What accounting, bookkeeping, or lease review resources can Jersey Mikes require a franchisee to utilize, and what are the payment obligations associated with these resources?

any other indebtedness in such proportions as Franchisor directs.

12. ACCOUNTING AND RECORDS

• 12.1 Franchisee shall establish and maintain a bookkeeping, accounting and record keeping system conforming to the requirements prescribed by Franchisor, including without limitation the use and retention of sales checks, cash register tapes, purchase orders, invoices, payroll records, check stubs, sales tax records and returns, cash receipts and disbursements, general journals, general ledgers, bank statements and deposit slips.
• 12.2 Franchisee will supply to Franchisor on or before the fifteenth (15th) day of each month, in the form approved by Franchisor, a profit and loss statement and a balance sheet for the last preceding calendar month. Additionally, Franchisee shall, at its expense, submit to Franchisor within ninety (90) days of the end of each fiscal year during the term of this Agreement, a profit and loss statement for such calendar year and a balance sheet as of the last day of such calendar year, prepared on an accrual basis including all adjustments necessary for fair presentation of the financial statements. Such financial statements will be certified to be true and correct by Franchisee. Franchisor reserves the right to require annual financial statements, prepared

in accordance with generally accepted accounting standards, review or audited by an independent certified public accountant.

• 12.3 Franchisee shall submit to Franchisor such other periodic reports, forms and records as specified, and in the manner and at the time as specified in the Manual or otherwise in writing.
• 12.4 Franchisee shall record all sales on the computer-based POS System as designated by Franchisor in the Manual or otherwise in writing, now or in the future. Franchisee agrees that Franchisor shall have the right to require Franchisee to utilize designated hardware and software for the computer-based POS System which are fully compatible with any program or system which Franchisor, in its discretion, may employ, including the credit card processing program and online ordering system. Franchisee agrees to pay the monthly software licensing and POS support fees, back-up cellular service, as well as the secure network fee for credit card processing and sales data transmittal, and fees associated with online and third party ordering and delivery, as determined by Franchisor, who retains the right to adjust the fees pursuant to System Standards. All Gross Receipts and all sales information requested by Franchisor shall be recorded on computer based POS equipment. F ranchisor shall have full access to all of Franchisee's data, system and related information by means of direct access whether in person, or by telephone, modem or internet and may share such data and i nformation with Franchisor's third party vendors in Franchisor's sole discretion. Up on termination of this Agreement, Franchisor may immediately terminate Franchisee's access to information reported or stored in the POS System or related system.
• 12.5 Franchisor and its designated agents shall have the right at all reasonable times to examine and copy, electronically or otherwise, at its expense, Franchisee's books, records and tax returns. If Franchisee makes sales through any third-party vendors (for example, companies that facilitate online ordering, deliveries or catering orders), Franchisor and its designated agents shall have the right to access all sales records and other records of such vendor and may request and receive such records directly from the vendor without Franchisee's consent. Franchisor shall also have the right, at any time, to have an independent audit made of Franchisee's books, at Franchisor's expense. If an inspection should reveal that any payments made to Franchisor have been understated in any report to Franchisor, then Franchisee shall immediately pay to Franchisor the amount understated upon demand, in addition to interest from the date such amount was due until paid, at the maximum rate permitted by law. If an inspection discloses an understatement in any report of two percent (2%) or more of the Gross Receipts as defined in Section 11.1(b), Franchisee shall, in addition, reimburse Franchisor for any and all costs and expenses connected with the inspection (including, without limitation, reasonable accounting and attorneys' fees). The foregoing remedies shall be in addition to any other remedies Franchisor may have.
• 12.6 Franchisee acknowledges that nothing contained in this Agreement constitutes Franchisor's agreement to accept any payments after same are due or a commitment by Franchisor to extend credit to or otherwise finance Franchisee's operation of the Franchised Restaurant. Further, Franchisee acknowledges that its failure to pay all amounts when due shall constitute grounds for termination of this Agreement, as provided by Section 17.
• 12.7 Franchisee must, at all times, maintain sufficient working capital reserves as necessary and appropriate to comply with its obligations under this Agreement. On Franchisor's request, Franchisee must provide Franchisor with evidence of working capital availability. Franchisor reserves the right, from time-totime, to establish certain levels of wo rking capital reserves, and Franchisee will comply with such requirements. Franchisor may from time-to-time designate the maximum amount of debt that Restaurants may service, and Franchisee will ensure that Franchisee will comply with such limits.

Source: Item 22 — CONTRACTS (FDD page 77)