Does Gold Star negotiate purchase arrangements with suppliers to receive quantity discounts for franchisees?

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Restrictions on Sources of Products and Services

This Item describes your obligations to buy or lease from Gold Star or Gold Star's designees, from suppliers approved by Gold Star, or in accordance with Gold Star's specifications. Gold Star negotiates purchase arrangements with suppliers in order to receive quantity discounts for franchisees and its company-owned restaurants.

To ensure that the Restaurant maintains the highest degree of quality and service, you must operate your Restaurant in strict conformity with the methods, standards and specifications that we prescribe in the Manual (as defined in Item 11 hereof) or otherwise in writing:

• offer for sale only those products and services for which Gold Star has given its written approval;
• sell or offer for sale all of the products and services Gold Star requires;
• purchase equipment, fixtures, software, ingredients, paper products and other items in accordance with Gold Star's specifications;
• employ only the preparation standards and techniques that Gold Star specifies;
• not deviate from Gold Star's standards and specifications, including our requirements concerning product preparation; and
• refrain from selling and offering for sale any products and services that Gold Star has later disapproved.

Depending on the item, Gold Star's purchasing specifications may include particular brands or models, particular characteristics of the products and services to be purchased, or one or more particular sources for the product or service. Gold Star may change the specifications during the term of the Franchise Agreement in its sole discretion.

Required Purchases of Goods and Services from Designated and Approved Suppliers.

You must purchase the following goods and services from designated suppliers pursuant to our specifications: chili products in all forms, food products, branded food products, branded and non-branded paper products, cleaning supplies, soda/beverages, bakery items, uniforms, signage and logo items, credit card services, equipment, furniture, architectural services, real estate brokerage services, civil engineering services, menus, marketing services, guest feedback systems. We require you to purchase these items from approved suppliers consistent with our specifications so that the products and services offered by all franchisees are uniform and consistent. We provide a list of these approved suppliers in our Manual. We have established specifications for Restaurant

construction and design, signs, promotional materials, operational procedures, equipment and other items bearing our trademarks, trade name and logos. All specifications are contained in the Manual. We will provide you with a list of required and suggested inventory, equipment and supplies after you purchase the Franchise.

Gold Star requires you to obtain and use a point-of-sale cash register system that meets Gold Star's standards and specifications (collectively, the "POS System") and reserves the right to require you to enter into a maintenance contract for the POS System with our designee.

Gold Star formulates and modifies its standards and specifications imposed on Franchisees based on its experience. Gold Star does not issue its specifications and standards to approved suppliers.

Source: Item 8 — Restrictions on Sources of Products and Services (FDD pages 21–25)