of the business contemplated by this Agreement and recognize that the restaurant industry is highly competitive, with constantly changing market conditions and consumer tastes. You recognize that the nature of Costa Vida Restaurants may change over time, that an investment in Costa Vida Restaurant involves business risks, and that the success of the venture is largely dependent on your own business abilities, efforts, and financial resources.

Except as expressly set forth in Item 19 of the Franchise Disclosure Document provided to you prior to the execution of this Agreement, we expressly disclaim the making of, and you acknowledge that you have not received or relied upon, any representation, guaranty, or warranty expressed or implied, as to the sales volume, income, earnings, expenses, revenues, profits or success of Costa Vida Restaurants or the business venture contemplated by this Agreement or the extent to which we will continue to develop and expand the network of Costa Vida Restaurants. You further acknowledge that you have not received or relied on any representations about the franchise, the Company, or its franchising program or policies from us or our officers, directors, shareholders, employees, or agents that are contrary to the statements made in our Franchise Disclosure Document or the terms of this Agreement. Any information acquired by you from other Costa Vida franchisees relating to sales, income, earnings, expenses, revenues, profits or success of any franchised Costa Vida Restaurant does not constitute information obtained from us; nor do we make any representation as to the accuracy of any information. You acknowledge and agree that Costa Vida's officers, directors, employees, and agents act only in a representative, and not in a personal, capacity in connection with any of our dealings with you.

C. YOUR REPRESENTATIONS.

You and your Owners jointly and severally represent and warrant to us that: (1) neither you nor any of your Owners has made any untrue statement of any material fact or has omitted to state any material fact in the written information you have submitted in obtaining the rights granted hereunder; (2) neither you nor any of your Owners has any direct or indirect legal or beneficial interest in any business that may be deemed a Competitive Business, except as you have otherwise completely and accurately disclosed in writing to us in connection with obtaining the rights granted hereunder; and (3) the signing and performance of this Agreement will not violate any other agreement to which you or any of your Owners may be bound. You recognize that we have signed this Agreement in reliance on all of the statements you and your Owners have made in writing in connection with this Agreement.

D. CERTAIN DEFINITIONS.

The terms listed below have the meanings which follow them and include the plural as well as the singular. Other terms are defined elsewhere in this Agreement in the context in which they arise.

"Affiliate" – Any person or entity that directly or indirectly owns or controls the referenced party; that is directly or indirectly owned or controlled by the referenced party, or that is under common control with the referenced party. The term "control" means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of an entity, whether through ownership of voting securities, by contract or otherwise.

"Affiliated Restaurant" – A Costa Vida Restaurant which an Affiliate of ours operates and in which we or our Affiliate owns a controlling interest.

"Brand Standards Book" – The compendium of design, construction and other brand standards which we produce, as modified, supplemented, or otherwise amended from time to time. The Brand Standards Book may be produced in any format or medium, including, without limitation, graphic and videographic elements.

"Confidential Information" – Our proprietary and confidential information relating to the development and operation of Costa Vida Restaurants, including: (1) Operations Manual, Training Program Manual, and other manuals given to you, your Owners and business partners, and your Restaurant Personnel; (2) ingredients, recipes, and methods of preparation and presentation of authorized food and products, including, without limitation, the Recipe Books; (3) site selection criteria for Costa Vida Restaurants and plans and specifications for the development of Costa Vida Restaurants; (4) sales, marketing, and advertising programs and techniques for Costa Vida Restaurants; (5) identity of suppliers and knowledge of specifications, processes, procedures, and equipment, and pricing of authorized food products, materials, supplies, and equipment; (6) knowledge of operating results and financial performance of Costa Vida Restaurants, other than Costa Vida Restaurants you own; (7) methods of inventory control, storage, product handling, training and management relating to Costa Vida Restaurants; (8) computer systems and software programs used or useful in Costa Vida Restaurants including, without limitation, mobile applications and loyalty programs; and (9) any and all other information that we provide you that is labeled or considered proprietary or confidential or which would generally be regarded as confidential in the franchise-restaurant industry.

"Costa Vida Products" – Products approved or required by us or our Affiliates for sale at or from Costa Vida Restaurants, including Mexican and southwestern cuisine, other food items, beverages, clothing, accessories, and other products approved by us or our Affiliates; provided that we have the right to modify and/or discontinue the use of any such products at any time and include additional or substitute products.

"Costa Vida Restaurant" or "Restaurant" – A restaurant featuring Mexican fare with a custom preparedto-order food service counter, or any other outlet selling any Costa Vida Products for on- or off-premises consumption and services, all as designated by us and developed and operated with our approval and

consent, which we, or any of our Affiliates, own, operate or franchise and which uses the Marks and the System.

• "Copyrights" Works of authorship and other categories of work entitled to copyright protection that we license for use in connection with the operation of Costa Vida Restaurants and for which we or any of our Affiliates claim copyright protection.
• "Franchised Restaurant" A Costa Vida Restaurant which is owned, controlled and operated by any person, persons, entity or entities other than us or our Affiliates pursuant to a Costa Vida franchise agreement duly executed by us and them.
• "Investor" Each person or entity, other than the Operating Partner, that has a direct or indirect legal or beneficial ownership interest amounting to less than 10% of all ownership interests in you, if you are an entity. An Investor is not an Owner where such term is capitalized in this Agreement.
• "Marks" –The trademarks, trade names, service marks, logos and other commercial symbols which we authorize you to use to identify Costa Vida Products and/or services offered by Costa Vida Restaurants, including the trademarks and service marks COSTA VIDA and COSTA VIDA FRESH MEXICAN GRILL and the Trade Dress and the goodwill associated therewith; provided that we have the right to modify and/or discontinue the use of these trademarks, trade names, service marks, logos and other commercial symbols and the Trade Dress, and establish, in the future, additional or substitute trademarks, trade names, service marks, logos, commercial symbols or Trade Dress, all of which modifications, additions and substitutions shall immediately upon their use be deemed included within this definition.
• "Net Sales" All revenues received or receivable by you as payment, whether in cash, credit, or other means of electronic payment or exchange, for sales of Costa Vida Products and any other items, goods and services made and offered in the operation of your Costa Vida Restaurant, whether or not these items are approved for sale from the Restaurant, including sales made at or away from your Restaurant. "Net Sales" excludes (i) all federal, state or municipal sales, use, or service taxes collected from customers and paid to the appropriate taxing authority, and (ii) declared tips, gratuities or service charges paid directly by customers to your employees or paid to you and promptly turned over to your employees in lieu of direct tips or gratuities. For items sold pursuant to coupons or other discounts (which must be approved by us), Net Sales also excludes the amount discounted from the purchase price of such items and from sales of pre-paid gift cards or certificates, but franchisees must pay royalties on revenues received on redemption of gift cards or certificates at their Restaurants.
• "Operating Partner" The individual designated in Exhibit B hereto and any replacement thereof approved by us.
• "Operations Manual" All information for the development, establishment and operation of a Costa Vida Restaurant which contains any mandatory or suggested standards, specifications or operating procedures, whether this information is communicated in writing and/or electronically (such as in bulletins, updates, guidelines, newsletters, emails, videotapes, audio tapes, compact discs, computer diskettes, CD-ROMs, presentations, limited access intranet sites, portable storage media, and alternative or supplemental means of communicating information by other media), all as supplemented and amended occasionally, including information with respect to training, management, quality assurance, health, safety, recruitment, security, site selection, site approval processes, standards, customer services, owner's manuals, training manuals and other materials, approved suppliers, and operating system manuals.
• "Owner" Each of your Operating Partner and each entity or person owning directly or beneficially 10% or more of the ownership interests in you. If any Owner within the scope of this definition is itself an entity (including an Owner that is an Owner because of this sentence), the term "Owner" also includes Owners (as defined in the preceding sentence) in such entity. It is the intent of this definition to "trace back" and include within the definition of Owner all natural persons owning the requisite interests to qualify as Owners.

• "Patents" The current and future patents and patent applications, if any, that cover business methods, processes, products, structures, equipment, and designs that we license for use in connection with the operation of Costa Vida Restaurants.
• "Personnel" All persons employed by you in connection with the development, management, or operation of your Restaurant, including persons in general/district management positions for your Costa Vida Restaurants if you have more than one, general managers, prep cooks, assistant managers, team trainers, shift supervisors, hourly associates, and all other persons who work in or for your Restaurant.
• "Recipe Books" The proprietary recipes for the preparation of Costa Vida food which will be loaned to you as set forth in the Franchise Agreement. The Recipe Books may be updated or recalled from time to time, and at all times remain the property of Costa Vida.
• "Reporting Period" A one-week period from 12:00 a.m., MST on Monday to 11:59 p.m., MST on Sunday.
• "Restricted Person" You; each of your Owners; and the spouses, natural and adopted children, and siblings of any of you and your Owners.
• "System Standards," "System" or "Costa Vida System" The business formats, signs, equipment, methods, procedures, designs, layouts, specifications, and arrangements for developing and operating Costa Vida Restaurants, which include, without limitation: the Marks, Trade Dress, building design and layouts, signage, equipment, ingredients, recipes, methods of preparation and specifications for authorized food products, training, methods of inventory control and certain operating and business standards and policies, all of which we may improve, further develop or otherwise modify, including, without limitation, as set forth in the then-current version of the Brand Standards Book produced by us, and any replacement or revision of the same.
• "Trade Dress" The designs, color schemes, signage, décor and images which we authorize you to use in the development and operation of Costa Vida Restaurants, which we or our Affiliates have the right to revise and further develop at any time, including, without limitation, as set forth in the then-current version of the Brand Standards Book produced by us, and any replacement or revision of the same.
• "Your Restaurant" The Costa Vida Restaurant operated by you under this Franchise Agreement.

2. GRANT OF RIGHTS.

A. GRANT OF FRANCHISE.

You have applied for the right to own and operate a Costa Vida Restaurant (the "Restaurant") at and only at, the following location: [_____________________] (the "Premises"). If a site has not yet been selected and approved as of the date of this Agreement, then you must sign and comply with the Site Selection Addendum attached hereto as Exhibit G. The site selected and approved pursuant to the Site Selection Addendum and Section 3.A below will upon approval be deemed the "Premises" for purposes of this Agreement. Subject to the terms and conditions of this Agreement, we grant you a non-exclusive right to operate your Restaurant at the Premises and to use the Marks in the operation of your Restaurant in accordance with the System Standards (the "Franchise").

Source: Item 22 — CONTRACTS (FDD pages 66–67)