Cleavers Franchise

You are required to use all software and applications that we specify and pay any subscription fees associated with them. In addition to the software associated with the POS System, we currently require you to use QuickBooks Online for digital bookkeeping and ADP for payroll & HR services. We may in the future modify or establish other sales reporting systems as we deem appropriate, for the accurate and expeditious reporting of Gross Revenue and delivery of our products and services. You must fully cooperate in implementing any such modifications at your expense. The current approximate cost of the required hardware and software is $5,000 to $10,000. The monthly software access fees are approximately $100 for Quickbooks Online and $300 for MicroWorks. ADP is estimated to be $15 to $18 per employee, based on running a bi- weekly payroll schedule.

You must purchase and use the POS System we specify, and have the latest versions of hardware, software and computer platforms to operate the POS System. The current POS System requirement is developed by MicroWorks. The POS System performs a variety of functions, including order management, gift card and loyalty program management, payment processing, bookkeeping, and sales report generation.

You are required to use all software and applications that we specify and pay any subscription fees associated with them. In addition to the software associated with the POS System, we currently require you to use QuickBooks Online for digital bookkeeping and ADP for payroll & HR services. We may in the future modify or establish other sales reporting systems as we deem appropriate, for the accurate and expeditious reporting of Gross Revenue and delivery of our products and services. You must fully cooperate in implementing any such modifications at your expense. The current approximate cost of the required hardware and software is $5,000 to $10,000. The monthly software access fees are approximately $100 for Quickbooks Online and $300 for MicroWorks. ADP is estimated to be $15 to $18 per employee, based on running a bi- weekly payroll schedule.

“Gross Revenue” includes all revenues and income from any source derived or received by you from, by or on account of the operation of the Franchised Business or made pursuant to the rights granted hereunder, including but not limited to, any and all other revenues received using our methods, operations and/or trade secrets whether received in cash, in services, in kind, from barter and/or exchange, on credit (whether or not payment is actually received) or otherwise. Gross Revenue includes the full amount payable by your customers, without deduction for your delivery costs or for other write-offs; however, Gross Revenue does not include (i) any sales tax or similar taxes collected from customers and turned over to the governmental authority imposing the tax, (ii) properly documented refunds to customers, or (iii) properly documented promotional discounts (i.e., coupons). Gross Revenue includes your revenues from the sale of alcoholic beverages. If a state or local law applicable to your Franchised Business prohibits or restricts in any way your ability to pay and our ability to collect Royalty Fees or other amounts based on Gross Revenue derived from the sale of alcoholic beverages at the Franchised Business, then we will renegotiate the Royalty Fees and other provisions to provide the same basic economic effect to both us and you as otherwise provided in this Agreement, with a corresponding change to the definition of Gross Revenue. Gross Revenue does not include gift card purchases, at the time of purchase, but Gross Revenue does include the redemption amount of purchases made by gift card. 2 You must pay directly to our Brand Fund a Brand Fund Contribution of 1% of weekly Gross Revenue generated by your Franchised Business. Payments are due at the same time and in the same manner as the Royalty Fee. You may be required to set up authorization at your bank to allow the Brand Fund to electronically transfer funds from your bank account to the Brand Fund’s bank account. Interest and late fees will apply to any late payments or electronic funds transfer requests denied due to insufficient funds. If you do not report your revenues for the month, then we will collect 120% of the last Brand Fund collected and settle the balance the next period in which you report revenue. 3 The Internal Systems Fee is $650 per month and may cover services such as access to QuickBooks accounting software, Microworks operating software, software license and maintenance fees, website hosting and maintenance, Franchise web portal access, and other technology-related services developed by Franchisor. 4 Upon our request, you must furnish us with a quarterly report and documentation of local advertising expenditures during the previous calendar quarter. You may not use social media platforms, such as Facebook, Twitter, LinkedIn, blogs or other networking and sharing websites, unless you first receive our written approval to do so, and such use is in strict accordance with our requirements. 5 We may offer mandatory and/or optional additional training programs or a national business meeting or annual convention. The total amount of required ongoing training and/or annual meetings will be ten (10) days or less per year at a location we designate. We reserve the right to impose a reasonable fee for all optional additional training programs. Currently, we charge $500 per person, per day for all optional additional training programs. You are responsible for any and all incidental expenses incurred by you and your personnel in connection with additional training or attendance at Franchisor’s national business meeting or annual convention, including, without limitation, costs of travel, lodging, meals and wages. 6 We may establish audit and quality assurance programs conducted by third-party providers, such as, by way of example only, mystery shop programs and periodic quality audits, to monitor the operations of your Franchised Business. If we require it, you must subscribe and pay the fees for any such program.

“Gross Revenue” includes all revenues and income from any source derived or received by you from, by or on account of the operation of the Franchised Business or made pursuant to the rights granted hereunder, including but not limited to, any and all other revenues received using our methods, operations and/or trade secrets whether received in cash, in services, in kind, from barter and/or exchange, on credit (whether or not payment is actually received) or otherwise. Gross Revenue includes the full amount payable by your customers, without deduction for your delivery costs or for other write-offs; however, Gross Revenue does not include (i) any sales tax or similar taxes collected from customers and turned over to the governmental authority imposing the tax, (ii) properly documented refunds to customers, or (iii) properly documented promotional discounts (i.e., coupons). Gross Revenue includes your revenues from the sale of alcoholic beverages. If a state or local law applicable to your Franchised Business prohibits or restricts in any way your ability to pay and our ability to collect Royalty Fees or other amounts based on Gross Revenue derived from the sale of alcoholic beverages at the Franchised Business, then we will renegotiate the Royalty Fees and other provisions to provide the same basic economic effect to both us and you as otherwise provided in this Agreement, with a corresponding change to the definition of Gross Revenue. Gross Revenue does not include gift card purchases, at the time of purchase, but Gross Revenue does include the redemption amount of purchases made by gift card. 2 You must pay directly to our Brand Fund a Brand Fund Contribution of 1% of weekly Gross Revenue generated by your Franchised Business. Payments are due at the same time and in the same manner as the Royalty Fee. You may be required to set up authorization at your bank to allow the Brand Fund to electronically transfer funds from your bank account to the Brand Fund’s bank account. Interest and late fees will apply to any late payments or electronic funds transfer requests denied due to insufficient funds. If you do not report your revenues for the month, then we will collect 120% of the last Brand Fund collected and settle the balance the next period in which you report revenue. 3 The Internal Systems Fee is $650 per month and may cover services such as access to QuickBooks accounting software, Microworks operating software, software license and maintenance fees, website hosting and maintenance, Franchise web portal access, and other technology-related services developed by Franchisor. 4 Upon our request, you must furnish us with a quarterly report and documentation of local advertising expenditures during the previous calendar quarter. You may not use social media platforms, such as Facebook, Twitter, LinkedIn, blogs or other networking and sharing websites, unless you first receive our written approval to do so, and such use is in strict accordance with our requirements. 5 We may offer mandatory and/or optional additional training programs or a national business meeting or annual convention. The total amount of required ongoing training and/or annual meetings will be ten (10) days or less per year at a location we designate. We reserve the right to impose a reasonable fee for all optional additional training programs. Currently, we charge $500 per person, per day for all optional additional training programs. You are responsible for any and all incidental expenses incurred by you and your personnel in connection with additional training or attendance at Franchisor’s national business meeting or annual convention, including, without limitation, costs of travel, lodging, meals and wages. 6 We may establish audit and quality assurance programs conducted by third-party providers, such as, by way of example only, mystery shop programs and periodic quality audits, to monitor the operations of your Franchised Business. If we require it, you must subscribe and pay the fees for any such program.

“Gross Revenue” includes all revenues and income from any source derived or received by you from, by or on account of the operation of the Franchised Business or made pursuant to the rights granted hereunder, including but not limited to, any and all other revenues received using our methods, operations and/or trade secrets whether received in cash, in services, in kind, from barter and/or exchange, on credit (whether or not payment is actually received) or otherwise. Gross Revenue includes the full amount payable by your customers, without deduction for your delivery costs or for other write-offs; however, Gross Revenue does not include (i) any sales tax or similar taxes collected from customers and turned over to the governmental authority imposing the tax, (ii) properly documented refunds to customers, or (iii) properly documented promotional discounts (i.e., coupons). Gross Revenue includes your revenues from the sale of alcoholic beverages. If a state or local law applicable to your Franchised Business prohibits or restricts in any way your ability to pay and our ability to collect Royalty Fees or other amounts based on Gross Revenue derived from the sale of alcoholic beverages at the Franchised Business, then we will renegotiate the Royalty Fees and other provisions to provide the same basic economic effect to both us and you as otherwise provided in this Agreement, with a corresponding change to the definition of Gross Revenue. Gross Revenue does not include gift card purchases, at the time of purchase, but Gross Revenue does include the redemption amount of purchases made by gift card. 2 You must pay directly to our Brand Fund a Brand Fund Contribution of 1% of weekly Gross Revenue generated by your Franchised Business. Payments are due at the same time and in the same manner as the Royalty Fee. You may be required to set up authorization at your bank to allow the Brand Fund to electronically transfer funds from your bank account to the Brand Fund’s bank account. Interest and late fees will apply to any late payments or electronic funds transfer requests denied due to insufficient funds. If you do not report your revenues for the month, then we will collect 120% of the last Brand Fund collected and settle the balance the next period in which you report revenue. 3 The Internal Systems Fee is $650 per month and may cover services such as access to QuickBooks accounting software, Microworks operating software, software license and maintenance fees, website hosting and maintenance, Franchise web portal access, and other technology-related services developed by Franchisor. 4 Upon our request, you must furnish us with a quarterly report and documentation of local advertising expenditures during the previous calendar quarter. You may not use social media platforms, such as Facebook, Twitter, LinkedIn, blogs or other networking and sharing websites, unless you first receive our written approval to do so, and such use is in strict accordance with our requirements. 5 We may offer mandatory and/or optional additional training programs or a national business meeting or annual convention. The total amount of required ongoing training and/or annual meetings will be ten (10) days or less per year at a location we designate. We reserve the right to impose a reasonable fee for all optional additional training programs. Currently, we charge $500 per person, per day for all optional additional training programs. You are responsible for any and all incidental expenses incurred by you and your personnel in connection with additional training or attendance at Franchisor’s national business meeting or annual convention, including, without limitation, costs of travel, lodging, meals and wages. 6 We may establish audit and quality assurance programs conducted by third-party providers, such as, by way of example only, mystery shop programs and periodic quality audits, to monitor the operations of your Franchised Business. If we require it, you must subscribe and pay the fees for any such program.

We do not provide for placement of local advertising on your behalf, and we have no obligation to spend any amount on advertising in your area or territory. You are responsible for local advertising placement. You must list the Franchised Business in local business directories, including, but not limited to, listings on Internet search engines. If feasible, you may do cooperative advertising with other Cleavers Philadelphia franchisees in your area, with our prior written approval. You may not maintain any business profile on Facebook, Twitter, LinkedIn, YouTube or any other social media and/or networking site without our prior written approval. System-wide Brand Development Fund (Franchise Agreement, Section 13.3)

We do not provide for placement of local advertising on your behalf, and we have no obligation to spend any amount on advertising in your area or territory. You are responsible for local advertising placement. You must list the Franchised Business in local business directories, including, but not limited to, listings on Internet search engines. If feasible, you may do cooperative advertising with other Cleavers Philadelphia franchisees in your area, with our prior written approval. You may not maintain any business profile on Facebook, Twitter, LinkedIn, YouTube or any other social media and/or networking site without our prior written approval. System-wide Brand Development Fund (Franchise Agreement, Section 13.3)