What happens if a Hydrodog franchisee uses unauthorized suppliers?

the use of high-quality suppliers of services, materials and inventory. You cannot, at any time, use any suppliers of services, materials or inventory that we have not previously approved. We will provide you with a list, that we may modify from time-to-time, in our Business Judgment, of approved manufacturers, suppliers, or distributors of Operating Assets and Business Materials. We may designate approved or designated suppliers, providers, distributors, or manufacturers for any types, models or brands of business materials, inventory, Operating Assets, and other equipment and business services that we approve for the HydroDog Businesses or which we designate in the Manuals as relating to the establishment or operation of the HydroDog Business, which may include us or our affiliates as one of, or the only approved or designated supplier for certain items or services (the "Approved Suppliers"). You can only purchase materials and inventory for your HydroDog Business from Approved Suppliers. Purchasing materials and inventory from suppliers that are not Approved Suppliers is grounds for default and/or termination of this Franchise Agreement. You agree that you will not, without our written approval, use or authorize any of your owners to use any services, material, inventory, supplies or equipment and/or suppliers, distributors, manufacturers or service providers not authorized by us for your HydroDog Business. You must utilize any ordering system that any of our Approved Suppliers (including us or our affiliates) designate. We, our affiliates, or Approved Suppliers may charge a mark-ups/profits margin on the sale of business materials, operating assets, supplies, and inventory that we or they sell to you. We, or they, do not represent or warrant in any manner whatsoever that we, or they, will limit the amount of markup/profit margin on such sales, and we, or they, may change, modify, increase, or decrease such mark-up/profit margins at any time.

• (b) Review Procedures: Our approval of Operating Assets, Business Materials, and Approved Suppliers will be communicated through the specifications and standards designated in our Manuals or via other communications to you from time-to-time. In approving

types, models, brands and suppliers, manufacturers, distributors or service providers, we may take into consideration such factors as quality, warranty and prices. We may approve one or a limited number of suppliers, manufacturers, distributors or service providers in order to obtain lower prices or materials of a more uniform and/or higher quality.

• (c) Changes to Approved Suppliers. If you wish to use any type, model, manufacturer or brand of materials, supplies or equipment, supplier, manufacturer or distributor of equipment, supplies or material, any service provider or any other brand, manufacturer, distributor or supplier of materials, supplies, services or equipment, which is not currently approved by us, you are required to: (i) notify us in writing; (ii) submit to us sufficient specifications, photographs, samples and/or other information requested by us concerning such type, model, brand, service, service provider and/or supplier, manufacturer or distributor. We will then determine, within a reasonable time not to exceed thirty (30) calendar days, whether such type, model or brand, supplier, distributor, service provider or manufacturer complies with our specifications, and/or whether such supplier, manufacturer, distributor or service provider meets our criteria for approval. We may from time-to-time prescribe procedures for the submission of requests for approval of types, models, brands, manufacturers, distributors, service providers or suppliers and obligations which approved manufacturers, distributors, service providers or suppliers must assume. Under no circumstances are Franchisees permitted to offer for sale any item or order inventory from any suppliers or vendors that have not been expressly authorized by us. We reserve the sole right, in our Business Judgment, to decide if any supplier, vendor or item is authorized and reserve the right to disapprove or refuse to approve any supplier, vendor or item. Under no circumstances may you offer for sale any products or perform any services that we have not previously authorized. Selling unauthorized products or ordering from unauthorized vendors is grounds for default and/or termination of this Agreement.

Source: Item 23 — RECEIPTS (FDD pages 43–166)