BMB Franchising Services

21 BMB Franchising Services, Inc. Franchise Disclosure Document | 2023-2024 Advertising Fund In addition to local advertising (individually or through a Cooperative), we have established an Advertising Fund. Currently, you must make weekly contributions to the Advertising Fund in an amount equal to 2.5% of your Restaurant’s Gross Sales. Upon written notice to you, we may vary or increase the portion of the Advertising Assessment that you are required to spend as an Advertising Fund contribution; provided that in no event will your total required expenditures for advertising exceed the maximum Advertising Assessment referenced above. We or someone we designate will administer the Advertising Fund. We will direct all programs financed by the Advertising Fund, including the creative concepts, materials, endorsements, and the geographic market and media placement and allocation thereof. We may use the Advertising Fund to satisfy the costs of producing video, audio, and written advertising materials; administering national, regional, and multi- regional advertising programs; developing and maintaining an Internet Website; and supporting public relations, market research, and other advertising, promotion, and marketing activities. We are not required to make expenditures for you that are equivalent or proportionate to your Advertising Fund contribution or to ensure that any particular franchisee benefits directly or in proportion to its contribution to the Advertising Fund. Except for a portion of the Advertising Fund spent on Website development and maintenance (a portion of which may include soliciting the sale of franchises using the Website), the Advertising Fund is not used to solicit the sale of franchises. Currently, we anticipate that Advertising Fund advertising will be conducted primarily through electronic or print media on a regional basis, and that the majority of our advertising will initially be developed in- house. We may use the Advertising Fund to directly place advertising in your local or regional market; however, we also intend to use the Advertising Fund to create and prepare marketing materials or advertising programs that will be provided to you so that you may directly place or implement such materials or programs in your local or regional market. Any amounts that you spend to place or implement advertising created by the Advertising Fund in your local or regional market will be credited towards your local advertising obligations. We will not use your Advertising Fund contributions to defray any of our operating expenses, except for any reasonable salaries, administrative costs, travel expenses, and overhead that we may incur in administering the Advertising Fund and its programs. Although not contractually required to do so, we anticipate that each Bombshells Restaurant owned by us or an affiliate of ours will contribute to the Advertising Fund on the same basis as our franchisees. We will prepare an annual statement of the Advertising Fund’s operations and will make it available to you if you request it. We are not required to have the Advertising Fund statements audited. No Advertising Fund monies were collected or spent during our last fiscal year. We may terminate the Advertising Fund at any time upon 30 days prior written notice to you. If we terminate the Advertising Fund, all unspent monies will be distributed to the contributors in proportion to their respective contributions during the preceding 12-month period. (Franchise Agreement, Section 9.D.) Computer and Electronic Cash Register Systems The Franchise Agreement requires that you use only the point of sale cash registers and computer systems and equipment that we prescribe for Bombshells Restaurants (“Computer System”) and that you promptly adhere to our requirements. Requirements may include hardware components, dedicated telephone lines, a high-speed, broadband Internet connection, at our then-current, minimum bandwidth specification, modems, printers, and other computer-related accessories and peripheral equipment. We may require you to add to your Computer System memory, ports, and other accessories or peripheral equipment or additional, new, or substitute software, replace or upgrade your Computer System (software and hardware) and other computers, and enter into maintenance agreements for the Computer System. There is no 22 BMB Franchising Services, Inc. Franchise Disclosure Document | 2023-2024 contractual limitation on the frequency or cost of these obligations, and you are responsible for the costs of all Computer System requirements. The Computer System currently uses Aloha software. You will be required to purchase the designated bundled POS software package through the hardware POS provider we require. The Computer System’s hardware components include a processor, credit card swipes, and receipt and other printers, which are generally available from a number of retailers. It will cost between $45,000 and $75,000 to buy the Computer System’s components when you develop the Restaurant. Aloha also offers leasing options. We will authorize you to lease from Aloha if you choose a leasing option. We will provide you 30 days advance written notice of any changes to our Computer System requirements. You must acquire, install, and maintain such anti-virus and anti-spyware software as we require and must adopt and implement such Internet user policies as we may prescribe for purposes of avoiding, blocking, and eliminating viruses and other conditions that interfere with the operation of the Computer System. You must: (a) use any proprietary and non-proprietary software programs, system documentation manuals, and other materials that we require in connection with the operation of the Restaurant; (b) input and maintain in your Computer System such data and information as we prescribe; and (c) purchase new or upgraded software programs, system documentation manuals, and other proprietary and non-proprietary materials at then-current prices whenever we adopt new or upgraded programs, manuals, and materials for the System. You must enter into all software license agreements, “terms of use” agreements, and software and hardware maintenance agreements, in the form and manner we prescribe, and pay all fees imposed by the agreements. You must acquire and use, from the date the Franchise Agreement is signed until the expiration or termination of the Franchise Agreement, a valid email address. You must provide us notice of any changes to your email address and provide us the new or revised email address immediately upon its acquisition. We may independently access your Computer System and retrieve, analyze, download, and use all software, data, and files stored or used on the Computer System. We may independently access the information system through our intranet, in your Restaurant, or from or through other locations and methods. You must store all data and information that we designate and report data and information in the manner we specify, including through our intranet, file exports, or other online communications or services. There is no contractual limitation on our right to independently access this information. You also must maintain a phone line and a high-speed, broadband Internet connection, at our current, minimum bandwidth specification, dedicated to the sole use of allowing the exchange of information between you, us, and any third-party vendors that we require, and any software and/or services designated by us to facilitate these communications. You must maintain and share with us a permanent, Internet email account. Neither we nor our affiliates are required to provide ongoing maintenance, repairs, upgrades, or updates to your Computer System or other computer equipment. You must, at all times, be compliant with all applicable and current Payment Card Industry Data Security Standards (“PCI DSS”) requirements and other data security policies that we may implement. For more information about PCI DSS, you may visit https://www.pcisecuritystandards.org/. Confidential Operations Manuals After you sign the Franchise Agreement, we will provide you with access to one set of our Manuals in electronic or paper format. A copy of the table of contents of the Manuals is attached as Exhibit F to this disclosure document. Our Manuals contain a total of 492 pages. We consider the contents of the Manuals to be proprietary, and you must treat them as confidential. You may not make any copies of the Manuals. Training At least 60 days before the Opening Date of your Restaurant, your Operating Principal, District Manager 23 BMB Franchising Services, Inc. Franchise Disclosure Document | 2023-2024 (if applicable), and Restaurant managers we require (currently, at least 4 front of house managers, one kitchen manager, and one business manager) must have attended and completed, to our satisfaction, our initial management training program. (Franchise Agreement, Section 8.A. and Development Agreement, Section 8.A.) Any time before the Opening Date of your Restaurant, but no later than 90 days after the Opening Date, any person who owns 20% or more in the franchisee entity must attend an abbreviated initial training program that lasts approximately three weeks. (Franchise Agreement, Section 8.A. and Development Agreement, Section 8.A.) Our initial training program is offered as needed during the year depending on the number of new franchisees entering the System, the number of other personnel needing training, and the scheduled opening of new Bombshells Restaurants. The subjects covered, approximate hours of classroom and on the job training, and other information about our initial training program are described below: TRAINING PROGRAM