What standards and specifications is a Surestay Hotel By Best Western franchisee required to comply with?

We issue standards, specifications, requirements, criteria, and policies for use by franchisees in developing and operating System Hotels, and modifications of those standards and specifications, in our confidential operations manual (the "Manual"). In order to maintain the integrity, image uniformity and public reputation of the System, you are required to comply with all of our Standards and specifications. Among other things, the Standards may regulate the types, models, and brands of products and services your Hotel uses; required and authorized products and services that the Hotel must offer to customers and quality standards for those products and services; and designated and approved suppliers of these items and services. We may require you to purchase products or services from us or another supplier we designate and/or with our prior approval and/or according to our specifications.

You are currently required to license the System's PMS (currently AutoClerk Cloud PMS) from our affiliate, AutoClerk. When you obtain the required PMS, you will also receive the GMS. The GMS provides a full-suite guest management system for System Hotels. The GMS includes preregistration, dynamic upsells, guest messaging, digital compendium and mobile check-out. The GMS enables hoteliers to increase revenue, boost staff efficiency and maximize guest satisfaction. If the Property has a waiver from the requirement to use the System's required PMS, you must still obtain the GMS and pay all associated fees.

In order to license the PMS from AutoClerk, you will be required to enter into a Software as a Service Agreement in the form attached as Exhibit K. You are also currently required to purchase Lodging Link, a product offered by Comtrol Corporation that provides connectivity and integration of the PMS into other guest and hotel service systems (e.g. Call Accounting, PBX, in-room entertainment, Key Card, etc.). We, AutoClerk and Comtrol Corporation are the only approved suppliers of certain PMS-related installation, maintenance and licensing, and you will be required to make payments to us/AutoClerk for those services. We are also the only approved supplier of distribution system photographs that must be taken of your Hotel and certain other distribution services disclosed in Item 6.

You are required to purchase an approved shower head and key cards; use our approved rate shopping service and rate optimization software subscription program; purchase our required guest room amenities, linen and terry pillows; use our designated chemical supplier; and use our approved PMS provider and sign manufacturers. Except as described above, neither we nor any of our affiliates are currently approved suppliers, or the only approved suppliers, of any products or services you are required to purchase or lease.

Except as described above, you may purchase all other products and services from any source of distribution as long as the product or service meets the Standards. We reserve the right, in our business judgment, to enter into exclusive purchasing arrangements for particular products or services and to require that you purchase products or services from approved suppliers or distributors in the future.

If you would like to purchase any items you are required to purchase from approved suppliers from any supplier or distributor we have not yet approved, you must submit to us a written request for approval of the proposed supplier or distributor. We have the right to inspect a proposed supplier's or distributor's facilities, and to require product samples from the proposed supplier or distributor to be delivered at our option either directly to us or to any independent, certified laboratory which we designate for testing. We may charge you or the supplier a reasonable fee for the evaluation, or require the supplier to participate in a brand marketing or rebate program, and will decide within a reasonable time (no more than 120 days). We have no obligation to approve any new supplier you propose. We reserve the right to periodically re-inspect the facilities and products of any approved supplier or distributor and to revoke our approval if the supplier or distributor does not continue to meet any of our criteria.

Approval of a supplier or distributor may be conditioned on requirements relating to product quality and reviews, prices, consistency, reliability, financial capability, industry reviews, labor relations, client relations, frequency of delivery, concentration of purchases, standards of service, including prompt attention to complaints, willingness to participate in brand marketing or rebate programs, or other criteria and may be temporary, pending our continued evaluation of the supplier or distributor at any time and from time to time. We will make available our then current criteria to you, as necessary, upon request if we are asked to evaluate and approve a new supplier, item, or service for use with the System.

Insurance. You must maintain, at your own expense, the insurance coverage that we periodically require. You currently must have commercial general liability insurance, employment practices insurance, automobile liability insurance (for owned, non-owned, and hired automobiles), cyber security insurance, and statutory workers' compensation insurance, each in the amount set forth in the Standards, currently as follows:

• Commercial General Liability: $6M General/Excess/Umbrella. We strongly recommend that assault and battery, abuse and molestation, and human trafficking liability coverage not be limited or excluded. Exposure to carbon monoxide may not be excluded and may not be limited to amounts less than the $6M.
• Employment Practices Insurance: $1M.
• Automobile Liability: $1M coverage for owned, hired and non-owned automobiles.
• Cyber Security Liability: $1M
• Worker's Compensation: As required by law.

All required insurance must be with insurers having the minimum ratings we specify, name us and Best Western International as additional insureds, and carry the endorsements and notice requirements we specify in the Standards. Upon request, you must provide us with certificates and other documents that we request evidencing that you have obtained insurance policies that comply with the then-current insurance requirements set forth in the Standards.

Advertising Materials. You must obtain our approval before conducting any significant marketing and promotion activities, including before using any Internet sites or posting any content to those Internet sites.

System Hotel Development. The specifications and layout of the Hotel must conform to our policies and the policies of the System.

Source: Item 8 — RESTRICTIONS ON SOURCES OF PRODUCTS AND SERVICES (FDD pages 48–51)