What factors does Lees Famous Recipe consider when approving a restaurant location?

You must locate a site for your Restaurant that we approve (the "Authorized Location"), and you may not sign a lease or enter into a purchase agreement to acquire any land or building for the Authorized Location until we have given our approval in writing. As part of the approval process, you must submit to us certain development materials for the proposed Authorized Location, including a written description of your proposed Authorized Location together with evidence satisfactory to us that confirms your favorable prospects for obtaining the proposed location. We approve locations on a case-by-case basis, considering items such as size, appearance, and other physical characteristics of the site, demographic characteristics, traffic patterns, competition from other businesses in the area and other commercial characteristics, such as purchase price and financing if you are acquiring the land and buildings and rental obligations and other lease terms (including those that we require be in the lease) if you lease the premises for your Restaurant. We

will give you written notice of our approval or rejection of the proposed location within 30 days after receiving all required materials from you.

Prior to executing the lease for the Restaurant (if you are leasing the Restaurant premises), you must submit to us a copy of the lease for examination and approval. We will review the lease to ensure that it contains the terms that we require in all leases. We will give you written notice of our approval or rejection of the proposed lease within 30 days after receiving all required materials from you. You and your landlord must also execute a lease addendum in the form that we prescribe (see Exhibit C of the Franchise Agreement).

Source: Item 8 — RESTRICTIONS ON SOURCES OF PRODUCTS AND SERVICES (FDD pages 26–33)