What do the System Standards for an Extreme Art Studio franchise contain?

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Our confidential franchise operations manual ("Franchise Operations Manual") states our standards, specifications, and guidelines for all products and services we require you to obtain in establishing and operating your Extreme Art Studio Business, and approved vendors for these products and services. We will notify you of new or modified standards, specifications, and guidelines through periodic amendments or supplements to the Franchise Operations Manual or through other written communication (including electronic communication, such as email, or through a system-wide intranet). The Franchise Operations Manual contains mandatory and suggested standards, specifications, operating procedures, and rules ("System Standards").

Designated and Approved Suppliers

You must purchase or lease approved brands, types, or models of products, services, supplies, operating assets, or other items only from suppliers we designate or approve. If we designate products and services to be purchased through approved and/or designated third-party suppliers, then you will purchase those products and services from the designated suppliers in compliance with the terms and in the manner approved by us or our affiliates. Our affiliates or we may be a designated or approved supplier or distributor, or otherwise be a party to these transactions. We may concentrate purchases with one or more manufacturers, distributors, or suppliers to obtain lower prices and/or the best advertising support and/or services for any group of Extreme Art Studio Businesses franchised or operated by us or our affiliates.

Approval of a product or supplier may be conditioned on requirements relating to product quality, prices, consistency, reliability, financial capability, labor relations, customer relations, frequency and speed of delivery, past experience with our affiliates, concentration of purchases, standards of service (including prompt attention to complaints), or other criteria, and may be temporary pending our continued evaluation of the supplier from time to time. All suppliers must meet the standards and specifications established by us. We will not issue to you or any of our approved suppliers our standards and specifications, except as we deem necessary for purposes of production.

If you would like to purchase or use any products, services, operating assets, or materials that we have not approved or from any unapproved supplier, you must submit to us a written request for approval of the proposed product and/or supplier prior to purchasing any such item. We reserve the right to charge you our then-current new product/supplier application fee and require you to reimburse us for our expenses (which will not exceed the reasonable cost of the research and inspection, and the actual cost of the test) to make the evaluation. We have the right to inspect the proposed supplier's facilities, and to require product samples from the proposed supplier to be delivered at our option either directly to us or to a third party we designate for testing. We shall notify you in writing of the approval or rejection of the proposed supplier within a reasonable time after completion of the investigation of the proposed supplier. If we fail to respond within 60 days, your request will be deemed denied. We may withhold approval of the supplier. We are likely to reject your request for a new supplier without conducting any investigation if the proposed supplier is for items bearing our Marks, or if we already have designated an exclusive supplier for the item proposed to be offered by the new supplier. We reserve the right to periodically re-inspect the facilities and products of any approved supplier and to revoke our approval if the supplier does not continue to meet any of our criteria. We also reserve the right to charge suppliers a royalty for the right to manufacture products for use in Extreme Art Studio Businesses.

You must purchase certain products and supplies that contain our Marks. You must purchase the implementation services from us. We are currently the only approved supplier of this item. We and our affiliates reserve the right to become a designated supplier of additional products, supplies, or materials in the future. You may also purchase Uniforms at any time, but are not required to do so.

Source: Item 8 — RESTRICTIONS ON SOURCES OF PRODUCTS AND SERVICES (FDD pages 23–26)