What efforts is a Fat Shack franchisee required to use to promote their Fat Shack Restaurant?

Franchisee agrees at all times to faithfully, honestly and diligently perform Franchisee's obligations hereunder, to use best efforts to promote its FAT SHACK Restaurant and to not engage in any other business or activity that conflicts with the operation of the FAT SHACK Restaurant in compliance with this Agreement. Franchisee agrees to utilize the Marks and Licensed Methods to operate all aspects of Franchisee's FAT SHACK Restaurant in accordance with the methods and systems developed and prescribed from time to time by FSI, all of which are a part of the Licensed Methods. Franchisee's FAT SHACK Restaurant shall offer all products and services designated by FSI. Franchisee shall implement any additions and changes to the products and services offered by its FAT SHACK Restaurant that FSI requires.

Franchisee shall obtain FSI's prior written approval of all written advertising or other marketing or promotional programs not previously approved by FSI regarding the FAT SHACK Restaurant,

including, without limitation, "Yellow Pages" advertising, newspaper ads, flyers, brochures, coupons, direct mail pieces, specialty and novelty items, radio and television advertising, Internet "web" pages and other home pages or domain names on any common carrier electronic delivery system. Franchisee acknowledges that web pages and websites on the Internet constitute advertising and is subject to the terms set forth in Section 13.5 below. Any proposed written advertising or a description of a marketing or promotional program not previously approved by FSI shall be submitted to FSI at least 10 days prior to publication, broadcast or use. Franchisee acknowledges that advertising and promoting the FAT SHACK Restaurant in accordance with FSI's standards and specifications is an essential aspect of the Licensed Methods, and Franchisee agrees to comply with all advertising standards and specifications. Franchisee also agrees to participate in any promotional campaigns and advertising and other programs that FSI periodically establishes.

Franchisee agrees to conduct a grand opening advertising and promotional program for the FAT SHACK Restaurant at the time and in the manner specified by FSI. Franchisee's grand opening program will utilize the marketing and public relations programs and media and advertising materials that FSI has either developed or approved. Franchisee agrees that FSI may order and pay for some or all of the grand opening materials on behalf of Franchisee. If FSI does pay for Franchisee's grand opening expenses, FSI shall have the right to debit Franchisee's bank account or otherwise require Franchisee to reimburse FSI for such expenses not later than 60 days prior to the planned FAT SHACK Restaurant opening date. Franchisee will provide FSI with a summary of grand opening program expenditures within 120 days after the FAT SHACK Restaurant opens.

FSI may in its sole discretion, conduct regional, national or international advertising to promote the FAT SHACK brand and system generally, and charge its franchisees for this service. FSI reserves the right, upon not less than 30 days' notice to Franchisee, to require Franchisee to pay to FSI an advertising, marketing and promotion fee ("Marketing and Promotion Fee") in an amount designated in the notice, up to a maximum of 1½ percent of the total amount of Franchisee's weekly Gross Sales. FSI may change the percentage of the Marketing and Promotion Fee upon 30 days' notice to Franchisee, but it shall not increase the Marketing and Promotion Fee above 1½ percent of Franchisee's weekly Gross Sales during the term of this Agreement.

Franchisee shall not develop, create, distribute, disseminate or use any Internet advertising or website, or any multimedia, social media, telecommunication, mass electronic mail or audio/visual advertising, promotional or marketing materials ("Electronic Advertising"), without FSI's prior written consent, which consent may be withheld in FSI's sole discretion. FSI shall retain the exclusive right to develop and control the content of all Electronic Advertising for the FAT SHACK Restaurants. Franchisee acknowledges that FSI shall own all Electronic Advertising related to the Marks and Licensed Methods. FSI reserves the right, upon 30 days' prior written notice, to require Franchisee, to create, customize or provide access to any websites, telecommunications, audio/visual advertising, promotional or marketing material as part of the Electronic Advertising. If FSI permits or requires Franchisee to develop any Electronic Advertising, Franchisee shall do so in compliance with FSI's policies and rules regarding the creation, maintenance, use and content of such Electronic Advertising as set forth in this Agreement, the Operations Manual or Electronic Advertising code of conduct that FSI may develop, disseminate and modify from time to time. Any amounts that Franchisee spends to participate in Electronic Advertising shall be credited toward Franchisee's local advertising obligations.

FSI currently does not require its franchisees to conduct any specific local advertising of their FAT SHACK Restaurants, although FSI recommends that that they do advertise their Restaurant businesses. Although FSI currently does not require Franchisee to expend a specific amount or

percentage of its Gross Sales on advertising, it reserve the right to do so in the future. In that event, Franchisee will be required to submit regular reports to FSI accounting for the use of these funds. FSI also does not currently require its franchisees to participate in a local or regional advertising cooperative, although it reserve the right to do so in the future. FSI has not established any rules or regulations related to local or regional advertising cooperatives. If a local or regional advertising program in Franchisee's area is established, FSI may allocate a portion of any required local advertising amounts to the regional advertising program. FSI is not required to spend any amount on advertising in the area or territory where Franchisee's FAT SHACK Restaurant is located.

Franchisee shall engage in all types of advertising, marketing and promotional activities as from time to time may be prescribed by FSI and shall not engage in any advertising, marketing or promotional activities unless FSI's written consent is first obtained.

Source: Item 23 — Receipts (FDD pages 53–223)