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Franchise Disclosure Document

Chatime Franchise, LLC offers franchises for operating Chatime Restaurants, which serve gourmet coffees, teas, and bubble tea, with an initial investment ranging from $208,600 to $475,400. Multi-unit development agreements are also available, requiring investments between $293,600 to $700,400 for three to ten locations. The document provides essential information about franchise agreements, fees, and risks, and emphasizes the importance of consulting legal and financial advisors before proceeding.

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0% found this document useful (0 votes)

316 views246 pages

Franchise Disclosure Document

Uploaded by

John Empleado

We take content rights seriously. If you suspect this is your content, claim it here.

Available Formats

Download as PDF, TXT or read online on Scribd

FRANCHISE DISCLOSURE DOCUMENT

Chatime Franchise, LLC

a Delaware limited liability company
6000 Sepulveda Blvd.
Culver City, CA 90230
Tel. +61 92830880
Email: companysecretary@[Link]
Website: [Link]

We offer franchises to operate a Chatime food service establishment (a “Chatime Restaurant”) offering
gourmet coffees and teas, other coffee and tea-based beverages, bubble tea, compatible food products,
coffee and tea makers, and related supplies, accessories, and gifts at a specified location within a designated
geographic territory.

The total investment necessary to begin operation of your Chatime Restaurant is between $208,600 to
$475,400. This includes $86,900 to $99,400 that must be paid to us or our affiliates.

We also offer multi-unit development agreements under which you agree to open and operate an agreed
number of Chatime Restaurants within a specific geographic area according to an agreed development
schedule. If you sign a multi-unit development agreement, you will pay us a multi-unit development fee
when you sign the multi-unit development agreement, which will serve as a full credit toward the initial
franchise fee for each unit to be developed. The number of locations in a multi-unit agreement will normally
range from three to ten locations. The estimated initial investment when signing a multi-unit development
agreement for three to ten locations is $293,600 to $700,400, which includes the multi-unit development
fee and the estimated initial investment for the first location.

This disclosure document summarizes certain provisions of your franchise agreement and other information
in plain English. Read this disclosure document and all accompanying agreements carefully. You must
receive this disclosure document at least fourteen (14) days before you sign a binding agreement with, or
making any payment to, the franchisor or an affiliate in connection with the proposed franchise sale. Note,
however, that no government agency has verified the information contained in this document.

You may wish to receive your disclosure document in another format that is more convenient for you. To
discuss the availability of disclosures in different format, contact Chatime Franchise, LLC, at 6000
Sepulveda Blvd., Culver City, CA 90230, tel.+61 92830880, companysecretary@[Link].

The terms of your contract will govern your franchise relationship. Don’t rely on the Franchise Disclosure
Document alone to understand your contract. Read all of your contracts carefully. Show your contract and
this Franchise Disclosure Document to an advisor, like a lawyer or an accountant.

Buying a franchise is a complex investment. The information in this Franchise Disclosure Document can
help you make up your mind. More information on franchising, such as “A Consumer’s Guide to Buying
a Franchise,” which can help you understand how to use this Franchise Disclosure Document, is available
from the Federal Trade Commission. You can contact the FTC at 1-877-FTC-HELP or by writing to the
FTC at 600 Pennsylvania Avenue, NW, Washington, D.C. 20580. You can also visit the FTC’s home page
at [Link] for additional information. Call your state agency or visit your public library for other
sources of information on franchising.

There may also be laws on franchising in your state. Ask your state agencies about them.

ISSUANCE DATE: April 18, 2023

Here are some questions that you may be asking about buying a franchise and tips on how
to find more information:

QUESTION WHERE TO FIND INFORMATION

How much can I earn? Item 19 may give you information about outlet sales,
costs, profits or losses. You should also try to obtain
this information from others, like current and former
franchisees. You can find their names and contact
information in Item 20 or Exhibit G.

How much will I need to invest? Items 5 and 6 list fees you will be paying to the
franchisor or at the franchisor’s direction. Item 7 lists
the initial investment to open. Item 8 describes the
suppliers you must use.

Does the franchisor have the

Item 21 or Exhibit A includes financial statements.
financial ability to provide
Review these statements carefully.
support to my business?

Is the franchise system stable, Item 20 summarizes the recent history of the number
growing, or shrinking? of company-owned and franchised outlets.

Will my business be the only Item 12 and the “territory” provisions in the franchise
Chatime business in my area? agreement describe whether the franchisor and other
franchisees can compete with you.

Does the franchisor have a Items 3 and 4 tell you whether the franchisor or its
troubled legal history? management have been involved in material litigation
or bankruptcy proceedings.

What’s it like to be a Chatime Item 20 or Exhibit G lists current and former

franchisee? franchisees. You can contact them to ask about their
experiences.

What else should I know? These questions are only a few things you should look
for. Review all 23 Items and all Exhibits in this
disclosure document to better understand this
franchise opportunity. See the table of contents.

Continuing responsibility to pay fees. You may have to pay royalties and other fees even
if you are losing money.

Business model can change. The franchise agreement may allow the franchisor to change
its manuals and business model without your consent. These changes may require you to
make additional investments in your franchise business or may harm your franchise
business.

Supplier restrictions. You may have to buy or lease items from the franchisor or a limited
group of suppliers the franchisor designates. These items may be more expensive than
similar items you could buy on your own.

Operating restrictions. The franchise agreement may prohibit you from operating a
similar business during the term of the franchise. There are usually other restrictions. Some
examples may include controlling your location, your access to customers, what you sell,
how you market, and your hours of operation.

Competition from franchisor. Even if the franchise agreement grants you a territory, the
franchisor may have the right to compete with you in your territory.

Renewal. Your franchise agreement may not permit you to renew. Even if it does, you
may have to sign a new agreement with different terms and conditions in order to continue
to operate your franchise business.

When your franchise ends. The franchise agreement may prohibit you from operating a
similar business after your franchise ends even if you still have obligations to your landlord
or other creditors.

Some States Require Registration

Your state may have a franchise law, or other law, that requires franchisors to
register before offering or selling franchises in the state. Registration does not mean that
the state recommends the franchise or has verified the information in this document. To
find out if your state has a registration requirement, or to contact your state, use the agency
information in Exhibit D.

Your state also may have laws that require special disclosures or amendments be
made to your franchise agreement. If so, you should check the State Specific Addenda.
See the Table of Contents for the location of the State Specific Addenda.

iii

Certain states require that the following risk(s) be highlighted:

1. Out-of-State Dispute Resolution. The franchise agreement requires you to

resolve disputes with the franchisor by mediation, arbitration, and/or litigation only
in New York. Out-of-state mediation, arbitration, or litigation may force you to
accept a less favorable settlement for disputes. It may also cost more to mediate,
arbitrate, or litigate with the franchisor in New York than in your own state.

2. Development Quota. If you sign a multi-unit development agreement, you

must open a certain number of outlets in the agreed territory in accordance with a
specified schedule. Your inability to meet your development quota may result in
loss of any territorial rights you are granted, termination of your multi-unit
development agreement, and loss of your investment.

Certain states may require other risks to be highlighted. Check the “State Specific
Addenda” (if any) to see whether your state requires other risks to be highlighted.

Page

Item 1: The Franchisor, and Any Parents, Predecessors, and Affiliates .................................. 1
Item 2: Business Experience ......................................................................................................... 5
Item 3: Litigation ........................................................................................................................... 5
Item 4: Bankruptcy ....................................................................................................................... 7
Item 5: Initial Fees......................................................................................................................... 7
Item 6: Other Fees ......................................................................................................................... 9
Item 7: Estimated Initial Investment ......................................................................................... 12
Item 8: Restrictions on Sources of Products and Services ........................................................ 17
Item 9: Franchisee’s Obligations ............................................................................................... 20
Item 10: Financing ...................................................................................................................... 21
Item 11: Franchisor’s Assistance, Advertising, Computer Systems, and Training ............... 21
Item 12: Territory ....................................................................................................................... 28
Item 13: Trademarks .................................................................................................................. 31
Item 14: Patents, Copyrights and Proprietary Information .................................................... 34
Item 15: Obligation to Participate in the Actual Operation of the Franchise Business ........ 35
Item 16: Restrictions on What the Franchisee May Sell .......................................................... 36
Item 17: Renewal, Termination, Transfer, and Dispute Resolution ....................................... 36
Item 18: Public Figures ............................................................................................................... 46
Item 19: Financial Performance Representations .................................................................... 46
Item 20: Outlets and Franchisee Information........................................................................... 46
Item 21: Financial Statements .................................................................................................... 49
Item 22: Contracts ....................................................................................................................... 49
Item 23: Receipts ......................................................................................................................... 51

EXHIBITS

Exhibit A Financial Statements

Exhibit B Franchise Agreement
Exhibit C Multi-Unit Development Agreement
Exhibit D List of Agents for Service of Process and Regulatory Authorities
Exhibit E Addenda Required by State(s)
Exhibit F Acknowledgment Addendum to Chatime Franchise, LLC Franchise Agreement
Exhibit G List of Franchisees
Exhibit H Operations Manual Table of Contents
Exhibit I State Effective Dates
Exhibit J Receipt

The Franchisor is Chatime Franchise, LLC, which will be referred to as “Chatime,” “we,” or “us.”
The term “you” or “Franchisee” means the person or legal entity that is granted the franchise and
the direct and indirect owners of any legal entity that becomes a franchisee. Our affiliates license
franchised Chatime Restaurants and operate company-owned Chatime Restaurants both in the U.S.
and internationally. We do not conduct any business activity other than franchising Chatime
Restaurants and other restaurants under different marks.

The Franchisor

We are a Delaware limited liability company organized on July 12, 2022. Our principal place of
business is 6000 Sepulveda Blvd., Culver City, CA 90230. We currently conduct business under
our organizational name “Chatime Franchise, LLC” and the marks “Chatime®,” “ ®”, “

“ ®”,
”, and “Duan Chun Zhen.” We do not conduct business or intend to do
business under any other names. We have no predecessor required to be included in this Item 1.

We are in the process of developing three company-owned Chatime Restaurant locations in

Southern California, which we expect will open in 2023. We have offered Chatime franchises
since April 2023.

Our agents for service of process are disclosed in Exhibit D. Our agent for service of process in
Delaware is A Registered Agent, Inc., 8 The Green, Suite A, Dover, Delaware 19901. We do not have
a physical office in Delaware.

Our Parent and Affiliates

Our parent company, Chatime Global LLC (“Chatime Global””), is a Delaware limited liability
company organized on July 12, 2022. Chatime Global’s principal place of business is SE702 66
Goulburn Street, Sydney NSW 2000, Australia.

Chatime Global is owned fifty percent by Chatime International Corp (“Chatime International”).,
a Delaware corporation incorporated on July 7, 2022. Chatime International’s principal place of
business is SE702 66 Goulburn Street, Sydney NSW 2000, Australia.

Chatime International is owned by Chatime Group Pty Ltd (“Chatime Group”), an Australian
company incorporated in July 2018. Chatime Group’s principal place of business is SE702 66
Goulburn Street, Sydney NSW 2000, Australia. Chatime Group has offered Chatime franchises
in Australia since 2009, and currently has 162 franchised Chatime outlets in Australia. Chatime
Group offered franchises in Australia in 2021 for restaurants serving Korean oven-roasted chicken
under the trade name “Goobne”, but no franchises were sold. Chatime Group has not offered
franchises in any other line of business.

Chatime Global is owned fifty percent by Chatime NorthStar LLC (“Chatime North Star”), a
Delaware limited liability company organized on January 18, 2022. Chatime North Star’s
1

Chatime North Star is owned by La Kaffa International Co., Ltd. (“La Kaffa”), a corporation
formed under the laws of Taiwan in March 2004. La Kaffa’s principal place of business is No. 98,
Gaotie Ninth Road, Zhubei City, Hsinchu County 30274, Taiwan.

La Kaffa licenses us the right to use and sublicense the use of the Chatime® and ®
trade
names and related marks. La Kaffa does business under the names “Chatime®”, “Chatime
® ® ®
”, “ ®”,“ ®”,“ ®”, “ , and “ .” La Kaffa has operated businesses
similar to the one you will operate since January 2008. La Kaffa currently operates approximately
1,200 Chatime Restaurants worldwide by itself or through franchisees. La Kaffa has offered
franchises for Chatime Restaurants since April 2009. As of December 31, 2022, La Kaffa had
twelve franchised or licensed Chatime Restaurants in the United States similar to the business you
will operate as a franchisee, and had sold in excess of 100 Chatime Restaurant franchises
worldwide.

La Kaffa also offers franchises for a number of other restaurant concepts by itself or through its
subsidiaries. La Kaffa has offered franchises for businesses offering specialty coffees, teas, and
meals under the trade name “La Kaffa Coffee” since July 2010. As of December 31, 2021, La
Kaffa has sold approximately three La Kaffa Coffee franchises worldwide. La Kaffa has offered
franchises for businesses offering Taiwanese traditional desserts under the trade name “ZenQ
Dessert” since January 2012. As of December 31, 2021, La Kaffa has sold approximately seven
ZenQ Dessert franchises worldwide. La Kaffa has offered franchises for businesses offering
specialty baked goods under the trade name “Bake Code” since November 2014. As of December
31, 2021, La Kaffa has sold approximately eleven Bake Code franchises worldwide. La Kaffa has
offered franchises for businesses offering high-end tea-based beverages under the trade name
“Chatime Lounge” since October 2016. As of December 31, 2021, La Kaffa has sold
approximately three Chatime Lounge franchises worldwide. La Kaffa has offered franchises for
businesses offering Sichuan folk beef noodles under the name “Duan Chun Zhen” since July 2019.
As of December 31, 2022, La Kaffa has sold approximately 8 Duan Chun Zhen franchises
worldwide.

La Kaffa’s affiliate Chatime USA, LLC (“Chatime USA”), a Delaware limited liability company,
formed in January 2014, offered Chatime franchises for businesses similar to the one you will operate
as a franchisee, in the United States, from February 2014 to June 2022. As of December 31, 2022,
Chatime USA had ten operating franchised and licensed Chatime Restaurants in the United States.
From 2016 to 2020, Chatime USA operated one company-owned Chatime restaurant in New York,
New York similar to the business you will operate as a franchisee. From 2017 to 2018, Chatime
USA operated one additional company-owned Chatime restaurant in New York, New York similar
to the business you will operate as a franchisee.

Our affiliate Chatime Wholesale LLC, a Delaware limited liability company, formed in July 2022,
sells products and branded supplies to our franchisees. Chatime Wholesale LLC’S principal place
of business is 6000 Sepulveda Blvd., Culver City, CA 90230.

The Franchised Business

General

We have spent considerable time, effort, and resources to develop the Chatime franchise system
(the “System”) that includes, without limitation, producing, merchandising, and selling Chatime
coffee, tea, bubble tea, compatible food products, and other products and merchandise that we
approve. The distinguishing characteristics of the System include, without limitation, (i)
proprietary trademarks (the “Trademarks”), (ii) distinctive exterior and interior design, decor, color
and identification schemes and furnishings, (iii) special menu items, (iv) standards, specifications,
requirements, and procedures for operations, manufacturing, distribution, and delivery, (v) the
quality and safety of products and services offered, (vi) management systems and programs, (vii)
training and assistance, and (viii) marketing, advertising, and promotional programs, all of which
we may change, supplement, and further develop.

We offer franchises to qualified persons to own and operate food service businesses offering
gourmet coffees and teas, other coffee and tea-based beverages, bubble tea, compatible food
products, coffee and tea makers, and related supplies, accessories, and gifts at a specified location
within a designated geographic territory (a “Territory”). If we grant you a franchise, you will
execute our standard form of Chatime Franchise, LLC Franchise Agreement attached as Exhibit B
(the “Franchise Agreement”) and be granted the right to develop and operate one Chatime
Restaurant.

We also offer multi-unit development agreement franchises to qualified persons who must
establish certain minimum numbers of Chatime Restaurants within a designated geographic
territory (a “Development Territory”). If we grant you a multi-unit development agreement
franchise, you will execute our standard form of multi-unit development agreement attached as
Exhibit C (the “Multi-Unit Development Agreement”) and be granted the right to begin opening
Chatime Restaurants in your Development Territory (the “Development Rights”). Your master
franchise business includes the obligation to open a certain number of Chatime Restaurants in your
Development Territory in accordance with a specified schedule (the “Development Quota”). If
you fail to meet your Development Quota or fail to comply with any financial obligation relating
to the Development Rights, we may terminate your Development Rights, reduce or eliminate your
Development Territory or the territorial protections provided under your Multi-Unit Development
Agreement, or take other action we deem appropriate in our discretion.

We may periodically make changes to the System including, without limitation, our menu,
operating standards, and facility, signage, equipment, and fixture requirements. You may need to
make additional investments if we make System changes or if your Chatime Restaurant’s
equipment or facilities become worn or obsolete, or for other reasons (for example, to comply with
changes to applicable laws or regulations). Your Chatime Restaurant must be developed and
operated to our specifications and standards. Uniformity of products sold in Chatime Restaurants
is important to the overall integrity and reputation of the System; accordingly, you have no
discretion regarding the products sold or other System standards.
3

Market Competition

Your Chatime Restaurant will offer products and services to the general public throughout the year
and compete with other beverage and food product service business. The market for this type of
products and services generally is developed and very competitive in the United States. You will
compete with locally-owned businesses and national and regional chains that sell similar products.
The market for gourmet coffees and teas, coffee or tea-based beverages, bubble tea, and related
products is well-established and highly competitive. Your Chatime Restaurant will compete on
the basis of factors such as price, service, location, convenience, and food quality. You may find
that there is competition for a suitable location. Principal factors that vary but impact our brand’s
competitive position are name recognition (which is stronger in some regions than in others),
product quality, variety, appearance, location, and advertising. Your Chatime Restaurant may also
be affected by other factors such as changes in consumer taste, seasonal weather changes,
economic conditions, population, and travel patterns.

You may also compete with other existing Chatime Restaurants and with new Chatime Restaurants
that we may operate, franchise, or license in the future. Your competition may also include other
outlets selling coffee, tea, and food items, grocery stores, convenience stores, and specialty coffee
shops. We may grant selected franchisees unique rights or franchises to operate or distribute
authorized products through special distribution channels such as airports, service plazas,
universities, and grocery stores. These special arrangements may involve special agreements or
modifications to our standard franchise agreement and other agreements.

Industry-Specific Law and Regulations

Your Chatime Restaurant will be subject to various federal, state, and local laws and regulations
applicable to restaurant businesses including, without limitation, laws and regulations regarding
state and local licensing, zoning, land use, construction, environmental protocols and various
health, sanitation, safety, and fire standards. For example, federal, state, and local laws and
regulations regulate businesses handling food and food products (in particular, refrigerated and
frozen food items), and these laws and regulations will apply to your business. Local county health
departments generally reserve the right to inspect restaurants to ensure compliance with safe food
handling practices and adequacy of kitchen facilities. Your Chatime Restaurant must comply with
all federal and state laws requiring disclosure of nutritional information on menus and menu
boards.

In addition to laws pertaining specifically to the restaurant industry, your Chatime Restaurant will
be subject to laws or regulations that apply to businesses generally. For example, your Chatime
Restaurant will be subject to employment laws such as the Fair Labor Standards Act, Title VII of
the Civil Rights Act of 1964, the Family and Medical Leave Act, and various state laws governing
such matters as minimum wage, overtime, and working conditions. The Americans with
Disabilities Act may require you to expend certain amounts to ensure compliance by your Chatime
4

Item 2: Business Experience

Director: Yao-Hui (Henry) Wang (also known as 王耀輝)

Mr. Wang has been a director in us and our parent Chatime Global LLC since our inception in July
2022. Mr. Wang founded La Kaffa and has been La Kaffa’s Chairman and President since February
2004. Mr. Wang has been the chairman of Chatime USA since January 2014, and was the
President of Chatime USA from January 2014 to December 2019. All of these positions are or were
located in Zhubei City, Taiwan.

Director: Li-Yu (Teresa) Wang (also known as 王耀輝)

Ms. Wang has been a director in us and our parent Chatime Global LLC since our inception in
July 2022. Ms. Wang was a founder and director in La Kaffa since February 2004. Ms. Wang
was a director of Chatime USA since January 2022. All of these positions are or were located in
Zhubei City, Taiwan.

Director and Chairperson: Chen (Charlley) Zhao

Mr. Zhao has been a director and chair of the board in us and our parent Chatime Global LLC
since our inception in July 2022. Mr. Zhao has been the Managing Director of Chatime Group Pty
Ltd. since April 2009. All of these positions are or were located in Sydney, Australia.

Chief Executive Officer: Carlos Antonius

Mr. Antonius has been chief executive officer in us and our parent Chatime Global LLC since our
inception in July 2022. Mr. Antonius has been chief executive officer in Chatime Group Pty Ltd.
since June 2015. All of these positions are or were located in Sydney, Australia.

Chief Financial Officer: David Prince

Mr. Prince has been chief financial officer in us and our parent Chatime Global LLC since our
inception in July 2022. Mr. Prince has been chief financial officer in Chatime Group Pty Ltd.
Since July 2020. All of these positions are or were located in Sydney, Australia.

Item 3: Litigation

Pending Cases

Andaru Asmoro and Ardocondro, LLC vs. Chinatown Business Center 1, LP, Houston Chatime
LLC, Selina Xu, Chatime USA, LLC, and Ruiqing Xu, Case Number 2020-18076, Harris County,
Texas. On March 18, 2020, Mr. Andaru Asmoro and Ardocondro, LLC, collectively a single
franchisee (“Ardocondro”) of our affiliate Chatime USA LLC’s former Master Franchisee Houston
Chatime, LLC (“HCLLC”), filed a civil lawsuit against HCLLC, its principals Ruiquing Xu and
Selina Xu, and our affiliate Chatime USA LLC in the District Court of Harris County, Texas.
Ardocondro purchased an operating Chatime franchise from HCLLC. Shortly after the purchase,
Ardocondro was locked out of the property where the Chatime franchise was located by Chinatown
Business Center 1, LP (“CBC”), the property’s landlord, because Ardocondro had not obtained an
5

Concluded Cases

Gao vs. JM Sister Enterprise, LLC, Case Number HG16818235, Alameda County, California. On
June 3, 2016, Mr. Shan Gao, a franchisee of our affiliate Chatime USA LLC’s former Master
Franchisee JM Sister Enterprise, LLC (“Master Franchisee”), filed a civil lawsuit against JM Sister
Enterprise, LLC, its principal, Joey Li, and our affiliate Chatime USA LLC in the Superior Court
of California, County of Alameda. Plaintiff alleged that the Master Franchisee negligently and/or
fraudulently misrepresented its authority to sell Chatime franchises and its registration status.
Plaintiff sought rescission and damages in excess of $182,500 from the Master Franchisee and
principal directly, and from our affiliate Chatime USA LLC based on an agency/apparent authority
theory. On or about February 7, 2017, our affiliate Chatime USA LLC filed several cross-claims
against the Master Franchisee seeking contribution, indemnity, and defense for any liability arising
from the matter. In August 2017, the parties reached a settlement without any findings or
admissions of liability by any party. Under the settlement terms, our affiliate Chatime USA
LLC agreed to pay Plaintiff $52,000, Joey Li agreed to pay Plaintiff $6,000, and our affiliate
Chatime USA LLC was assigned Plaintiff’s claims against the Master Franchisee and its other owners.

Governmental Actions

Investigation by Letitia James, Attorney General of the State of New York, of La Kaffa
International Co., Ltd., Chatime USA, LLC, and Yao-Hui Wang. In December 2018, the Attorney
General of the State of New York (the “NYOAG”) began to inquire into the activities of our
affiliate Chatime USA LLC and La Kaffa pursuant to New York General Business Law, Article 33,
§680 et seq., also known as the New York State Franchise Sales Act (the “NY Franchise Sales
Act”). The inquiries were made in connection with the issues of whether our affiliate Chatime
USA LLC and La Kaffa sold franchises from or in New York without satisfying the pre-requisite
of registering the franchise offerings with the NYOAG or otherwise having a franchise registration
exemption. The NYOAG found that our affiliate Chatime USA LLC and La Kaffa sold franchises
from or in New York without being registered or exempt from registration. On November 25,
2019, our affiliate Chatime USA LLC, La Kaffa, and Yao-Hui Wang entered into an Assurance of
Discontinuance with the NYOAG (the “Assurance of Discontinuance”) prohibiting our affiliate
Chatime USA LLC and La Kaffa from engaging in, or attempting to engage in, conduct in violation
of the NY Franchise Sales Act. Further, pursuant to the Assurance of Discontinuance, (i) our
affiliate Chatime USA LLC and La Kaffa were required to offer rescission to franchisees that were
sold franchises in violation of the NY Franchise Sales Act, and (ii) our affiliate Chatime USA LLC
and La Kaffa were required to pay $25,000 in penalties and costs to New York.

In re Chatime USA, LLC, State of Washington, Department of Financial Institutions, Securities

Division, Consent Order No. S-19-2701-19-0001. On or about August 4, 2016, our affiliate
Chatime USA LLC entered into a five-year Master Franchise Agreement with a Canadian company
based in Edmonton, Alberta (the “Alberta Master Franchisee”) pursuant to which our affiliate
Chatime USA LLC granted the Alberta Master Franchisee master franchise rights in Washington.
In 2019, the Washington Department of Financial Institutions (the “Department”) began an
investigation into our affiliate Chatime USA LLC’s prior franchising activities in connection with
its application for franchise registration. The Department concluded that the sale to the Alberta
Master Franchisee violated Washington franchise law because (i) Chatime USA LLC granted
master franchise rights to the Alberta Master Franchisee in Washington without first obtaining
franchise registration in Washington, and (ii) Chatime USA LLC did not provide the Alberta
Master Franchisee with a U.S. disclosure document. Under the terms of a consent order dated
September 16, 2019, our affiliate Chatime USA LLC agreed to cease and desist from the sale of
franchises in Washington in violation of Washington franchise law and paid the Department $2,500
for the costs of its investigation.

No other litigation is required to be disclosed in this Item 3.

Item 4: Bankruptcy

No bankruptcy is required to be disclosed in this Item 4.

Item 5: Initial Fees

Franchise Fees

You will pay us a nonrefundable “Initial Franchise Fee” of $49,900 when you sign the Franchise
7

We also offer multi-unit development agreements under which you agree to open and operate an
agreed number of Chatime Restaurants within a specific geographic area according to an agreed
development schedule. If you enter into a multi-unit development agreement, you will pay us a
non-refundable multi-unit development fee at the time of signing the multi-unit development
agreement. The amount of the multi-unit development fee will depend on the number of locations
to be opened. For each location, you will have to sign a separate individual unit franchise
agreement in our then-current form of franchise agreement, which may be different than our
current form of franchise agreement. The multi-unit development fee (“Multi-Unit Development
Fee”) will serve as a full credit against the initial franchise fees for each location (including the
first location), so that you will not be required to pay an Initial Franchise Fee at the time you sign
each Franchise Agreement for each location.

The Multi-Unit Development fee is as follows: For two locations, the fee is $98,900. For three
locations, the fee is $134,900. For more than three locations, the fee is $134,900 plus $20,000 for
each additional location. The Initial Franchise Fee and the Multi-Unit Development Fee are fully-
earned by us upon receipt and are non-refundable.

Number of Chatime Restaurants Fee Amount Due at Signing

1 $49,900
2 $98,900
3 $134,900
Additional Restaurants $20,000 each

Opening Inventory

You must purchase from us or suppliers approved by us an initial inventory of food products and
supplies before opening your Chatime Restaurant. The assortment and number of these items will
vary depending on the size, configuration, and storage capacity of the Chatime Restaurant, the
specifics of the location, the season of the year, and other factors. The estimated cost of the
opening inventory is $15,000 to $20,000.

Uniforms

You must also purchase from us or suppliers approved by us the required uniforms for your
Chatime Restaurant personnel, the number of which will vary depending on the size of your
Chatime Restaurant and your staffing needs. The estimated cost of uniforms is $500 to $1,500.

Initial Training

We will provide two weeks of initial training for up to four attendees, to be conducted by one or
two of our representatives. You must pay us a non-refundable initial training fee of $10,000 for
each Franchise Agreement. You will pay for you and your employee’s reasonable
accommodations, meal and related travel expenses. We estimate that the amount of travel and

Item 6: Other Fees

Type of Fee(1) Amount Due Date Remarks

Royalty 5.0% of Gross Tenth day of “Gross Sales” means the total actual gross
Sales the month charges for all products, merchandise, and
calculated services sold to your Restaurant’s
based on the customers for cash or credit, whether such
Gross Sales of sales are made at or from the premises of
the previous your Restaurant or any other location or
month other channels of distribution if approved
in writing in advance by us and including
proceeds from any business interruption or
similar insurance coverage, but excluding
(i) sales, use, service, or excise taxes
collected from customers and paid to the
appropriate taxing authority and
(ii) all customer refunds, adjustments and
promotional discounts including any senior
citizens discount.
Local Marketing At least 2.0% of As incurred We require you to spend at least 2.0% of
Expenditure Gross Sales Gross Sales on local marketing. See Item
11.
Brand 2.0% of Gross Tenth day of
Marketing Fee(2) Sales the month
calculated
based on the
Gross Sales of
the previous
month
Additional Varies Before the If you request additional training or
Training Fee additional assistance, or we deem additional training
training begins necessary, such additional training will be
provided by us at our designated training
center, on-site or otherwise at a place and
time we determine. We may charge a
reasonable fee for any additional training
based on the scope of the training and you
will pay the fee upon receipt of our
invoice. The current fee is $300 per day
per trainer. You will be responsible for
the costs of our trainers’ travel, meal and
accommodation expenses. You will bear
the full costs and risk of all trainees’
attendance including, without limitation,
9

Renewal Outlet No more than No later than 30 We determine the amount of the Renewal
Fee 25% of the then- days before the Outlet Fee based on your compliance with
current New Restaurant is your Franchise Agreement (e.g., whether
Outlet Fee renewed you make timely payments,
comply with System standards, etc.).
Transfer Fee $10,000 Prior to transfer Payable if we approve a transfer of your
approval Franchise Agreement.
Audit Fee Cost of audit As invoiced Payable if (i) we find that you have
understated any amount you owe to us by
more than 2%, or (ii) you fail to furnish
reports, supporting records, other
information or financial statements as
required on a timely basis and we believe
an audit is necessary. The Audit Fee
includes accountants’ fees, legal fees, and
associated travel and accommodation
expenses for our employees.
Interest Rate The lesser of 1.5% As invoiced If you fail to pay us any amount when due,
per month or the you will pay interest on that amount at the
highest rate allowed Interest Rate from the time the amount
by law should have been paid until it is paid.
Interest accrues daily and may be
capitalized by us.
Alternate Costs incurred As invoiced You will reimburse us for our costs to test
Supplier Testing a proposed alternate supplier regardless of
Fee whether such supplier is approved.
Temporary Commercially As invoiced If you cease to conduct operations or
Management Fee reasonable fee not abandon your franchise business, we or our
less than $30 per nominee may, but are not required to, enter
hour plus costs of your business premises and operate and
travelling, manage your franchise business until you
accommodation, comply with our direction or notice
meals, and other requiring you to recommence operations.
expenses for You will pay us a reasonable Temporary
operating and Management Fee we determine and our
managing the associated expenses including, without
Restaurant limitation, costs for employee wages and
entitlements, travel, accommodations, and
meals.

Notes:

(1) Type of Fee. All fees paid to us or our affiliates are uniform and non-refundable
under any circumstances once paid. Fees paid to vendors or other suppliers may be refundable
depending on the vendors and suppliers. Notwithstanding the foregoing, if you give us notice of
termination within seven days after execution of your Franchise Agreement, we will return all
payments (whether of money or other valuable consideration) made by you to us under your
Franchise Agreement less certain amounts as specified in your Franchise Agreement within 14
days after receiving your notice of termination.

We may combine the Brand Marketing Fee with other marketing fees provided by other franchisees.
If you request any additional marketing assistance that is not within the scope of assistance provided
for by the Brand Marketing Fee, then you will pay any additional fees we charge for such additional
marketing assistance upon demand. You will not use any marketing or promotional materials
unless such marketing or promotional materials have been first approved in writing by us.

Item 7: Estimated Initial Investment

YOUR ESTIMATED INITIAL INVESTMENT

TABLE A: Franchise Agreement Estimated Initial Investment

The figures below assume the opening of one Chatime Restaurant by you pursuant to a Franchise
Agreement and operation of the Chatime Restaurant for an initial phase of three months, unless otherwise
indicated:

Estimated Amount Method of When Payable to

Type of Expenditure
Range Payment Payable Whom
Initial Franchise Fee(1) $ 49,900 Lump sum Upon Us
signing
Franchise
Agreement

Initial Training and $10,000 As arranged As incurred Us and third

Related Personnel Cost(2) parties
Rent(3) $6,000 to $33,000 As arranged As specified Landlord
in lease
Lease Security Deposit (3) $4,000 to $22,000 As arranged As specified Landlord
in lease
Rent for storage room $0 to $3,000 As arranged As specified Third party
in lease
Leasehold improvements (4) $50,000 to $145,000 As arranged As incurred Third party

Equipment (5) $25,000 to $75,000 As arranged As incurred Third party

Technology Systems(9) $11,500 to $18,000 As arranged As incurred Third party or us

Uniforms $500 to $1,500 As arranged As incurred Us or third party

Insurance(10) $3,000 to $6,000 As arranged As incurred Third party

Professional Fees $1,000 to $5,000 As arranged As incurred Third party

Additional Funds – Three $20,000 to $60,000 As arranged As incurred Third party

Months(11)
Total Estimated Initial $ 208,600 to $475,400
Investment

Notes:

The initial investment for a new Chatime Restaurant depends primarily upon (i) the size, (ii) the
Chatime Restaurant’s configuration, (iii) the Chatime Restaurant’s location, (iv) the local real
estate market, (v) construction expenses, and (vi) the amount and terms of any financing you
secure. The initial funds required must be estimated since most costs are not within our control
and may change at frequent intervals. These figures are estimates only and we cannot and do not
guarantee that your costs will fall within the stated ranges. These estimated ranges are based on
our experience and information provided by the franchisees and licensees of our affiliates. Costs
are constantly changing and your costs may be higher. You should diligently investigate all
potential costs before proceeding.

(1) Initial Franchise Fee. You will pay us a non-refundable $49,900 Initial Franchise Fee.

(2) Initial Training and Related Personnel Cost. We conduct an initial training program for your
benefit (the “Initial Training Program”). Prior to and during the period of your Chatime Restaurant
opening under your Franchise Agreement, we will provide any on-site portion of the Initial
Training Program (the “Initial Training”) to you and your employees, up to four persons. The
Initial Training will be conducted by one or two Franchisor representatives. You must pay us a
fee of $10,000 for each Franchise Agreement. Please note that the complete Initial Training
Program generally lasts two weeks and any additional follow-up training (if applicable) generally
lasts approximately five to ten days. You will pay for you and your employee’s reasonable
accommodations, meal and related travel expenses. If you are required to attend the Initial Training
Program at our designated training center, we estimate that the amount of travel and living
expenses you will spend on you and your employees will be $200 per person per day.

The above estimated costs are for up to four people to attend Initial Training, to be conducted by
one or two Franchisor representatives. If additional persons are required to attend Initial Training,
the costs will increase proportionately. There may also be additional training time needed to
13

(3) Rent. Rental costs vary considerably according to the type of Chatime Restaurant, real estate
values in your area, your real estate interest (leasehold or ownership), location, size of the site,
labor rates, code requirements, and other factors. We recommend that you secure commercial
property of at least 300 square feet. You may also need to secure warehouse space for excess
inventory. Factors that typically affect your rental costs include, without limitation, costs to lease
or buy the property, fair market values, general local lease terms, costs to renovate or develop the
site, and other site improvements. Lease terms are individually negotiated and may vary materially
from one location or transaction to another. Commercial leases are typically “triple net” leases
that require you to pay rent, taxes, insurance, maintenance, repairs, common area maintenance
costs, merchants’ association fees, and all other costs associated with the property. Rent will likely
exceed the landlord’s cost of leasing or financing the purchase of the location. You may also have
to pay percentage rent. The estimate for the security deposit assumes that the landlord requires
you to pay a security deposit equal to eight weeks’ rent. This note applies to leases for your
Chatime Restaurant and any additional storage space.

(4) Leasehold Improvements. Leasehold improvement costs include, without limitation,

architectural, design, construction, engineering, and legal fees. These estimates do not include
extraordinary costs due to extensive redesign, permitting, variances, environmental issues, legal
obstacles, etc.

(5) Equipment. Equipment includes, without limitation, blenders, tea brewers, refrigerator,
sealing machines, and ingredient dispensers.

(6) Opening Inventory. You will purchase an initial inventory consisting of products from
suppliers we approve before opening your Chatime Restaurant. The assortment and number of
these items will be based upon the size and configuration of your Chatime Restaurant. The
estimated cost for the opening inventory of these products is $15,000 to $20,000 depending on the
type of Chatime Restaurant, the specifics of the location, and the storage capacity of your Chatime
Restaurant.

(7) Initial Local Marketing. This represents the estimated costs of your activities for marketing
and advertising before your franchise is open and during the grand opening phase.

(8) Licenses, Permits, and Utility Deposits. These are the estimates for business licenses,
business permits, and utility deposits that may be required by local, state, and other governmental
authorities, or any utility providers.

(9) Computer and Electronic Cash Register Systems

You are required to use our then designated point of sale system and associated operating

Neither we nor our affiliates have any obligation to provide ongoing maintenance, repairs,
upgrades, or updates to the point-of-sale systems or other computer systems you. You may
negotiate terms with a third party supplier that we approve. We may require you to upgrade or
update any point-of-sale system or computer system to one we designate if we decide that such
upgrade or update will be in the best interests of the brand and our franchise network. There are
no contractual limitations on the frequency or cost of this obligation.

(10) Insurance. We currently require that you maintain the following insurance coverages: A)
general liability coverage with minimums of $1 million per occurrence, $2 million general and
products/completed operations aggregate, $1 million personal/advertising injury, $50,000 rented
premises damage, and $5,000 medical expenses; B) franchisee commercial auto insurance with a
$1 million combined single limit; C) workers compensation insurance with coverage limits of $1
million for bodily injury by disease per accident, $1 million policy limit, and $1 million per
employee, regardless of state laws and cannot exclude owner-operators; D) property/business
interruption coverage business personal property, tenant improvements, equipment, business
interruption, and franchisor royalties, for a minimum of 12 months’ actual loss sustained; E) cyber
liability insurance with minimum coverage limits of $250,000 per occurrence and $250,000
aggregate; F) employment practices liability insurance with minimum coverage limits of $500,000
per occurrence and $500,000 aggregate, which includes third party liability and wage & hour
coverage of at least $25,000, with a maximum deductible that does not exceed $25,000; G) crime
insurance with a minimum coverage of $100,000 for each claim. We recommend that you
maintain build-out insurance coverage. We reserve the right to update the insurance requirements
for franchises in the future, in order to address changing exposures and evolving risk factors.
Franchisees will be notified of any changes to the insurance requirements and are expected to
comply with the updated coverage standards. Some property owners may require higher levels of
commercial general liability insurance or other insurance coverage under their leases. Initial
premiums for commercial general liability are subject to change due to market forces beyond our
control. Your premium may be higher based upon your risk profile. You should discuss with your
insurance carrier whether or not these costs need to be paid in full before opening or whether they
can be budgeted. Failure to maintain such insurance may result in loss of your franchise and
additional financial obligations.

(11) Additional Funds – Three Months. This is an estimate of the funds needed for business (not
personal) expenses during the first three months of operation of your Chatime Restaurant and
includes the estimated costs of sales and operating expenses incurred during the initial month of
operation (such as payroll, utilities, taxes and, other expenses). This estimate excludes owners’
salaries or draws, non-Chatime Restaurant management expenses, and the purchase of your
Chatime Restaurant’s opening inventory. Your actual costs may be higher. Cash flow from your

TABLE B: Multi Unit Development Agreement Estimated Initial Investment

To calculate the figures below, we have added the costs of entering into the Multi-Unit Development
Agreement to the estimate above for a single Chatime Restaurant.

To Whom
Method of
Type of Expenditure Amount When Due Payment
Payment
is to be Made
Multi-Unit $134,900 to $274,900 Lump At signing of Us
Development Sum Multi-Unit
Fee for three to Development
ten locations Agreement
Estimated Initial
Investment to $158,700 to $425,500 This is the total estimated initial investment for a
Open Initial single Chatime Restaurant in Table A above (not
Chatime including the initial franchise fee which is covered
Restaurant by the multi-unit development fee).
Total Estimated $293,600 to $700,400
Initial
Investment for a
three to ten
location Multi-
Unit Agreement

Explanatory notes to Multi-Unit Development Agreement chart above:

1. If you sign a multi-unit development agreement, you will pay us, when you sign that
agreement, a non-refundable fee for the right to development multiple franchise units. You agree
to open and operate the agreed number of Chatime Restaurants within a specific geographic area
according to an agreed development schedule. The amount of the multi-unit development fee will
depend on the number of locations to be opened. For each location, you will have to sign a separate
16

The Multi-Unit Development fee is as follows: For two locations, the fee is $98,900. For three
locations, the fee is $134,900. For more than three locations, the fee is $134,900 plus $20,000 for
each additional location. The multi-unit development fee is fully-earned by us upon receipt and is
not refundable under any circumstances, regardless of the number of units you open.

2. This estimate assumes that you will not require separate office space to operate the multi-
unit development business. Typically, the multi-unit development business will initially be
operated from your home, and then, after you have opened your first Chatime Restaurant, the
multi-unit development business will be operated in the office space of one of your Chatime
Restaurants.

Item 8: Restrictions on Sources of Products and Services

The System’s reputation and goodwill are based upon the sale of high quality products and the
provision of high quality service. You will conform to our standards of quality, safety, cleanliness,
appearance and service. We anticipate that our standards will change over time and you will adhere
to these changes.

You must operate all aspects of your Chatime Restaurant in strict conformance with the methods,
standards and specifications of our System. Our methods, standards, and specifications will be
communicated to you in writing through our confidential Operations Manual and other proprietary
guidelines and writings that we prepare for your use in connection with the Chatime Restaurant
and System. We may periodically change our System standards and specifications from time to
time, as we deem appropriate or necessary in our sole discretion, and you will be solely responsible
for costs associated with complying with any modifications to the System.

You may only market, offer, sell and provide the approved products and services at your Chatime
Restaurant in a manner that meets our System standards and specifications. We will provide you
with a list of our then-current approved products and services, along with their standards and
specifications, as part of the Operations Manual or otherwise in writing prior to the opening of
your Chatime Restaurant. We may update or modify this list in writing at any time.

If you wish to offer any product or service in your Chatime Restaurant other than our approved
Products and services, or use any item in connection with your Chatime Restaurant that does not
meet our System standards and specifications, then you must obtain our prior written approval as
described more fully in this Item.

We have the right to require you to purchase any items or services necessary to establish and
operate your Chatime Restaurant from a supplier that we approve or designate, which may include
17

We have the right to require you to purchase any items or services necessary to operate your
Chatime Restaurant. Currently, we have approved suppliers for the following items: (i) food
products and ingredients; (ii) real estate and construction management services; (iii) construction
due diligence (unless proposed site does not require such due diligence); (iv) architectural,
engineering and design services related to the establishment of your Chatime Restaurant; (v)
construction site visits; (vi) signage; (vii) furniture and equipment that must be used in connection
with the operation of the Chatime Restaurant; (viii) technology set-up and ongoing services; (viii)
branded and proprietary ingredients, inventory and supplies; (ix) payroll and rostering services;
and (x) initial local marketing and location launch events. Certain food products that easily spoil
(e.g., fresh fruits and milk) may be purchased by you locally with our prior approval. Our current
sole approved supplier for construction services is Consolidated Development Services, our
current sole approved supplier for real estate services is Morrow Hill, and our current sole
approved supplier for initial marketing activities is Slique Media.

We may grant you approval to obtain food products, supplies, equipment (including point-of-sale
and back office computer systems), and materials for your Chatime Restaurant and services to your
Chatime Restaurant from other sources as long as they meet our specifications, standards, and
requirements. Every supplier must demonstrate that it can meet all System specifications,
standards, and requirements and has adequate capacity to supply our franchisees’ quantity and
delivery needs to our satisfaction. Before approving any supplier, we may take into consideration,
without limitation (i) consistency with products or name brands already in the System, (ii)
economies of scale achieved by larger volumes, and (iii) certain other benefits that a supplier may
offer such as new product development capability. When approving a supplier, we take into
consideration the System as a whole; some franchisees may pay higher prices to an approved
supplier than they might pay to an unapproved supplier. We may withhold approval of a supplier
for any reason. A list of approved suppliers is available on request. Suppliers are required to share
shipping, distribution, and all other relevant information with us.

Our criteria for approving suppliers is not available to you or your proposed suppliers. You or the
supplier may request approval by submitting a written request to us. We may require that samples
from the supplier be delivered to us or to a designated independent testing laboratory for testing
prior to approval. All requests will be reviewed in accordance with our then-current procedures
and subject to our available resources for review. You or the supplier will be required to reimburse
us for all costs that we incur in the testing and approval process whether the supplier is approved
or not. The supplier must meet our then-current specifications, standards, and requirements, which
may include signing a non-disclosure agreement or a performance guarantee. We may change our
specifications, standards, and requirements at any time and there is no limit on our right to do so.
If the supplier that you propose is initially approved or disapproved, we will notify you and the
supplier within 30 to 60 days depending on the nature of the products or services. We may
withdraw our approval at any time if the supplier’s performance does not meet our criteria, we
change our specifications, standards or requirements, or for other reasons. If an approved
supplier’s approval is revoked, we will inform you of the revocation and you will cease to use that

We may limit the number of potential suppliers that we consider for approval. For some categories
of products, we may designate a third party or ourselves as an exclusive supplier. We currently
have exclusive supplier arrangements for some categories of products or services.

You must offer for sale the complete range of approved products. The approved products are listed
in the Operations Manual (or as otherwise notified by the Franchisor). You are required to
purchase an adequate and balanced quantity of stock of approved products. Inventory/stock
requirements will be detailed in the Operations Manual or directly communicated to you.
Inventory/stock requirements will be predominantly influenced by historical data and experience
across the franchised network. There is an obligation to purchase an inventory of stock for opening
the franchised business.

Our policy for approved products and approved suppliers is intended to ensure the consistency and
quality of product standards and branding of the System and to protect the intellectual property of
the Franchisor and to assist the Franchisee to comply with all laws and regulations. which you
must purchase.

You must obtain and maintain such insurance coverage that we require and satisfy other insurance-
related obligations as provided in your Franchise Agreement at your own expense. Insurance
premiums will depend on the insurance carrier’s charges, terms of payment and your history. All
insurance policies will name us and our affiliates as an additional insured party.

You must send us samples of all advertising, promotional, and marketing materials that we have
not prepared or previously approved for our approval before use. If you do not receive written
approval within 30 days after we receive the materials, they will be deemed rejected. You may not
use any advertising, promotional, or marketing materials that we have not approved.

Except as described above, neither we nor our affiliates currently derive revenue or other material
consideration from your required purchases.

We must approve your proposed Chatime Restaurant location. You will submit any proposed lease
or purchase agreement for our review and approval. We will use commercially reasonable efforts
to inform you of our approval or disapproval within a reasonable time after our receipt of your
proposed lease or purchase agreement.

We currently have no purchasing or distribution cooperatives. We may negotiate purchase

arrangements with suppliers for the benefit of the System. We do not provide material benefits to
you (for example, renewal or granting additional franchises) based on your purchase of particular
products or services or your use of particular suppliers.

We and our affiliates will derive revenue from your purchase of products, supplies, signs,
uniforms, and other products and services that we or our affiliates provide to you. In addition, we
may receive promotional allowances, volume discounts, commissions, rebates, and other payment
from suppliers, vendors, accounting services, and insurance providers. Our affiliates negotiate
19

You are required to purchase or lease all of your products, ingredients, goods, supplies, equipment,
inventory, insurance, payroll service, real estate and project management services, and accounting
services, from us or one of our approved suppliers which may be one of our affiliates.

Our affiliates La Kaffa and Chatime Wholesale LLC are the only approved suppliers for certain
products and supplies such as ingredients, supplies, and equipment. Officers of the franchisor own
an indirect ownership interest in La Kaffa and Chatime Wholesale LLC.

Except for La Kaffa and Chatime Wholesale LLC, there are no approved suppliers in which any
of our officers own an interest.

We estimate that your required purchases from approved suppliers will represent approximately
90% of the total purchases for establishing and operating your Chatime Restaurant. We do not
have any historical figures for our total revenue or the amount of revenue from required purchases
or leases by franchisees, because we just started offering franchises in 2023.

Item 9: Franchisee’s Obligations

This table lists your principal obligations under the Franchise Agreement and other
agreements. It will help you find more detailed information about your obligations in these
agreements and in other Items of this FDD.

Article in
Obligation FDD Item
Franchise Agreement
(FA) or Multi-Unit
Development
Agreement (MDA)
a. Site selection and acquisition/lease FA: Articles 2 and 4 Items 1, 11, and 12
MDA: Articles 3 and 4
b. Pre-opening purchase/lease FA: Articles 4 and 6 Items 1, 6, 7, 8, and 11
MDA: Articles 3 and 4
c. Site development and other pre- FA: Articles 2, 3, 4, and 6
Items 1, 6, 7, and 11
opening requirements MDA: Articles 3 and 4
d. Initial and ongoing training FA: Articles 3 and 4 Items 5 and 11
MDA: Not applicable
e. Opening FA: Articles 2, 3, 4, and 5 Item 11
20

Item 10: Financing

We do not offer direct or indirect financing. We do not guarantee your note, lease, or obligation.

Item 11: Franchisor’s Assistance, Advertising, Computer Systems, and Training

Pre-Opening Obligations

The following are our obligations before the opening of your franchised Chatime Restaurant:

1. Training

We will provide to you, your senior managers designated by us, and any guarantors with a minimum
of two weeks continuous training in English (“Initial Training”), described in more detail below.
The Initial Training will be conducted at any place we designate, for a fee of $10,000 per Franchise
Agreement. You will ensure that the Initial Training is commenced by the designated persons no
earlier than two months prior to your Chatime Restaurant’s opening and completed no later than
your Chatime Restaurant’s opening. (Clause 3.1(1) of the Franchise Agreement).

If you fail the Initial Training program, you will be required to complete an additional training
following the Initial Training at a place and time we determine. We may charge you a prorated fee
for such additional training and you will pay that fee upon receipt of our invoice prior to opening
the outlet. (Clause 3.1(2) of the Franchise Agreement).

We will provide you with additional on-site advice, guidance, and support in connection with the
opening of your Chatime Restaurant for a fee. You will pay us reasonable compensation and
reimburse us for all associated costs and expenses including, without limitation, costs for
compensation, travel, accommodations, and meals, upon your receipt of our invoice. (Clauses 3.3,
3.4 and 3.9 of the Franchise Agreement).

2. Operations Manual

We will provide an electronic copy of our Operations Manual for your franchise business and your
Chatime Restaurant. Each Operations Manual contains mandatory and suggested standards,
operating procedures and rules that we prescribe for the System. The Operations Manual is
confidential, copyrighted, and not to be reproduced or distributed to any unauthorized person. We
may change the Operations Manual at any time in our discretion. Our current Operations Manual
consists of 397 pages. The sections and number of pages in each section are detailed in Exhibit H.
(Clause 3.5 of the Franchise Agreement).

3. Site and Lease Approval

We will provide you with our site selection criteria. We will review your proposal for the site
location. Your site must be approved by us and developed by you in accordance with our
requirements. If you sign a Multi-Unit Agreement, you must find a suitable location for each
additional location in time to meet the development schedule. We will not reimburse you for any
costs you incur for any location you submit to us for review and approval. (Clauses 4.7, 4.8 and
4.9 of the Franchise Agreement).

We will approve or disapprove a proposed site within 30 days of your submission. If we do not
22

We may approve or disapprove a proposed site in our discretion. Factors affecting our approval
generally include location, occupancy costs, proximity to major retail activity, traffic volume and
speed, density of nearby population (resident or daytime), competition and potential for
encroachment on other Chatime Restaurants, site configuration, parking, accessibility, visibility,
signage permitted by the landlord and local governmental authorities, and other factors. (Clauses
4.7, 4.8 and 4.9 of the Franchise Agreement). You will not begin any construction on a site without
our prior approval. (Clause 4.11 of the Franchise Agreement).

You will provide us with all required information about a site you propose. You will provide a
copy of the site lease for our record. We do not pay “finders’ fees” for sites. We do not generally
own or take a prime lease on real estate and then lease it to our franchisees. We are not required
to provide you with assistance in negotiating the purchase or lease of a site, but we may do so in
some cases by providing certain supporting data on the site. (Clauses 4.8, 4.9, and 5.4 of the
Franchise Agreement).

We will review your lease to ensure that you have obtained a lease addendum, in substantially the
form attached to the Franchise Agreement, which must give us the option but not the obligation to
assume the lease if you default on the lease, and which must require the landlord to give written
notice to us of any defaults by you. (Clause 4.9 of the Franchise Agreement).

4. Construction

We will provide you with standard, generic plans and specifications for the improvements,
furnishings, fixtures, and decor of your Chatime Restaurant. You will then have specific plans and
specifications for construction or conversion of the space for your Chatime Restaurant prepared
by an approved licensed architect at your expense. These plans and specifications must be
approved by us in writing before you begin construction. We must approve any changes made
during construction in writing. (Clause 4.11 of the Franchise Agreement).

You must use our approved suppliers for real estate and construction management services,
construction due diligence, architectural, engineering and design services, construction permit
acquisition and management services, and construction site visits. All construction will be at your
expense. (Clause 4.11 of the Franchise Agreement).

You will ensure that your Chatime Restaurant is accessible to and usable by persons with
disabilities and meets the Standards for Accessible Design for new construction or any more
stringent accessibility standard under federal, state, or local law prior to opening your Chatime
Restaurant. (Clause 4.11 of the Franchise Agreement).

The typical length of time between the earlier of the signing of a Franchise Agreement or the first
payment of consideration for a Chatime Restaurant and the opening of the Chatime Restaurant is
23

5. Computer and Electronic Cash Register Systems

You are required to use our then designated point of sale system and associated operating
technology stack. You will ensure that connectivity include notation on type of connection speed
at your Chatime Restaurant is maintained and available at all times to allow all data generated by
the point-of-sale system to be captured by our central polling server. We will have independent
access to this information. You will be responsible for the payment of all initial and ongoing costs
associated with the technology stack and with any associated payment procedures we specify from
time to time in the Operations Manual or our Global Policies and Procedures. (Clause 4.14 of the
Franchise Agreement).

Post-Opening Obligations

The following are our obligations during the operation of your franchised Chatime Restaurant:

(1) We will provide you with a required series of ongoing competency based training,
for you, your senior managers, and any guarantors throughout the term of your agreement.
Training will be conducted either in person, digitally or a combination of blended learning. All
such training will be conducted in English. If you fail to meet the approved training programs in a
timely manner, we will provide additional training at your cost at a location within your Territory
or at such other location we determine. You will pay us reasonable compensation and reimburse
us for all associated costs and expenses including, without limitation, costs for compensation,
travel, accommodations, and meals, upon your receipt of our invoice. (Clause 3.3 of the Franchise
Agreement).

(2) We will provide you with additional on-site advice, guidance, and support in
connection with the initial operations of your Chatime Restaurant, for a fee. You will pay us
reasonable compensation and reimburse us for all associated costs and expenses including, without
limitation, costs for compensation, travel, accommodations, and meals, upon your receipt of our
invoice. (Clauses 3.3, 3.4 and 3.9 of the Franchise Agreement).

(3) We will provide ongoing training advice and guidance to you concerning the
development and operation of your Chatime Restaurant to the extent and in the manner that we
deem necessary and appropriate. (Clause 3.3, 3.4, and 3.9 of the Franchise Agreement).

(5) We will grant you a license to use our intellectual property in your Territory.
(Clause 11.1 of the Franchise Agreement).

Advertising Expenditures

You will spend the Local Marketing Expenditure on advertising for your Chatime Restaurant in
your local defined territory. The Local Marketing Expenditure is paid to third parties. You may
use your own local advertising materials including, without limitation, directory advertising,
newspaper ads, digital including social channels, flyers, brochures, coupons, direct mail pieces,
specialty and novelty items, and radio and television advertising; provided, however, that you
follow our brand guidelines and obtain our prior written approval of all proposed advertising
materials at your expense. We will endeavour to approve or disapprove the advertising materials
within 10 days after we receive it from you. You are not required to participate in a local or regional
advertising cooperative. (Clause 7.1 of the Franchise Agreement).

You must contribute to our system-wide advertising and promotional fund called the Brand
Marketing Fund by paying a fee of Two Percent (2 %) of your gross sales. You will pay the Brand
Marketing Fund Fee to us on the tenth day of each month based on your Gross Sales for the
previous month. (Clause 7.2 of the Franchise Agreement).

The fund will be used to support and pay for advertising, marketing and promotion efforts we
designate, and associated administrative expenses with the management of the fund. All marketing
materials will be prepared by us or our advertising/public relations/promotional agencies. The
fund may be used to pay for the costs of researching, preparing, maintaining, administering and
directing advertising and promotional materials and programs in the manner that we decide. We
will not use the fund for the costs of soliciting prospective franchisees. In addition, the fund may
be used to pay for the costs of the personnel who manage the advertising and promotional programs
for the fund and for reasonable administrative costs and overhead incurred in the activities related
to the fund. Company-owned and affiliate-owned locations, if any, will contribute to this fund, at
the same rate as that required of franchisees. There is no assurance that any portion of your Brand
Marketing Fee or the Brand Marketing Fund will be allocated or spent for advertising in your
Territory or region of the country. (Clause 7.3 of the Franchise Agreement).

We will administer the fund. The annual financial statements of the fund will be audited and will
be made available to you for your review, at your request, within six months after the end of our
fiscal year. Other than reimbursement for reasonable costs and overhead incurred in activities for
the administration or direction of the fund, neither we nor any affiliate will receive any payment
for providing services or products to the fund. If we spend more than the contributions
accumulated in the fund during any fiscal year, we may receive, on demand, reimbursement in
later years to the extent of the excess expenditure. We will not be required to spend any amount
from the fund on advertising or promotions in your area. Any local, regional or national
advertising efforts may not equitably reach all markets. If any contributions to the fund, including
any associated earnings, are not spent in the fiscal year in which they accrue, they will remain in

There is no advertising council comprised of franchisees that advises us on advertising policies.

We are not required to spend any amount on advertising in your Territory or geographic area.
(Clause 7.2 of the Franchise Agreement).

If you request any additional marketing assistance from us, you will pay us any additional fees we
charge for such additional marketing assistance including but not limited to media and any
additional personnel related costs. You will not use any marketing or promotional material
unless that marketing or promotional material has our previous written approval. (Clause 7.3 of
the Franchise Agreement).

TRAINING

The Initial Training Program includes, without limitation: (i) sales and Chatime Restaurant
operations management, (ii) staff training and scheduling, (iii) local area marketing, (iv) Chatime
Restaurant management, (v) raw material inventory and controls, and (vi) basic Chatime
Restaurant maintenance. We may offer special training courses such as service competency staff
training, promotional training, other pre-opening support, and continuous organizational support
in our discretion. (Clause 3.1 of the Franchise Agreement).

Training may be conducted at our headquarters, virtually, at a designated training site in the United
States, or at the location of your Chatime Restaurant in our discretion.

INITIAL TRAINING PROGRAM

Hours of Hours of
Subject Classroom On-the-Job Location
Training Training
Corporate and Training Overview 6 to 8 Our headquarters,
and Introduction virtually, a designated
training facility, or
your Restaurant
Front of House Counter Operation 6 to 8 Restaurant
Back of House Kitchen Operation 6 to 8 Restaurant
Outlet Opening and Closing Procedures 6 to 8 Restaurant
Point Of Sale Training 2 to 4 Restaurant
Inventory and Stock Controls 6 to 8 Restaurant
Food Safety 2 to 4 Restaurant
Customer Service 2 to 4 Restaurant
Marketing Plans 4 to 6 Restaurant
Basic Maintenances 4 to 6 Restaurant

Initial Training is mainly conducted in our company-owned location in Southern California, or at

one of our Chatime approved training locations or Chatime Restaurants. Training will be led by
Sonny Sanchez, Chatime’s current operations and training lead. Sonny has been with us and our
parent Chatime Global since early 2023. Sonny has more than ten years’ experience as a manager
and trainer in the Boba/Tea restaurant category, and has received best practice training at the
Chatime international offices.

The Initial Training program is mandatory for all franchisees. You, your General Manager(s), and
key management personnel, (as defined in your Franchise Agreement) must complete the Initial
Training Program to our satisfaction. Initial training must be commenced by the designated
persons no earlier than two months prior to the opening date of your Chatime Restaurant, and prior
to the opening dated of your Chatime Restaurant. Scheduling of the Initial Training Program is
based on the projected opening date for your franchise business or your Restaurant. (Article 3 and
Clause 5.1 of the Franchise Agreement).

The Initial Training Program is designed to address all phases of the operation of a franchise
business and your Chatime Restaurant. The Initial Training Program involves approximately two
weeks of instruction for up to a maximum of four persons trained together at the same time. We
will provide additional Initial Training Programs for any additional personnel at your cost. (Article
3 of the Franchise Agreement).

If you do not complete all training and certification requirements in a timely manner and in line
with training benchmarks, you will be liable for all additional training costs and your opening will be
delayed, all costs incurred due to the delay will be borne by you. In the event you don’t complete the
approved training programs within a reasonable time, or as agreed to in writing with the franchisor,
we retain the right to terminate your Franchise Agreement. (Article 3 of the Franchise Agreement).

You and your managers must have sufficient literacy and fluency in the English language to
satisfactorily complete the Initial Training Program and communicate with your employees,
customers, and suppliers. (Article 3 and Clause 5.1 of the Franchise Agreement).

For the Initial Training, you must pay us a fee. In addition, you must pay for the costs for your
own employees to attend the training, including your employees’ uniforms, salaries,
accommodations, meals, and travel expenses. If you attend the Initial Training Program or later
training programs in a location other than one of our training centers, you may be charged certain
additional costs such as your portion of the costs for the meeting room which will be required to be
paid in full prior to the opening of your location. (Article 3 of the Franchise Agreement).

At your request and in our discretion, we may provide additional technical and orientation
personnel to assist you with developing your franchise business or operating your Chatime
Restaurant. You will be invoiced the associated expenditures of such personnel. (Article 3 of the
Franchise Agreement).

Computer Systems and Technology Stack

Required Components

You must purchase and operate all technology systems (also known as “Technology Stack”) that we
designate from time to time in order to optimize the operations of your Chatime location and customer
engagement. Components of our technology stack currently include:

• Revel point of sale system,

• Revel customer facing self-serve kiosk,
• Stratos digital menu board and supporting software,
• Olo delivery aggregator middleware,
• Como Chatime digital application (app) and CRM for customer ordering and communication, and
• Deputy time and attendance and rostering software.

We may change the components of the technology stack from time to time in order to optimize in
location operations and customer experience.

Fees are payable for each element of the technology stack either to the designated supplier directly
or to us if so designated.

We estimate the monthly license fees payable for the technology stack to range from $499 to $1,150.
The specific fee can vary further if you elect to utilize certain additional optional extras, features or
touchpoints.

Your digital systems will collect sales data and information about your customers, including
names, contact information and purchase history. We will have independent unlimited access to
the data collected on your computer and digital system and there are no contractual limits imposed
on our access.

We will own all data that you and/or we collect relating to your customers. We will grant you a
license to use this data solely for purposes of operating your Chatime location and this license will
exist only while you remain an approved franchisee. You must protect all customer data with a
level of control proportionate to the sensitivity of data. You must comply with all applicable data
protection laws relevant to your, state, county, territory and region as well as our data processing
and data privacy policies set forth in the Operations Manual from time to time. You must also
comply with the standards established by PCI-DSS to protect the security of credit card
information. Full liability for PCI compliance and data protection is your sole responsibility.

Item 12: Territory

Your Franchise Agreement grants you the right to operate a single Chatime Restaurant in a location
approved by us in a designated territory (“Territory”) identified in your Franchise Agreement. You
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The designated territorial rights to the protected territory granted to you under the Franchise
Agreement are contingent upon complying with your obligations under the Franchise Agreement.
We have the right to terminate or reduce your designated territorial rights or to terminate your
Franchise Agreement if you fail to comply with your obligations under the Franchise Agreement.

There is no minimum Territory. The Territory may be as large as a two-mile radius from your
approved location. The size and boundaries of your protected territory will depend upon a variety
of factors, including the population base, population density, population growth, density of
businesses, and topographical features such as rivers, mountains, freeways.

You do not have the right to distribute products through alternative channels of distribution. We
may use alternative channels of distribution for our products and trademarks and we may expand
our sale of products on a local, regional, national, or international basis. We have the absolute
right to sell, distribute or license others to distribute products identified by the Trademarks (or by
any other name or trademark) anywhere and in any form (e.g., in packaged form or otherwise),
regardless of the proximity to your location, through any alternative distribution methods or
channels (such as grocery stores, the internet, or other alternative distribution methods or
channels). These other sources of distribution may compete with you. We reserve the absolute
right to distribute goods or services through the use of the Internet or other electronic
communications, telephone, mail, or similar methods, under our trademarks or any other marks,
regardless of the destination of the products or services; if we elect to distribute goods or services
through these means, we are under no obligation to compensate you for orders received through
such means.

There are no restrictions on your soliciting or accepting orders outside your Territory. However,
we retain the sole right to use our trademarks on the Internet, including in connection with websites,
domain names, directory addresses, metatags, as graphic images on webpages, linking, advertising,
co-branding, and other arrangements. You may not maintain a website or social media accounts
without our prior written consent. If we do ever approve of a website that you promote and
develop, we have the right to condition our approval on the terms that we determine are necessary,
such as requiring that your domain name and home page belong to us and be licensed to you for
your use during the term of your agreement.

You do not have the right to relocate your Chatime Restaurant without our permission. If you
request relocation, you must obtain our prior written approval for the site and meet our then-current
criteria for relocation. Our approval process is substantially the same process we use in approving
a new location. You must comply with all your obligations to us and sign our then-current form
of Franchise Agreement with all then-current ongoing fees, for a term equal to the term remaining
on your Franchise Agreement for the previous location or to align with the new lease term being
no greater than 10 years on the new location, at a pro rata fee of the initial Franchise Fee entered
into. The then-current Franchise Agreement may contain materially different terms and conditions
than your original Franchise Agreement. There is no additional Initial Franchise Fee paid to us for

Regardless of either proximity to your Territory, or your Chatime Restaurant, or any actual or
threatened impact on sales of your franchise business, we may (i) use the Trademarks and System
in connection with establishing and operating Chatime Restaurants at any location outside your
Territory, (ii) use the Trademarks or other marks in connection with selling or distributing any
goods or services anywhere in the world through alternative channels of distribution such as the
Internet or other electronic communications, telephone, mail, or similar channels regardless of the
destination of the products or services, and we may expand our sale of products on a local, regional,
national, or international basis; you may not distribute products through alternative channels of
distribution and we are under no obligation to compensate you for our soliciting or accepting orders
within your Territory through alternative channels of distribution, (iii) use the Trademarks or
System in connection with establishing and operating Chatime Restaurants in any non-traditional
or special distribution channel (i.e., airports, train stations, gas/convenience stores, limited-access
highway food facilities, hospitals, convention centers, schools, universities and colleges, hotels,
casinos and resorts, stadiums, arenas, ballparks, movie theaters, entertainment and sports
complexes, department stores and “big box” superstores, supermarkets, festivals, fairs and other
mass gathering locations or events, offices, factories, military facilities, and any government
buildings or other institutional facilities), including special distribution channels located within
your Territory, (iv) without using the Trademarks, acquire, establish, or operate any business of
any kind at any location anywhere in the world, or (v) use the Trademarks in connection with
soliciting or directing advertising or promotional materials to customers anywhere in the world.

As part of your review of a proposed Territory, we may, but are not required to, provide you with
certain information such as (i) maps indicating existing Chatime Restaurants’ and/or competitors’
locations and may highlight potential areas of interest to us, and (ii) demographic reports
(including population and median household income) generated by third parties. It is important
you validate the information we provide to you.

If you sign a Multi-Unit Development Agreement, you are obligated to open a certain minimum
number of Chatime Restaurants (“Outlets”) in your Development Territory in accordance with a
specified schedule. (“Development Quota”). You will negotiate the size of your designated
Development Territory with us based on your Development Quota.

Your Multi-Unit Development Agreement sets out one or more protected geographic areas
(“Development Territory”) identified specifically for the development of new Outlets. This does
not mean that you have any exclusive right to any potential customer base for your Outlets. You
have no rights relating to the distribution or competitive brands that we control. You have no rights
relating to the alternative distribution channels referenced above. Under certain conditions, you will
have the first opportunity for special distribution opportunities inside your Development Territory.
This first opportunity is conditioned upon your compliance with all material provisions of your
agreements with us and our affiliates, your meeting our criteria for your Multi-Unit Development
expansion schedule, and the permission of the party that controls the special distribution
opportunities. You do not have any other rights to pursue special distribution opportunities.

If you do not continue to meet our then-current guidelines for multi-unit development and
ownership, we may terminate your Development Rights, vary your Development Territory, and/or
terminate the exclusivity attached to the Development Rights in our discretion (following which
we may ourselves develop and operate franchises in your Development Territory or may grant a
right to a third party to develop and operate franchises in your Development Territory).

Unless we have terminated the exclusivity of your Development Rights, we will not establish or
operate, nor license any other person to establish or operate, an Outlet under the System and the
Trademarks at any traditional location in your Development Territory during the term of your Multi-
Unit Development Agreement except for Outlets already established or permitted by us prior to
the execution of your Multi-Unit Development Agreement, and except for any non-traditional or
special distribution channel (i.e., airports, train stations, gas/convenience stores, limited-access
highway food facilities, hospitals, convention centers, schools, universities and colleges, hotels,
casinos and resorts, stadiums, arenas, ballparks, movie theaters, entertainment and sports
complexes, department stores and “big box” superstores, supermarkets, festivals, fairs and other
mass gathering locations or events, offices, factories, military facilities, and any government
buildings or other institutional facilities), including special distribution channels located within
your Development Territory.

We do not require minimum sales quotas for each individual Outlet; provided, however, that you
must have open and operating no fewer than the number of Outlets specified in your Development
Quota.

There are no restrictions on our right or the right of our affiliates to sell goods or services that are
the same as or similar to those that you will sell.

Item 13: Trademarks

Your Franchise Agreement gives you the non-exclusive right to operate your Chatime Restaurant
under the Trademarks. You may also be authorized to use other current or future trademarks to
operate your Chatime Restaurant.

You will follow our rules when you use the Trademarks. You will not use any of our company
names or any part of the Trademarks (i) as part of a business entity name, e-mail address, electronic
identifier, or Internet domain name, (ii) except for those we license to you, or (iii) for the sale of
any unauthorized product or service or in a manner we have not authorized in writing. You may
only use the Trademarks to operate your Chatime Restaurant and not for any other purpose or in any
manner without our prior authorization. You may only use the Trademarks on vehicles with our
prior written consent.

Except as otherwise noted, the Trademarks and service marks listed below are filed or registered
on the Principal Register of the United States Patent and Trademark Office (the “USPTO”) on the
date shown and all affidavits required to preserve and renew these Trademarks have been timely
filed.

REGISTERED MARKS

Registration Number Registration Date

Trademark

CHATIME Registration No. 5,321,339 Registered October 31, 2017

“Chatime Ri Chu Cha Tai”

Registration No. 4,178,239 Registered July 24, 2012

(and design)

“Ri Chu Cha Tai”

Registration No. 3,905,609 Registered January 11, 2011

(design)

Registration No. 6,310,008 Registered March 30, 2021

(design only)

Registration No. 6,817,092 Registered August 16, 2022

(and design)

PENDING APPLICATIONS

Trademark Serial Number Application Date

Serial No. 97182603 Dec. 21, 2021

Serial No. 97182620 Dec. 21, 2021

La Kaffa does not have a federal registration for the trademarks listed as “Pending Applications”
in the chart above. Therefore, those trademarks do not have many of the legal benefits and rights
of a federally registered trademark. If La Kaffa’s or our right to use one of these trademarks is
challenged, you may have to change to an alternative trademark, which may increase your
expenses.

There are no material determinations, proceedings, or litigation that may affect your right to use
the Trademarks other than as may be stated in this FDD. We do not know of any superior prior
rights or any infringing use that could materially affect your use of the Trademarks other than as
stated in this FDD. There are no effective material determinations of the USPTO Trademark Trial
and Appeal Board or any state trademark administrator or any court relating to the Trademarks.
There is no pending infringement, opposition, or cancellation of any of the Trademarks and no
pending material litigation involving the principal Trademarks.

You will immediately notify us when you learn of an infringement of or challenge to your use of
the Trademarks. We will take the action we think appropriate. We and La Kaffa have the right to
control all administrative proceedings or litigation involving the Trademarks. We will pay all costs
you incur to commence or defend legal proceedings relating to our intellectual property provided
that we have authorized your actions. If we undertake the defense or prosecution of any such legal
proceeding, you will execute any documents and do such acts as may be necessary in our counsel’s
opinion to carry out such defense or prosecution.
33

You and your guarantors must not register or claim rights to intellectual property similar to or
derivative of our intellectual property. You and your guarantors must (i) immediately upon
execution of your Franchise Agreement, transfer ownership of any intellectual property (e.g.,
business or corporate names, trademarks, or domain names) similar or identical to our intellectual
property to us at your expense if you or your guarantors then own such intellectual property, (ii)
immediately transfer ownership of any intellectual property (e.g., business or corporate names,
trademarks, or domain names) similar or identical to our intellectual property to us at your expense
if you or any of your guarantors registers such intellectual property during the term of your
Franchise Agreement.

If any of your improvements (e.g., any works, marks, designs, ideas, know-how, or trade secrets
that are derived from or incorporate our intellectual property) are developed by or on your behalf
during the term of your Franchise Agreement from which you obtain any intellectual property
rights, you will assign all such rights to us or our nominee free of all encumbrances as and when
the rights are created.

Item 14: Patents, Copyrights, and Proprietary Information

No patents or registered copyrights are material to the franchise. We claim copyright interests in
our Operations Manual, advertising materials, the content and format of our products, and all other
printed and pictorial materials that we produce (and any translations of them produced by us or
others), although these materials have not been registered with the Copyright Office of the Library
of Congress. These materials are proprietary and confidential and considered our property. These
materials may be used by you only as long as you are a franchisee and as provided in your
Franchise Agreement. Any rights granted to you as a user of any copyright are subject to our
ownership, rights, and interests in the copyright.

We and La Kaffa have the right to control all administrative proceedings or litigation involving
our copyrights. We will pay all costs you incur to commence or defend legal proceedings relating
to our copyrights provided that we have authorized your actions. If we undertake the defense or
prosecution of any such legal proceeding, you will execute any documents and do such acts as may
be necessary in our counsel’s opinion to carry out such defense or prosecution. If we require you
to modify or discontinue using the subject matter covered by the copyright, you must do so
immediately.

You do not receive the right to use an item covered by a patent or copyright unless it is expressly
incorporated as proprietary information in our Operations Manual. You may use these materials
in the manner we approve in the operation of your Chatime Restaurant during the term of your
Franchise Agreement. You may not use these materials in any other way for your own benefit, or
communicate or disclose them to, or use them for the benefit of, any other person or entity. These

There is no effective decision, ruling or order of the USPTO, the Copyright Office of the Library
of Congress, or any court that could materially affect the ownership or use of any patents or
copyrighted materials. Our right to use or license these patents and copyrighted items is not
materially limited by any agreement or known infringing use.

There are no agreements currently in effect that significantly limit our rights to use or license the
use of patents or our copyrights in any manner material to you. We may use and incorporate
changes and improvements that you or your employees or contractors develop into the System.
We do not have any obligation to you or the developer of these changes or improvements in
connection with such use and incorporation.

Item 15: Obligation to Participate in the Actual Operation of the Franchise Business

Your operating manager must devote his or her full time, attention and effort to the franchised
business and provide direct, day-to-day supervision of the operation, in accordance with the terms
and conditions of your Franchise Agreement and the Operations Manual. Under the current
requirements of the Operations Manual, each manager must devote at least 38 hours per week in
the day-to-day operation of your Chatime Restaurant. The operating manager may not take on
other business responsibilities that would be inconsistent with the operational requirements of the
franchised business or contrary to its best interest. Your managing owner is responsible for
overseeing and supervising the operation of the franchised business, but we do not require your
managing owner to devote his or her full time to the franchised business unless the managing
owner is also the operating manager. The managing owner and operating manager may be the
same person.

Before your Chatime Restaurant opens for business, we require that your managing owner and
operating manager attend and complete our initial training program to our satisfaction. As a general
matter, subject to the successful completion of training, we do not have restrictions on who you
may hire as an on-site supervisor, however they must complete all training and be certified as the
manager of the location by the Franchisor. You or your approved managers will supervise, train,
and evaluate the performance of your employees so that they provide competent and efficient
service to customers.

If at any time your Chatime Restaurant is not being managed by an operating manager who has
attended and completed our initial training program to our satisfaction, we are authorized, but not
required, to appoint a manager to maintain operations on your behalf. Our appointment of a
manager does not relieve you of your obligations under the franchise agreement. We will not be
liable for any debts, losses, costs or expenses incurred during any period in which we manage the
35

A franchise business requires personal attention and it is important that you personally be involved
in all facets of the business. You will operate your franchise business so that our standards of
service, quality, and cleanliness are maintained and you will set standards for your employees to
follow. Because this is primarily a cash business, you must have effective, vigilant cash
management procedures to avoid employee theft. You may minimize these demands on you
personally by attracting, motivating, and retaining capable development, supervisory, production,
transportation, and sales personnel. Recruiting, training, motivating, and supervising your
employees is your responsibility.

Each owner of your company must sign a guaranty and assumption of obligations in a form
acceptable to us. We may also require the spouse of any signatory to sign, in our discretion. Any
breach of this guaranty by any such owner or spouse will be deemed a breach of this Agreement.

Each manager of your franchised business and each person who receives training from us or
otherwise has access to our confidential information must sign a written confidentiality and
noncompetition agreement with your company in a form acceptable to us. Any breach of such
undertaking by any such person will be deemed a breach of the franchise agreement.

We do not impose any other restrictions on your managers.

.
Item 16: Restrictions on What the Franchisee May Sell

You will confine your business to the operation of your Chatime Restaurant within your Territory.
You may not conduct any other business or activity at your Chatime Restaurant without our prior
written approval. You may only offer or sell products we approve and you will offer for sale the full
menu we prescribe.

We may add, delete, or change approved products that you are required to offer at your Chatime
Restaurant at any time in our discretion. There are no limits on our right to add, delete, or change
approved products. You may only use products, materials, ingredients, supplies, paper goods,
uniforms, fixtures, furnishings, signage, and equipment we approve and you will follow methods
of product preparation and delivery that meet our requirements.

Your franchise is limited to your specified Territory and all product sales must be made from your
Restaurant. You are not permitted to sell or distribute our goods or services through the use of the
Internet or other electronic communications, except for digital transactions via our approved
loyalty, delivery aggregator and brand platforms as designated from time to time. We may require
you to participate in a gift card and loyalty program in accordance with our policies and brand
procedures.

Item 17: Renewal, Termination, Transfer, and Dispute Resolution

This table lists certain important provisions of the Franchise Agreement and related

THE FRANCHISE RELATIONSHIP

Section in Franchise
Provision Agreement (FA) and Summary
Multi-Unit
Development
Agreement (MDA)
a. Length of the franchise term FA: §1.1(26); The term is ten years.
Schedule 1
MDA: §1.1(34) and The term is ten years.
Schedule 1
b. Renewal or extension of the FA: §1.1(5); §2.7; At the end of the initial term of your
term Schedule 1 Franchise Agreement, we may grant you
the option to continue operating as a
franchisee in your Territory and to enter
into a new Franchise Agreement for a
renewal term of ten years.
MDA: § 2.7 At the end of the initial term of your
Franchise Agreement, you may request to
enter into an additional term of ten years
under the terms of our then-current form of
multi-unit development agreement, which
may contain different terms
c. Requirements for franchisee FA: §2.6 Provided you satisfy all the following
to renew or extend conditions, we will grant you the option
to continue operating as a franchisee for a
renewal term of ten years: (i) give written
notice between eight and twelve months
before the end of the initial term,
(ii) execute a new Multi-Unit
Development Agreement that may
contain different terms and conditions
than your initial Multi-Unit Development
Agreement, (iii) have substantially
complied with all material provisions of
your Franchise Agreement, (iv) not be in
default of your Franchise Agreement or
any other agreements with us or our
affiliates, (v) pay us a Renewal Outlet
Fee, (vi) undertake any additional
training at your expense that we require,
(vii) execute the new Franchise
Agreement and all other documents we
require within 28 days of receipt, (viii)
execute a General Release of us and our
affiliates, and (ix) renovate and refurbish
your Restaurant as we may require. This

f. Termination by franchisor FA: §15.3 We have the right to terminate your

with “cause” Franchise Agreement with cause.
Depending upon the reason for
termination, we may not provide you with
an opportunity to cure.
MDA: § 13.3 We have the right to terminate your MDA
with cause. Depending upon the reason for
termination, we may not provide you with
an opportunity to cure.
g. Curable defaults FA: §15.3(1) All defaults must be cured within 30 days
after notice.
MDA: § 13.3(1) All defaults must be cured within 30 days
after notice.
h. Non-curable defaults FA: §15.3(4) We may terminate your Franchise
Agreement immediately upon written
notice to you if (i) you or a guarantor
breach any provision under Clauses 6,
9.2, or 9.3 of your Franchise Agreement,
(ii) a force majeure event continues for
more than 180 days, (iii) you no longer
hold a license required to carry on your
franchise business, (iv) you voluntarily
abandon your franchise business, (v) you
or a guarantor are convicted of a serious
offense, (vi) your operations endanger
public health or safety, (vii) you are
fraudulent in connection with your
operations or commit a fraud upon us, or
(viii) you voluntarily petition in
bankruptcy, are adjudicated a bankrupt or
insolvent, or a receiver, manager,
liquidator, or other person is appointed for
a substantial part of your assets.
MDA: §13.3(4) We may terminate your MDA
immediately upon written notice to you
if (i) you or a guarantor breach any
provision under Clauses 6, 7.2, or 7.3 of
your MDA, (ii) a force majeure event
continues for more than 180 days, (iii)
you no longer hold a license required to

MDA: §11.7 Upon the death or permanent incapacity of

any person with an interest in the
development business, such interest must
be transferred to a third party approved by
us within one year following the death or
incapacity. We have the right to terminate
the agreement if an approved transfer is not
completed within the designated period of
time.
q. Non-competition covenants §9.2(1) During the term of your Franchise
during the term of the Agreement, you, your owners and any
franchise guarantors will not finance, invest in, or
have a financial interest in any other
business without our prior written consent.
This provision is subject to state law.
MDA: §7.2(1) During the term of your MDA, you, your
owners and any guarantors will not
finance, invest in, or have a financial
interest in any other business without our
43

Applicable state law might require additional disclosures related to the information contained in
this Item 17. These additional disclosures appear in Exhibit E.

We do not use any public figure to promote our franchise.

Item 19: Financial Performance Representations

The FTC’s Franchise Rule permits a franchisor to provide information about the actual or potential
financial performance of its franchised and/or franchisor-owned outlets, if there is a reasonable
basis for the information, and if the information is included in the disclosure document. Financial
performance information that differs from that included in Item 19 may be given only if: (i) a
franchisor provides the actual records of an existing outlet you are considering buying, or (ii) a
franchisor supplements the information provided in this Item 19, for example, by providing
information about possible performance at a particular location or under particular circumstances.

We do not make any representations about a franchisee’s future financial performance or the past
financial performance of company-owned or franchised outlets. We also do not authorize our
employees or representatives to make any such representations either orally or in writing. If you
are purchasing an existing outlet, however, we may provide you with the actual records of that
outlet. If you receive any other financial performance information or projections of your future
income, you should report it to the franchisor’s management by contacting David Prince, Company
Secretary, at 6000 Sepulveda Blvd., Culver City, CA 90230, tel. +61 292830880, email:
companysecretary@[Link], the Federal Trade Commission, and the appropriate state
regulatory agencies.

Item 20: Outlets and Franchisee Information

The tables below list all of the outlets operated by us, our affiliates, or our affiliates’ franchisees,
licensees, subfranchisors, or subfranchisees.

Table 1
System-wide Outlet Summary for Years 2020 to 2022

Outlets at the Outlets at the

Outlet Type Year Net Change
Start of the Year End of the Year
2020 17 17 0
Franchised
2021 17 20 +3
2022 20 22 +2
2020 0 0 0
Company- Owned
2021 0 0 0
2022 0 0 0
2020 17 17 0
Total Outlets 2021 17 20 +3
2022 20 22 +2

Notes:
46

All of the company-owned outlets listed in this table for the years 2020 to 2022 were operated by our
affiliates Chatime USA LLC or La Kaffa. We are currently in the process of developing and opening three
company-owned outlets in Southern California.

In Maryland, our affiliate Chatime USA LLC issued a master franchise agreement to Lucky Leaf LLC,
which operates three Chatime outlets in Maryland. Lucky Leaf LLC has issued three Chatime subfranchise
agreements to subfranchisees in Maryland.

Table 2
Transfer of Franchise Outlets from Franchisees to New Owners
(Other than the Franchisor) for Years 2020 to 2022

Number of
State Year
Transfers
2020 0
All States 2021 0
2022 0

Table 3
Status of Franchise Outlets for Years 2020 to 2022

Outlets at Reacquired Ceased Outlets at

Outlets Termina- Non-
State Year Start of by Operations – End of the
Opened tions Renewals
the Year Franchisor Other Reasons Year
2020 2 0 0 0 0 0 2
CA 2021 2 1 0 0 0 0 3
2022 3 0 0 0 0 2 1
2020 2 0 0 0 0 0 2
GA 2021 2 0 0 0 0 1 1
2022 1 0 0 0 0 0 1
2020 0 0 0 0 0 0 0
KS 2021 0 1 0 0 0 0 1
2022 1 0 0 0 0 0 1
2020 2 0 0 0 0 0 2
MD

MD 2021 2 1 0 0 0 0 3
2022 3 3 0 0 0 0 6

SC 2021 0 0 0 0 0 0 0
2022 0 0 0 0 0 0 0
2020 1 0 0 0 0 0 1
WA 2021 1 0 0 0 0 0 1
2022 1 0 0 0 0 0 1
2020 11 0 0 0 0 1 10
Total 2021 10 3 0 0 0 1 12
2022 12 4 0 0 0 4 12

See Notes above at Table 1.

Table 4
Status of Company-Owned and Affiliate Owned Outlets for Years 2020 to 2022
Outlets Ceased
Reacquired Outlets
at Start Outlets Termina- Non- Operations
State Year by at End of
of the Opened tions Renewals – Other
Franchisor the Year
Year Reasons
CA 2020 0 0 0 0 0 0 0
2021 0 0 0 0 0 0 0
2022 0 0 0 0 0 0 0
2020 0 0 0 0 0 0 0
Total 2021 0 0 0 0 0 0 0
2022 0 0 0 0 0 0 0

Notes:

We are currently in the process of developing and opening three company-owned Restaurants in
Southern California.

Table 5
Projected Openings as of December 31, 2022
48

California 0 0 3

Ohio 1 1 0

Total 3 3 3

Notes:

All of the franchise agreements signed but outlets not opened in this table were issued by our
affiliates Chatime USA LLC or La Kaffa. Because we have just started issuing franchises, we do
not yet have any franchise agreements signed but outlets not opened.

A list of the current franchisees, subfranchisees, or licensees of our affiliates Chatime USA LLC
and La Kaffa as of December 31, 2022 and their contact information, is provided in Exhibit G. In
addition, Exhibit G contains a list of all franchisees, subfranchisees, or licensees of our affiliates
Chatime USA LLC and La Kaffa that had an outlet transferred, terminated, canceled, not renewed,
or otherwise voluntarily or involuntarily ceased doing business in our last fiscal year, or that had
not communicated with us or our affiliates within ten weeks of the date of this FDD.

If you buy this franchise, your contact information may be disclosed to other buyers when you
leave the franchise system.

No franchisees have signed confidentiality clauses during the last three fiscal years that restrict their
ability to speak with you about their franchised business. There are currently no trademark-specific
franchisee organizations that have been created, sponsored, or endorsed by us. No trademark-specific
franchisee organizations associated with the System have asked us to include information about them
in our current FDD.

Item 21: Financial Statements

Attached as Exhibit A is our opening audited financial statement, as of the date of initial funding.

Item 22: Contracts

The following agreements are exhibits to this FDD:

Exhibit B Franchise Agreement
Exhibit C Multi-Unit Development Agreement

Exhibit F Acknowledgment Addendum to Chatime Franchise, LLC Franchise

Agreement

Item 23: Receipts

Exhibit J contains detachable documents acknowledging your receipt of this FDD.

FINANCIAL STATEMENTS

A-1

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accuracy of this information. Any action you take upon the information you find on this website ([Link]), is strictly at your own risk. We will not be liable for any losses and/or damages in connection with the use of our website.
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accuracy of this information. Any action you take upon the information you find on this website ([Link]), is strictly at your own risk. We will not be liable for any losses and/or damages in connection with the use of our website.
Exhibit B to the Franchise Disclosure Document

CHATIME FRANCHISE AGREEMENT

Chatime Franchise Agreement

(United States of America)

Parties

Chatime Franchise, LLC (Franchisor)

Franchisee specified in Schedule 1 (Franchisee)

Guarantors specified in Schedule 1 (Guarantor)

1 Definitions and Interpretation ........................................................................................................... 1

2 Grant of rights and development obligations ................................................................................. 8
3 Training and operating assistance ................................................................................................ 11
4 Franchisee’s operational obligations............................................................................................. 14
5 Other obligations of Franchisee .................................................................................................... 18
6 Initial and Continuing Fees............................................................................................................. 24
7 Marketing .......................................................................................................................................... 26
8 Confidential Information .................................................................................................................. 29
9 Protection of goodwill ...................................................................................................................... 30
10 Indemnity and limitation of liability................................................................................................. 32
11 Intellectual Property ........................................................................................................................ 33
12 Transfer and other dealings by Franchisor .................................................................................. 35
13 Transfer and other dealings by Franchisee ................................................................................. 35
14 Temporary Operation by Franchisor .............................................................................................. 38
15 Termination of Agreement.............................................................................................................. 39
16 Dispute resolution ............................................................................................................................ 41
17 Rights and obligations upon termination or expiration ............................................................... 43
18 Guarantee and indemnity ............................................................................................................... 45
19 Corporate Franchisee ..................................................................................................................... 46
20 Trust provisions ............................................................................................................................... 47
21 Acknowledgements, representations and warranties ................................................................. 49
22 Notices .............................................................................................................................................. 50
23 Force majeure .................................................................................................................................. 50
24 Power of attorney ............................................................................................................................ 51
25 Changes in laws .............................................................................................................................. 51
26 Miscellaneous .................................................................................................................................. 51

Schedule 1 - Franchise Particulars .............................................................................................................. 56

Schedule 2 - Marks and Websites .............................................................................................................. 60

Exhibit 1 – Form of Release...............................................................................................................................

Exhibit 2 – Form of Lease Addendum ...............................................................................................................
Exhibit 3 – Form of Personal Guarantee ...........................................................................................................
Exhibit 4 – Form of Confidentiality and Non-Competition Agreement .............................................................

Chatime Franchise Agreement (2023) | Page i

Parties Chatime Franchise, LLC being a Delaware limited liability company located at
6000 Sepulveda Blvd.
Culver City, CA 90230
(“Franchisor” or “we”)

The party identified as Franchisee in Item 1 of Schedule 1

(“Franchisee” or “you”)

Introduction

A Franchisor’s indirect parent company, La Kaffa International Co, Ltd., has developed a business
and proprietary know-how, information, systems, and procedures including distinctive business
formats, specifications, and the Marks for the establishment and operation of retail businesses
offering for sale gourmet coffees, teas, other beverages, and certain complementary products
(including food products), accessories, and services.

B Franchisor has been licensed by La Kaffa International Co., Ltd. to use the System and has the
right to grant third parties the right to establish and operate Outlets.

C Franchisee and Guarantor have requested, and Franchisor has agreed, to grant Franchisee a
Franchise on the terms and conditions set out in this Agreement.

D In consideration of Franchisor complying with Guarantor’s request, Guarantor has agreed to give a
guarantee and indemnity to Franchisor for the performance of Franchisee’s obligations under this
Agreement.

It is Agreed

1 Definitions and Interpretation

1.1 Definitions

The following words have these meanings in this Agreement unless the contrary intention
appears:

(1) Affiliate means any Person that directly or indirectly Controls, that is directly or indirectly
Controlled by, or that is under Common Control or Controlling Interest with, a specified
Person.

(2) Agency means any governmental entity or agency.

(3) Agreement means this document, including any schedule or annexure to it.

(4) Alternative Methods of Distribution means any alternative distribution methods or channels
(such as sales to grocery stores, sales via direct mail, subscriptions, or the internet, or other
alternative distribution methods or channels.

(5) Approved Supplier means Franchisor or a supplier or suppliers approved in writing by

Franchisor for the supply of Products and equipment to Franchisee.

(6) Brand Marketing Fee means the marketing fee payable by Franchisee to Franchisor in
the amount specified in Item 12 of Schedule 1.

Chatime Franchise Agreement (2023) | Page 1

(8) Business Hours means the hours of operation of each Outlet pursuant to any Legal
Requirements and/or the terms of any lease or other document conferring a right to occupy
the premises at which an Outlet is located.

(9) Chatime Menu means the food and beverage items specified in the Operations Manual or
otherwise in writing by Franchisor which must be offered for sale by Franchisee from the
Outlet and includes, as relevant, any specifications in relation to those products.

(10) Chatime Network means the network of Chatime Outlets in the Territory.

(11) Chatime Restaurant means a full service retail store that:

(a) Offers Products listed on the Chatime Menu for sale;

(b) Meets Franchisor’s standards and specifications;

(c) Operates under the Marks and the System; and

(d) Is operated pursuant to a valid franchise agreement.

(12) Collateral Agreement means any agreement between Franchisor and Franchisee or any
agreement between Franchisee and an Affiliate of Franchisor in connection with this
Agreement and The Franchised Business.

(13) Confidential Information means:

(a) Plans and specifications for the development of the Outlet;

(b) Recipes, training materials, programs and systems, methods, techniques, formats,
specifications, standards, procedures, sales and marketing techniques, computer
software programs, statistical data, and knowledge of and experience relating to
the development and operation of the Outlet;

(c) Marketing and advertising programs;

(d) Knowledge of specifications for and suppliers of Raw Materials and certain other
Products, materials, supplies, equipment, fixtures, furnishings, and services and
knowledge of operating results and financial performance of the Outlet;

(e) The Operations Manual (as applicable from time to time), Operations Manual
Addendum, and all other materials;

(f) Global Policies and Procedures;

(g) Information concerning the business and financial affairs of Franchisor and their
Affiliates including, without limitation, the identity of prospective franchisees and
Franchisees;

(h) The System Standards;

(i) Any information which is provided by Franchisor or any of its Affiliates and marked
“confidential” or any information which is provided by Franchisor or any of its
Affiliates pursuant to this Agreement or which Franchisee learns or gains access
to by reason of this Agreement; and
Chatime Franchise Agreement (2023) | Page 2
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(j) Any information that would at law be considered secret or confidential information
of Franchisor or any Affiliate of Franchisor.

(14) Control, Controlled by, or under Common Control or Controlling Interest means direct
or indirect possession of the power to direct or cause the direction of the management or
policies of any other Person, whether through more than 50% of the ownership of voting
interest, by contract, or otherwise.

(15) Cost means any cost charge, expense, outgoing payment, or other expenditure of any
nature and where appropriate includes fees and disbursements payable to contractors,
consultants, lawyers, and other advisers (including Legal Costs).

(16) Dispose includes, in relation to a share or a unit, entering into a transaction in relation to
the share or the unit (or any interest in the share or the unit), which results in a person other
than the registered holder of the share or the unit:

(a) Acquiring any legal or equitable interest in the share or the unit, including an
equitable interest arising from a declaration of trust, an agreement for sale and
purchase or an option agreement or an agreement creating a charge or other
encumbrance in the share or the unit;

(b) Acquiring any right to receive directly or indirectly any dividends payable in respect
of the share or the unit;

(d) Acquiring any rights of control over the exercise of any voting rights or rights to
appoint directors attaching to the share or the unit; or

(e) Otherwise acquiring legal or equitable rights against the registered holder of the
share or the unit which have the effect of placing the person in the same position
as if the person had acquired a legal or equitable interest in the share or the unit
itself.

(17) Dollars means the legal currency of United States of America unless the contrary intention
appears.

(18) Domain Name means the domain name controlled or under license by Franchisor for which
registration has been applied for, or which is specified for use by Franchisor and which
Franchisor authorizes Franchisee to use.

(19) Financial Year means the financial year of Franchisee set out in Item 20 of Schedule 1.

(20) Franchise means the right to develop and operate an Outlet at a specified location within
the Territory and to use the Marks and the System in the operation of that Outlet pursuant
to a franchise agreement.

(21) Franchised Business means the Chatime Restaurant business conducted by Franchisee
under this Agreement.

(22) Franchisee Parties means Franchisee and Guarantor.

(23) Franchisee’s Improvements means any works, marks, designs, ideas, know-how, or
trade secrets developed by Franchisee which are derived from or incorporate the
Intellectual Property or which are otherwise developed by Franchisee during the operation
of Franchised Business from which Franchisee obtains any intellectual property rights.
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(24) General Manager means the sufficiently experienced, skilled, and qualified person
employed by Franchisee who, after attending and successfully completing to Franchisor’s
satisfaction, the training referred to in clause 3.1, is responsible for the day-to-day
supervision and management of Franchised Business.

(25) Global Policies and Procedures means the written policies and procedures issued by
Franchisor from time to time in relation to the conduct of Franchised Business or
operational issues concerning the Outlet.

(26) Gross Sales means the total actual gross charges for all products (including the Products),
merchandise, and services sold to customers of each Outlet for cash or credit, whether
such sales are made at or from the premises of an Outlet or any other location or other
channels of distribution if approved in writing in advance by Franchisor but excluding:

(a) Sales, use, service, or excise taxes collected from customers and paid to the
appropriate taxing authority; and

(b) All customer refunds, adjustments, and promotional discounts including any senior
citizen’s discount.

(27) Initial Term means the term specified in Item 4 of Schedule 1.

(28) Initial Training Fee means the fee, payable to Franchisor for the initial training program, specified
in Item 10 of Schedule 1.

(29) Insurance Policies means the insurance policies specified in Item 19 of Schedule 1.

(30) Intellectual Property means:

(a) The Marks, the Network Name, copyright in the Operations Manual, Operations
Manual Addendum and any advertising or promotional materials provided by
Franchisor to Franchisee, data collected via any point of sale system used by
Franchisee in the Territory and includes all intellectual property rights in the
software, records, documents, specifications, plans, programs, menus, recipes, or
drawings;

(b) Any trade secrets, proprietary processes or know-how relating to the System,
Franchised Business or Franchises;

(c) All Confidential Information necessary for or which may be used in connection with
the administration, operation, and marketing of Franchised Business or
Franchises; and

(d) The Domain Name.

(31) Interest Rate means interest at the rate of the lesser of 1.5% per month or the highest rate
allowed by law.

(32) Interested Party means any of the following persons designated by Franchisor:

(a) Any person with a direct or indirect legal or beneficial interest in Franchisee,
including an interest in any entity directly or indirectly controlling Franchisee
(Controlling Entity), or in Franchisee’s assets and any person who is an officer,

Chatime Franchise Agreement (2023) | Page 4

(b) A spouse, child or person with an existing or former relationship of cohabitation,

lineal relatives by blood or by marriage or collateral relatives by blood or by
marriage of any person specified in clause 1.1(21).

(33) Legal Costs means all fees, costs, and disbursements actually paid or payable by
Franchisor or its Affiliates to its own legal representatives (whether or not assessed under
a retainer or costs agreement in place between Franchisor and its legal representatives)
and other expenses incurred by Franchisor or its Affiliates in connection with a demand,
action, arbitration, or other proceeding (including mediation, compromise, out of court
settlement, or appeal).

(34) Legal Requirements means all applicable laws, ordinances, regulations, rules,
administrative orders, decrees, and policies of any government, governmental agency, or
department including, without limitation, the municipal, city, county, state and federal
governments of the Territory, unless otherwise stated in this Agreement.

(35) Local Marketing Expenditure means the marketing expenditure to be spent by

Franchisee, as described in clause 7.1(1).

(36) Marks means the trademarks, service marks, logos, and other commercial symbols or
indicia owned or controlled under license by Franchisor, which Franchisor authorizes
Franchisee to use in accordance with this Agreement including those marks listed in
Schedule 2.

(37) Month means a calendar month.

(38) Network Name means the name “Chatime” and “日出茶太” or such variation to “Chatime”
and “日出茶太” or such additional or replacement name as Franchisor may from time to
time use as the name under which Outlets are operated.

(39) New Outlet Fee means the fee payable by Franchisee to Franchisor for each new Outlet
opened in the Territory in the amount specified in Item 9 of Schedule 1.

(40) New Term means the term specified in Item 5 of Schedule 1.

(41) Occupancy Right means any right to occupy the premises of an Outlet including as lessee,
sublessee, licensee, or as the holder of some other interest in the premises conferring an
enforceable right to use or occupy them.

(42) Opening Date means the date of opening of the Outlet which is anticipated to be the date
specified in Item 21 of Schedule 1.

(43) Operations and Training Manager means the sufficiently experienced, skilled, and
qualified person employed by Franchisee on a full-time basis, who after attending and
successfully completing to Franchisor’s satisfaction the training referred to in clause 3.1,
must oversee all aspects of the operation of the Outlet and ensure the Outlet complies with
the operational standards of the System and that the staff of the Outlet are fully trained.

Chatime Franchise Agreement (2023) | Page 5

(45) Operations Manual Addendum means an addendum to the Operations Manual including
specific operating procedures, standards and specifications relevant for the Territory.

(46) Outlets means Chatime Restaurants operated under the Chatime System.

(47) Owners means all Persons holding Ownership Interests exceeding 10% of the total
Ownership Interests in Franchisee and all Persons who have other direct or indirect
interests in Franchisee or this Agreement (the Persons or entities who are Owners as at
the date of this Agreement are listed in Item 2 of Schedule 1 to this Agreement).

(48) Ownership Interest means a direct or indirect, disclosed or undisclosed, legal or beneficial
ownership interest or voting right, including, without limitation:

(a) In relation to a corporation, the ownership of shares or other equity interests in

the company;

(b) In relation to a limited liability company, the ownership of membership interests or

other equity interests in the company;

(c) In relation to a partnership, the ownership of a general or limited partnership

interest;

(d) In relation to a trust, the ownership of the beneficial interest of such trust; or

(e) The right to cast some or all of the votes associated with such shares or interests.

(49) Person means an individual, corporation, general or limited partnership, limited liability
company, trust, association, or other legal entity.

(50) Premises refers to the location of the Franchised Business agreed and approved by
Franchisor, specified in item 6 of Schedule 1.

(51) Products means all Raw Materials, products, food items, and merchandise which
Franchisor from time to time authorizes for sale by Franchisee at the Outlet, and includes
products on the Chatime Menu and all products ancillary to the supply and service of
products on the Chatime Menu such as cups, utensils, and ingredients as specified in the
Operations Manual or any Operations Manual Addendum. This clause specifically exclude
those Franchisor does not authorize for sale by Franchisee at the Outlet and those for sale
outside of the Outlet including, without limitation, instant drink mix packets.

(52) Quarter means 3 successive Months commencing on each of January 1, April 1, July 1,
and October 1 of the respective year.

(53) Raw Materials means the raw materials used to produce Products included on the Chatime
Menu and include coffee beans, tea, non-dairy creamer, Chatime exclusive concentrated
juices, and other raw materials for the Products that are produced and packaged under the
Marks.

(54) Renewal Outlet Fee means the fee payable by Franchisee to Franchisor upon an existing
Outlet being renewed for a further term, as specified in Item 13 of Schedule 1.

(55) Restraint Area means the restraint area specified in Item 7 of Schedule 1.
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(56) Restrained Business means a business which is the same as or substantially similar to the
Franchised Business, or engaged, concerned or interested in or carrying on any retailing or
supplying of products or services the same as or substantially similar to the Products or
Services offered by the Franchised Business or other Chatime Restaurant Businesses.

(57) Restraint Period means the restraint period specified in Item 8 of Schedule 1.

(58) Royalty means a royalty in the amount specified in Item 11 of Schedule 1.

(59) Special Conditions means the special conditions (if any) specified in Item 25 of Schedule
1.

(60) Special Distribution Channel means a special or non-traditional location or distribution

channel, such as airports, train stations, gas/convenience stores, limited-access highway
food facilities, hospitals, convention centers, schools, universities and colleges, hotels,
casinos and resorts, stadiums, arenas, ballparks, movie theaters, entertainment and sports
complexes, department stores and “big box” superstores, supermarkets, festivals, fairs and
other mass gathering locations or events, offices, factories, military facilities, and any
government buildings or other institutional facilities, designated by Franchisor and requiring
Franchisee obtain the prior written consent from Franchisor before selling the Products.

(61) System means the distinctive business formats and methods for the development and
operation of Outlets, including color schemes, signs, equipment, layouts, systems,
methods, procedures, designs, marketing and advertising standards, and formats which
Franchisor may improve, further develop, or otherwise modify from time to time.

(62) System Standards means the specifications, standards, operating procedures, and rules
of the System that Franchisor prescribes for the operation of Outlets included in the
Operations Manual and any Operations Manual Addendum or Global Policies and
Procedures, all of which Franchisor may improve, further develop or otherwise modify from
time to time.

(63) Terms of Trade means Franchisor’s standard trading terms and conditions specified in
Item 24 of Schedule 1 and as amended by Franchisor from time to time and notified either
in writing by Franchisor to Franchisee or specified in the Operations Manual.

(64) Territory means the geographic area or areas specified in Item 6 of Schedule 1.

(65) Transfer Fee means the fee set out in Item 14 of Schedule 1.

(66) Website means an interactive electronic device contained in a network of computers linked
by communicative software including, without limitation, social media such as Meta,
Instagram, and Twitter, and Internet homepages including those listed in Schedule 2.

1.2 Interpretation

(1) Reference to:

(a) One gender includes the others;

(b) The singular includes the plural and the plural includes the singular;

(c) A person includes a body corporate;

(d) A party includes the party’s executors, administrators, successors and assigns;

Chatime Franchise Agreement (2023) | Page 7

(f) A thing includes the whole and each part of it separately;

(g) A statute, regulation, or provision of a statute or regulation includes:

(i) Any amendment or replacement of it; and

(ii) Another regulation or other statutory instrument made under it, or made
under it as amended or replaced;

(h) Dollars means United States dollars unless otherwise stated.

(2) Including and similar expressions are not words of limitation.

(3) Where a word or expression is given a particular meaning, other parts of speech and
grammatical forms of that word or expression have a corresponding meaning.

(4) Headings and the table of contents are for convenience only and do not form part of this
Agreement or affect its interpretation.

(5) A provision of this Agreement must not be construed to the disadvantage of a party merely
because that party was responsible for the preparation of the Agreement or the inclusion
of the provision in the Agreement.

(6) If an act must be done on a specified day which is not a Business Day, it must be done
instead on the next Business Day.

(7) A reference to the “end of the Franchise” means the expiry by effluxion of time or sooner
termination of the Franchise.

1.3 Parties

(1) If a party consists of more than one person, this Agreement binds each of them separately
and any two or more of them jointly.

(2) An obligation, representation or warranty in favor of more than one person is for the benefit
of them separately and jointly.

(3) A party which is a trustee is bound both personally and in its capacity as a trustee.

1.4 Relationship of Parties

(1) Nothing in this Agreement constitutes a partnership, joint venture, agency, or other form of
fiduciary relationship between Franchisee and Franchisor.

(2) Neither party has the power to bind any other party except as authorized by this Agreement.

2 Grant of Rights and Development Obligations

2.1 Grant of Rights for Initial Term

(1) Franchisor grants to Franchisee and Franchisee accepts the right to use the Intellectual
Property in the conduct of the Franchised Business at the Premises for the Initial Term,
subject to the terms and conditions of this Agreement.

Chatime Franchise Agreement (2023) | Page 8

(3) The rights granted to Franchisee pursuant to this Agreement are limited to the Premises
and apply only for the Initial Term. Franchisee acknowledges and agrees that it is not
being granted any rights to franchise and that it will not operate or grant Franchises, nor
solicit prospective franchisees, whether in or outside the Territory.

2.2 Designated Territory

(1) During the term of the Franchise, we will not establish or operate, or grant any person
other than you the right to establish or operate, a Chatime Restaurant at any location in
the Territory, except as may be provided in Section 2.3.

2.3 Rights Retained by Franchisor

(1) Franchisor, on behalf of itself and its Affiliates, retains all rights with respect to Outlets, the
Intellectual Property and the sale of Raw Materials and other Products and any other
products and services, anywhere in the world including, without limitation, the rights to:

(a) operate or grant others the right to operate Outlets under or in association with the
Marks or any other trademarks or service marks at such locations outside the
Territory, and on such terms and conditions as Franchisor, in its sole discretion,
deems appropriate;

(b) provide, franchise, license, sell, distribute and market any services or products
(under any brand, including but not limited to our Marks) through any Special
Distribution Channels, in or outside your Territory, including, without limitation,
through airports, train stations, hotels, convention centers, sport complexes,
hospitals, schools or universities, or festivals.

(c) provide, franchise, license, sell, distribute and market any services or products
(under any brand, including but not limited to our Marks) through any Alternative
Methods of Distribution in or outside your Territory, including, without limitation,
through retail establishments or via the internet;

(d) to establish and operate, and grant to others the right to establish and operate,
Chatime Restaurants at locations anywhere outside the Territory, including
locations near, on or adjacent to your Territory's boundaries;

(e) offer and sell to persons in or outside your Territory, using the Marks, services and
products that are the same as the services and products offered by Chatime
Restaurants, including without limitation the Products and the Raw Materials;

(f) in or outside your Territory, to offer and sell different services and products not
offered within a Chatime Restaurant, using the Marks, without offering you the right
to participate;

(g) acquire and continue to operate, directly or indirectly, any business operating under
different trademarks outside the Territory;

(h) acquire and retain, directly or indirectly, the rights and obligations of any franchisor
or licensor of any business similar to an Chatime Restaurant operating under
different trademarks outside the Territory;

(i) in or outside the Territory, to establish and promote other franchise systems
involving different services or products using different trademarks, and to establish
company-owned or franchised outlets for those systems, without offering you the
Chatime Franchise Agreement (2023) | Page 9
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right to participate;

(j) offer and sell franchising rights to Multi-Unit Developers who are located outside
the Territory;

(k) be acquired, directly or indirectly, in whole or in part, by any person(s) who provide
products or services similar or dissimilar to those provided by Chatime
Restaurants;

(l) provide, offer, sell and grant others the right to provide, offer and sell services and
goods similar to and/or competitive with those provided at Chatime Restaurants,
whether identified by the Marks or other trademarks or service marks, at festivals,
cultural or trade exhibitions, or other public events, both inside and outside the
Territory; and

(m) develop, manufacture, distribute, and/or sell Raw Materials and other Products
through any channel of distribution (including, without limitation, via the Internet)
under or in association with the Marks or any other trademark.

2.4 Development Obligations

(1) Franchisee agrees that during the Initial Term, it will at all times faithfully, honestly, and
diligently perform its obligations under this Agreement to open and operate the Franchised
Business at the Premises, and will continuously use its best efforts to promote and enhance
the Chatime Network Name.

2.5 Subcontracting

This Agreement is predicated on the ongoing, direct, and exclusive involvement of Franchisee in
the Franchised Business. No person other than an employee of Franchisee or a professional or
other advisor appointed on normal commercial terms is to be involved in the Franchised Business
without the prior written consent of Franchisor. In addition, Franchisee must not sub-franchise, sub-
license, subcontract, share, divide, or partition rights under this Agreement without Franchisor’s
prior written. Franchisor may in its absolute discretion withhold such consent.

2.6 Option for New Term

(1) Franchisor grants to Franchisee the option to:

(a) Operate as Franchisee in the Territory; and

(b) Enter into a new franchise agreement with Franchisor (based on Franchisor’s then-
current franchise agreement), for the New Term subject to the conditions set out in
these clauses 2.6(1) to 2.6(4) (the Option).

(2) Franchisee must notify Franchisor in writing of its intention to exercise the Option not more
than 12 Months and not less than 8 Months prior to the end of the Initial Term.

(3) Franchisee’s Option pursuant to clause 2.6(2) is subject to all of the following conditions
being satisfied:

(a) Franchisee has substantially complied with all material provisions of this
Agreement throughout the Initial Term.

(b) At the date of giving Franchisor notice of its intention to exercise the Option and as
at the end of the Initial Term, there is no outstanding breach of this Agreement or
any Collateral Agreement which has not been remedied.

Chatime Franchise Agreement (2023) | Page 10

(d) Franchisee undertakes to the satisfaction of Franchisor any additional training

required by Franchisor. Franchisee must bear the full cost of attendance at such
training, including all travel, accommodation and meal expenses and payment of
any training fee charged by Franchisor.

(e) Franchisee and all guarantors required by Franchisor, executing and returning to
Franchisor, Franchisor’s current franchise agreement together with all other
documents reasonably required by Franchisor, within 28 days of delivery to
Franchisee.

(f) If required by Franchisor, Franchisee, Owners, and Guarantor execute general

releases on terms satisfactory to Franchisor in its discretion, of any and all claims
against Franchisor and its Affiliates and their respective shareholders, directors,
officers, employees, agents, successors and assigns.

(g) Franchisee ensures that the Outlet which has been in operations for 5 or more
years is renovated and refurbished (including replacing or upgrading any plant,
equipment, fixtures, fittings and signs as Franchisor may reasonably require) in
order to bring the Outlet up to the then-current standards and specifications of
Franchisor for all new Outlets and to comply with any Legal Requirements.

(h) Franchisor confirming in writing to Franchisee that each of the conditions in these
clauses 2.6(3)(a) to 2.6(3)(g) have been satisfied.

(4) If the conditions specified in clauses 2.6(3)(a) to 2.6(3)(g) are not satisfied by the parties or
waived by Franchisor prior to the expiration date of the Initial Term, then this Agreement
will expire on the expiration date of the Initial Term and Franchisor will be free to operate
and grant franchises and development rights for Outlets in the Territory.

2.7 Guaranty. Franchisor’s grant of this franchise is made in reliance on the personal attributes of your
company’s owners and managers named in Item 2 of Schedule 1. Each person who now or later owns or
acquires, either legally or beneficially, any equity or voting interest in your Franchised Business (the
“Guarantor” or “Guarantors”), must execute and deliver to Franchisor a guaranty and assumption of
obligations agreement in a form attached as Exhibit 3. Franchisor may require the spouse of any or all
Guarantors to sign the Guaranty in our discretion. If any owner is an entity, we have the right to have the
Guaranty executed by individuals who have an indirect ownership interest in your company and their
spouses, if applicable. Upon our request at any time, Franchisee will furnish to Franchisor a list of all
holders of legal and beneficial interests in your Franchised Business together with descriptions of the type
of interests owned and the percentage ownership, and the names, addresses, email addresses and
telephone numbers of the Owners, certified as correct in the manner we specify. If any of Franchisee’s
general partners, managers, officers or directors ceases to serve as such or if any new person becomes
a general partner, manager, officer or director after the date of this Agreement, you will notify us of such
change within 10 days. Any breach of a Guaranty will be deemed to be a breach of this Agreement.

2.8 Collateral Agreements

Franchisee must comply with all terms and conditions of any Collateral Agreement and
acknowledges that a breach of any Collateral Agreement constitutes a breach of this Agreement.

3 Training and Operating Assistance

3.1 Initial Training

(1) Franchisor will provide to Franchisee, Guarantor, and any senior managers nominated by

Chatime Franchise Agreement (2023) | Page 11

(2) If deemed necessary by Franchisor, additional training will be provided by Franchisor either
immediately following the Initial Training or otherwise at a place and time determined by
Franchisor. Franchisor may charge Franchisee a reasonable fee for such additional
training, in addition to the travel, meal and accommodation costs of the trainers, and
Franchisee must pay that fee upon receipt of an invoice from Franchisor.

(3) In relation to the initial training described in clause 3.1(1) or 3.1(2), Franchisee agrees to:

(a) Ensure that all relevant persons attend the training at such times and places
specified by Franchisor and complete their training to Franchisor’s satisfaction; and

(b) Bear the full costs and risk of all trainees’ attendance at such training programs
(including their compensation, travel, accommodation, meals, employee wages
and entitlements, uniforms, workers’ compensation insurance and personal
expenses).

3.2 Continuing Training

(1) Franchisor may require Franchisee and/or Guarantor and any senior managers of
Franchisee to complete a formal training program with Franchisor from time to time during
the Initial Term at a place Franchisor designates. All such training will be conducted in
English. At Franchisee’s request, Franchisor may in its sole discretion conduct additional
training programs and provide assistance to Franchisee at a location within the Territory or
such other location agreed upon by Franchisee and Franchisor.

(2) Franchisee must pay all costs associated with:

(a) Its employees attending training in accordance with this clause 3 (including travel,
accommodation, meals, employee wages and entitlements, uniforms, workers’
compensation insurance, and personal expenses);

(b) Franchisor providing training in accordance with this clause 3 (including

compensation, travel, accommodation, and meals); and

(c) Any fees levied by Franchisor in relation to such training.

3.3 Continuing Guidance and Support

(1) Franchisor will provide ongoing advice and guidance to Franchisee concerning the
development, operation, and franchising of the Outlet in the Territory to the extent and in
the manner that it deems necessary and appropriate.

(2) Franchisor will arrange for a representative to visit the Territory and meet with Franchisee
at least once in each 12-Month period at Franchisor’s Cost.

3.4 Operations Manual

(1) Franchisor must supply, electronically, a soft copy of the Operations Manual to Franchisee
by way of loan.

Chatime Franchise Agreement (2023) | Page 12

(a) Upon receipt of the Operations Manual and as required from time to time during
the Initial Term, review the Operations Manual for compliance with applicable Legal
Requirements, local culture, and local business customs and practices for the
Territory; and

(b) When changes are required, prepare a written addendum of the changes and
provide to Franchisor for its review and approval. The approved addendum of
changes will become the Operations Manual Addendum.

(3) Franchisee may provide access to the Operations Manual and Operations Manual
Addendum to Franchisee’s key operational employees subject to the employees entering
into the approved confidentiality agreement with Franchisor.

3.5 Policies and Procedures

Franchisee:

(1) Must comply with any Global Policies and Procedures; and

(2) May issue and enforce compliance with policies and procedures for the operation of the
Outlet in the Territory, provided that Franchisor has first approved those policies.

3.6 Changes to Operations Manual

(1) Franchisor may add to, delete, or otherwise modify the specifications, standards, operating
procedures, systems, instructions, and any other information set out in the Operations
Manual or Operations Manual Addendum by giving notice to Franchisee of the change via
email.

(2) A change takes effect and forms part of the Operations Manual and Operations Manual
Addendum 7 days after notification to Franchisee.

(3) Franchisee must at its Cost adopt, in the conduct of The Franchised Business, all changes
to the Operations Manual and Operations Manual Addendum.
3.7 Franchisee Must Keep Operations Manual Secure

(1) Franchisee must:

(a) Keep, and use reasonable efforts to ensure that all Franchisee’s employees keep,
all hard and soft copies of the Operations Manual (including the Operations Manual
Addendum) in a safe and secure place;

(b) Return to Franchisor on demand all superseded, replaced, or outdated copies of

the Operations Manual and Operations Manual Addendum;

(c) Only make copies of the Operations Manual and Operations Manual Addendum
insofar as copies are required to be distributed to key operational employees of
Franchisee;

(d) Return to Franchisor all copies of the Operations Manual and Operations Manual
Addendum immediately upon the expiry or termination of this Agreement; and

(e) Not copy or disclose any part of the Operations Manual or Operations Manual
Addendum.

Chatime Franchise Agreement (2023) | Page 13

4 Franchisee’s Operational Obligations

4.1 Franchise Arrangements

Franchisee:

(1) Must itself comply with all Legal Requirements including, without limitation, any laws or
regulations relating to occupational health and safety and food safety; and

(2) Must ensure that Franchisor is named as a third party beneficiary of this Agreement and
that Franchisor will have the right, but not the obligation, to assume Franchisee’s
obligations under this Agreement.
4.2 Training and Support

(1) Franchisee agrees to develop a training program and to provide training support and
assistance to its employees in accordance with specifications prescribed by Franchisor.

(2) All services and assistance provided to Franchisee in connection with the operation of the
Outlet must be provided by Franchisee and such obligations of Franchisee must not be
transferred, subcontracted, or assigned to any other Person (other than Franchisor
pursuant to this Agreement) without the prior written approval of Franchisor.

(3) Franchisee must visit the Outlet established under this Agreement at least every Month, to
provide advice, guidance, and support and complete an evaluation report for the Outlet in
the form prescribed by Franchisor. At the request of Franchisor, Franchisee must make
available and provide to Franchisor, the evaluation reports in respect of the Outlet visited
by Franchisee, within 30 days of such request.

4.3 System Standards

(1) Franchisee agrees that at all times during the Initial Term, Franchisee will comply with all
System Standards.

(2) The System Standards may be periodically modified and supplemented by Franchisor in
its discretion during the Initial Term. Franchisee must comply with any revised System
Standards within 7 days of receipt of a notice from Franchisor advising of a change to the
System Standards.

(3) Franchisee agrees that System Standards prescribed from time to time in the Operations
Manual, or otherwise communicated to Franchisee through the issue of Global Policies and
Procedures, constitute provisions of this Agreement. Both parties agree and acknowledge
that Franchisor does not intend to prescribe System Standards that affect the fundamental
rights of Franchisee in this Agreement.

4.4 Compliance with the System

Franchisee agrees to diligently and continuously monitor compliance with the System and System
Standards, to strictly enforce compliance with the System and System Standards by Franchisee
and to furnish assistance to Franchisor to correct deficiencies in operation.
Chatime Franchise Agreement (2023) | Page 14
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accuracy of this information. Any action you take upon the information you find on this website ([Link]), is strictly at your own risk. We will not be liable for any losses and/or damages in connection with the use of our website.
4.5 Franchise Premise

Franchisee must at all times during the Initial Term maintain office facilities for operation of the
Franchise. Such office facilities will have a dedicated telephone line, which must be answered in
the Network Name and will otherwise be equipped and furnished and have signage in a manner
consistent with the image and minimum standards of Franchisor.

4.6 Customer Complaint System

Franchisee must establish a customer complaint system to redress all customer complaints. Such
system must be approved by Franchisor.

4.7 Site Selection

(1) Franchisor may from time to time modify site selection criteria and processes.
Franchisee may modify Franchisor’s site selection criteria and processes, as appropriate
for use in the Territory. Any modified site selection criteria and processes must be
submitted to Franchisor for its approval. Franchisor must notify Franchisee of its approval
of Franchisee site selection criteria and processes or otherwise of any changes that need
to be made. Franchisee must use the site selection criteria and processes as approved by
Franchisor (Territory Site Selection Criteria) for the selection of sites in the Territory.

(2) Franchisee must select sites in the Territory that it reasonably believes conform with the
Territory Site Selection Criteria.

4.8 Site Approval

(1) Franchisee must not establish, or permit any others to establish, an Outlet without first
obtaining the written approval of Franchisor. To obtain approval for a given site, Franchisee
must comply with the process set out in the Operations Manual.

(2) Subject to a reasonable belief by Franchisor that Franchisee will meet all requirements
under clause 4.8, Franchisor must provide its approval or non-approval to the proposed
Site within 30 days after receiving all the information required by Franchisor. Where
Franchisor does not approve a proposed Site, it must provide to Franchisee a written notice:

(a) Specifying that approval is withheld; and

(b) Setting out why approval is withheld. If any additional information is requested by
Franchisor in respect of a proposed Site, the 30 days will begin upon the date of
receipt of any such additional information.

(3) Franchisor may approve a proposed Site for the Outlet being opened subject to reasonable
conditions including, without limitation, renovating and remodeling the interior and exterior
of the Outlet according to Franchisor’s latest design guidelines, as determined in its sole
discretion.

(4) Promptly after receipt by Franchisee of written approval from Franchisor to establish the
Outlet at the proposed Site, or after the expiration of the 30 day period specified in
clause 4.8(2), Franchisee must itself or must ensure that the relevant Franchisee procures
an Occupancy Right in relation to the approved Premises. If the Occupancy Right is
procured by lease, license or other approved occupancy right, Franchisee must do so in
accordance with clause 4.9. If the Occupancy Right is procured by purchase, Franchisee
must return to Franchisor the lease evidencing Franchisee’s right to occupy the approved
Site 15 days after the purchase has been affected. Franchisee must then ensure that
construction and operation of the Outlet is undertaken pursuant to the terms of this
Agreement.
Chatime Franchise Agreement (2023) | Page 15
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(5) Any relocation of the Outlet beyond a 2-miles radius of the existing Premises or beyond 90
days of closing the Outlet at the original location is deemed opening a new Outlet and
subject to all applicable provisions under this Agreement, and Franchisor shall be entitled
to the New Outlet Fee.

4.9 Lease of Site of the Outlet

(1) Franchisee must hold the head lease or other Occupancy Right approved by Franchisor
for the Premises at the Outlet.

(2) Franchisee must obtain a Lease Addendum, signed by Franchisee, Franchisor, and the
Landlord, in substantially the form attached as Exhibit 2, which gives the Franchisor the
option but not the obligation to assume Lease if the Franchisee defaults on the Lease, and
which requires the Landlord to give written notice to the Franchisor of any defaults by the
Franchisee.

(3) Unless Franchisee owns or leases the relevant Premises, Franchisee must ensure that it
promptly obtains a lease for the Premises in respect of which Franchisor has given its
approval for the establishment of the Outlet.
4.10 Termination of Leases

(1) If a lease or other Occupancy Right approved by Franchisor is to be terminated, Franchisee

must, unless impractical to do so, give notice of termination to Franchisor. If:

(a) Such termination is not due to Franchisee’s fault prior to the expiration of this
Agreement;

(b) Such termination is a result of the Site being destroyed, condemned, or otherwise
rendered unusable as an Outlet in accordance with this Agreement; or

(c) In the judgment of Franchisor and Franchisee, there is a change in the character
of the location of a site sufficiently detrimental to its business potential to warrant
its relocation,

Franchisor will not unreasonably withhold permission for relocation of the Outlet from the
site in question to a site which meets the then-current Territory Site Selection Criteria,
subject to the requirements of this Agreement, and subject to the Franchisee executing a
Release in the form attached as Exhibit 1. Any such relocation will be at Franchisee’s sole
expense. Franchisee must seek and obtain Franchisor’s approval of the replacement site
and development of the new outlet, in accordance with the terms of this Agreement. No
New Outlet Fee will be payable to Franchisor provided the replacement site is within a 2-
mile radius of the existing site and the new Outlet at the replacement site is opened and
operated by the same Franchisee within 90 days of closing the Outlet at the original
location. Notwithstanding the foregoing, If the lease term for a new approved location
extends beyond the remaining term of the Franchise Agreement, then Franchisor shall
extend the Franchise Agreement to align with the end date of the new lease for the new
location, and Franchisee shall pay Franchisor a pro rata portion of the then-current New
Outlet Fee based on the length of the extension of the term of the Franchise Agreement,
provided that the lease term for any new approved location shall not exceed ten years.

(2) If a lease or other Occupancy Right approved by Franchisor terminates pursuant to clause
4.10(1), the parties do not agree to relocate the Outlet, and such Franchisee continues to
occupy the existing site after the end of this Agreement, Franchisee must, as soon as
reasonably possible and in accordance with any applicable Legal Requirements, ensure
that Franchisee alters the Site and removes or changes any signs, fixtures, fittings, colors,
and layout as reasonably requested by Franchisor to ensure that the appearance of the
Chatime Franchise Agreement (2023) | Page 16
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accuracy of this information. Any action you take upon the information you find on this website ([Link]), is strictly at your own risk. We will not be liable for any losses and/or damages in connection with the use of our website.
Site cannot be confused with the then-prevailing image for an Outlet or to be in any way
associated with Franchisor.

4.11 Construction of the Outlet

(1) Franchisee is responsible for the construction and development of the Outlet in accordance
with the System Standards. All plans and specifications for the Outlet must, if required by
Franchisor, be approved by Franchisor.

(2) Franchisee must use Franchisor’s approved suppliers for real estate and construction
management services, construction due diligence, architectural, engineering and design
services, construction permit acquisition and management services, and construction site
visits, in connection with the construction and development of the Outlet. All construction
of the Outlet under this Agreement must be undertaken by competent and licensed building
contractors and subcontractors.

(3) Franchisor may, in its sole discretion, approve or not approve an application for designing
the interior and exterior of the Outlet.

(4) In the construction of the Outlet in the Territory, Franchisee must ensure that it complies
with:

(a) Franchisor’s System Standards in relation to the construction of the Outlet; and

(b) All Legal Requirements, including applicable ordinances, building codes and permit
requirements and with lease requirements and restrictions.

(5) Franchisee must obtain Franchisor’s written approval of any material revision or adaptation
of Franchisee’s plans and specifications, previously approved by Franchisor (Approved
Plans). Franchisor must approve or disapprove any changes to the Approved Plans within
10 Business Days from receipt of the proposed changes.

(6) If Franchisor approves any revision or adaptation of the construction plans and
specifications, upon completion of construction, Franchisee must provide Franchisor with
a set of “as built” plans and specifications.

4.12 Acknowledgment

Franchisee acknowledges that Franchisor has the right, but no obligation, to approve architects
and other design and construction professionals to help ensure consistency, uniformity, and
quality with the System and the Chatime image.

4.13 Franchisor’s Inspection Rights

Franchisor, its Affiliates, consultants, and agents have the right to inspect the Outlet and the
construction work from time to time during the course of construction to verify the progress of
construction and Franchisee’s compliance with the terms of this Agreement.

4.14 Point of Sale System

(1) Franchisee must use a point of sale system and related technology systems nominated or
approved by Franchisor. The supplier of the point of sale system and related technology
systems must be approved by Franchisor.

(2) Franchisee must ensure that connectivity at the Outlet is maintained and available at all
times to allow all data generated by the point of sale system to be captured by Franchisor’s
central polling server.

Chatime Franchise Agreement (2023) | Page 17

5 Other Obligations of Franchisee

5.1 Personnel

(1) Managing Owner. The “Managing Owner” of your Chatime Restaurant is the person named
as such in Item 2 of Schedule 1. The Managing Owner is the primary person who will
represent your business in your dealings with us and who will be responsible for overseeing
and supervising the operation of the Franchised Business. The Managing Owner must be
an owner of an equity interest in your business whom we approve. Franchisee agrees that
a shareholder, member or partner will serve as your Managing Owner throughout the term
of this Agreement. Franchisee may not replace the Managing Owner without Franchisor’s
prior written approval, which Franchisor may condition on, among other things, attendance
and satisfactory completion by the prospective new Managing Owner of our initial training
program at Franchisee’s expense.

(2) Operating Manager. Franchisee will appoint at least one “Operating Manager”. The
Managing Owner and Operating Manager may be the same person. Franchisee’s
Operating Manager may but need not be an owner of your business. You will ensure that
the day-to-day operation of the Franchised Business is always actively managed by an
Operating Manager who has attended and successfully completed such training as we may
require from time to time. The Operating Manager will actively devote his or her full time,
attention and effort to the Franchised Business and provide direct, day to-day supervision
of the operation of the Franchised Business as provided in the then-current Operations
Manual. The current Operations Manual requires the Operating Manager to devote at least
38 hours per week to the day to day operations of your Chatime Restaurant. The Operating
Manager shall not directly or indirectly engage in any other business or other activity that
requires any significant management responsibility or time commitments or that may
otherwise conflict with Franchisee’s obligations under this Agreement.

(3) The Operating Manager will ensure at all times the proper levels of customer service in
accordance with the Operations Manual and this Agreement.

(4) Franchisee must ensure that the Operating Manager exerts their full-time efforts to the
franchising, development, and operation of the Chatime Network and does not directly or
indirectly engage in any other business or other activity that requires any significant
management responsibility or time commitments or that may otherwise conflict with
Franchisee’s obligations under this Agreement.

(5) If the Managing Owner or Operating Manager does not satisfactorily complete the initial
training program or if we determine that such person cannot satisfactorily complete the
training program, or if the Managing Owner or Operating Manager ceases to act as such,
then Franchisor may elect to train, at Franchisee’s expense, a qualified replacement (who
must be reasonably acceptable to us) within 30 days. Pending the appointment and training
of a new Managing Owner or Operating Manager or if, in our judgment, the Franchised
Business is not being managed properly, we have the right, but not the obligation, to appoint
a manager for the Franchised Business and require you to pay in the manner described in
clause 14.

(6) The Managing Owner and the Operating manager must attend and complete to
Franchisor’s satisfaction such training programs as Franchisor prescribes including the
initial training referred to in clause 3 (which may be conducted in whole or in part at any
place designated by Franchisor).
Chatime Franchise Agreement (2023) | Page 18
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accuracy of this information. Any action you take upon the information you find on this website ([Link]), is strictly at your own risk. We will not be liable for any losses and/or damages in connection with the use of our website.
(7) You agree to ensure that the Managing Owner, Operating Manager, and any other
management personnel of Franchisee shall execute and deliver a Confidentiality and Non-
Competition Agreement in the form attached as Exhibit 4. At our request, you will submit
to us a copy of all such written agreements. You will ensure that each such person complies
with the terms of such agreement during the period that he or she is employed by or
associated with your Franchised Business. Any breach of such agreement by any such
person will be deemed a breach of this Agreement.

(8) Unless otherwise provided in this Agreement, any proposed change or replacement of the
Operating Manager and Managing Owner must be approved by Franchisor in writing.

(9) No later than by the opening of the Outlet, Franchisee must hire a marketing manager who
will designate his or her full-time efforts to the development and implementation of
marketing and promotional programs for the Chatime Network in the Territory.

(10) Franchisee agrees to hire and maintain the number and level of additional management
personnel, as may be specified by Franchisor from time to time as part of the System
Standards for the development and supervision of operation of the Outlet within the
Territory in accordance with this Agreement.

(11) Franchisee will have sole authority and control over the day-to-day operations of the
Franchised Business and its employees. Franchisee will be solely responsible for recruiting
and hiring the persons you employ to operate the Franchised Business. Franchisee will
also be responsible for their training, wages, taxes, benefits, safety, work schedules, work
conditions, assignments, discipline and termination. Franchisee agrees to comply with all
workplace related laws. Franchisor will have no right or obligation to direct Franchisee’s
employees. Franchisor has no direct, indirect, or reserved power over, or authority to
control, Franchisee’s employee’s wages, benefits, other compensation, hours of work,
hiring, discharge, discipline, supervision or direction, or work rules. At no time will you or
your employees be deemed to be employees of ours or of any of our affiliates.

5.2 Meetings

(1) Franchisor may convene meetings and conferences (including regional meetings and
conferences) from time to time for Franchisee and its key personnel designated by
Franchisor, which may include other franchisees, whenever Franchisor considers this
necessary or appropriate. Franchisee must ensure that the General Manager and such
other key personnel of Franchisee, at Franchisee’s Cost, attend such meetings and
conferences. Franchisee shall pay Franchisor any fees or costs associated with the
meeting or conferences plus Franchisee’s associated expenses including, without
limitation, costs for travel, accommodation, meals, employee wages and entitlements,
uniforms, workers’ compensation insurance and personal expenses.

(2) Franchisor must give Franchisee a reasonable period of notice of meetings and
conferences.

(3) The location, agenda, duration, and all procedures and formats of each meeting and
conference will be determined by Franchisor.

5.3 Insurance

(1) From the date of this Agreement and at all times during the Initial Term (including, if
appropriate, the New Term), Franchisee must at its cost take out and maintain in full force
and effect the Insurance Policies with reputable insurers which comply with all Legal
Requirements and on terms and conditions acceptable to Franchisor.

(2) Franchisee must also maintain in force all other insurance of the types, in the amounts, and
Chatime Franchise Agreement (2023) | Page 19
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accuracy of this information. Any action you take upon the information you find on this website ([Link]), is strictly at your own risk. We will not be liable for any losses and/or damages in connection with the use of our website.
with such terms and conditions as Franchisor may from time to time reasonably prescribe,
in the Operations Manual or otherwise.

(3) The Insurance Policy must:

(a) Name Franchisor and its Affiliates that it designates as additional insured parties;

(b) Contain a waiver of all subrogation rights against Franchisor, its Affiliates, and
their successors and assigns;

(c) Contain primary and noncontributory provisions, and be occurrence-based with

per-location aggregate;

(d) Be provided by an A- VII or higher AM Best-rated carrier;

(e) Provide for 30 days’ prior written notice to Franchisor of any material modification,
cancellation, or expiration of such policy; and

(f) Include coverage for a minimum liability of no less than the amount specified by
Franchisor.

(4) Franchisee must provide Franchisor at least annually and on request by Franchisor a
copy of the certificates of insurance or other evidence requested by Franchisor that the
Insurance Policy exists, is current, and is on terms and conditions approved by Franchisor.
The maintenance of the Insurance Policy is the responsibility of Franchisee. Franchisor
may, but will have no obligation to, prescribe types or amounts of insurance coverage and
will have no obligation to indemnify Franchisee if it does not do so or if the types or amounts
of insurance coverage prescribed by Franchisor are insufficient to fully cover a claim made
against Franchisee.

(5) Franchisee must promptly and in accordance with the terms of the relevant Insurance
Policy, report to both the insurer and Franchisor, any claim or event which may give rise to
a claim against Franchisee, Franchisor, or any of their Affiliates.

5.4 Records and Reports

(1) Franchisee must maintain and preserve at its principal office, full, complete, and accurate
records and reports pertaining to the development and operation of the Outlet and the
performance by Franchisee of its obligations under this Agreement. Such records must
include the information prescribed in the Operations Manual or the Global Policies and
Procedures.

(2) In addition to the reports referred to in clause 5.4(1), Franchisee must deliver to Franchisor
in the form periodically required by Franchisor, which may include in an electronic format,
the following:

(a) A notice of Outlet opening on or before the opening date of the Outlet and the lease
agreement, if any, for the site where the Outlet is located;

(b) By the end of each Wednesday, an audited report of Gross Sales for the
immediately preceding week;

(c) By the tenth day of each Month, an audited report of the daily Gross Sales and an
audited profit and loss account in the prior Month;

(d) Within 90 days after the end of the Financial Year, financial statements of
Franchisee including an audited Financial Year-end balance sheet for Franchisee
and an audited profit and loss account for such Financial Year reflecting all year-
Chatime Franchise Agreement (2023) | Page 20
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accuracy of this information. Any action you take upon the information you find on this website ([Link]), is strictly at your own risk. We will not be liable for any losses and/or damages in connection with the use of our website.
end adjustments, and an audited statement of changes in financial condition on a
basis consistent with generally accepted accounting principles of the Territory (or,
at Franchisor’s option in accordance with any recognized international accounting
principles which may be adopted by appropriate standards-setting bodies during
the Initial Term);

(e) At least 60 days prior to the end of each Financial Year:

(i) A development plan to be implemented by Franchisee during Franchisor’s

next Financial Year, including capital and operating budgets; and

(ii) A marketing plan and budget describing the proposed marketing activities
and expenditures for the Local Marketing Expenditure for the succeeding
Financial Year;

(f) Within 60 days following the end of each Financial Year, a report of the receipts
and disbursements of advertising, promotion, public relations, market research and
other marketing programs and activities undertaken by the Local Marketing
Expenditure during the preceding year; and
(g) Such other data, reports, information, financial statements and supporting records,
in relation to the Franchised Business (including Gross Sales for each Month), as
determined and in a format required by Franchisor from time to time, which may
include the provision of reports and data in an electronic format.

(3) Each such report and financial statement furnished by Franchisee must be verified as
correct and signed by Franchisee in the manner prescribed by Franchisor, such as audited
by a certified public accountant.

(4) Franchisee must immediately report to Franchisor any events or developments which may
have a significant or materially adverse impact on the performance of Franchisee under
this Agreement or the goodwill associated with the Marks or the Outlet.

(5) Franchisee must fully disclose to Franchisor all information concerning the Franchised
Business as Franchisor may reasonably require.

5.5 Inspections and Audits

(1) Franchisor and its agents may at any time during normal Business Hours inspect, audit and
make copies or extracts of the records and reports described in clause 5.4 and any other
business records, bookkeeping and accounting records, electronic records and files, value
added, sales, use, service, and income tax records and returns, and other records of The
Franchised Business.

(2) Franchisor may, at any time, during normal Business Hours and one hour before and
one hour after normal Business Hours, inspect the premises of the Outlet for the purpose
of:

(a) Monitoring compliance by Franchisee of its obligations under this Agreement; and

(b) Ensuring compliance by Franchisee of its financial obligations under this

Agreement and for the purpose of verifying any financial information provided by
Franchisee to Franchisor.

(3) Franchisor may conduct an audit of Franchisee’s books of account. The audit may be
performed by independent accountants appointed by Franchisor. Franchisee must fully
cooperate with representatives of Franchisor and independent accountants appointed by
Franchisor to conduct such inspection or audit.

Chatime Franchise Agreement (2023) | Page 21

(5) If in Franchisor’s opinion, an inspection or audit is required because of the failure of

Franchisee to furnish reports, supporting records, other information or financial statements
as required, or to furnish such reports, records, information or financial statements on a
timely basis, or if an understatement of fees received by Franchisee for the period of any
audit is determined by any such audit or inspection to be greater than 2%, Franchisee must
reimburse Franchisor for the cost of such inspection or audit, including, without limitation,
legal fees and accountants fees, and the travel and accommodation expenses applicable
per day for employees of Franchisor.

(6) The remedies referred to in this clause 5.5 will be in addition to all other remedies and
rights of Franchisor under this Agreement or under any applicable law.

5.6 Governmental Approvals (Including Registration)

(1) Franchisee agrees to execute any and all instruments and documents, render such
assistance, and otherwise cooperate with Franchisor, in order to obtain all governmental
approvals Franchisor is required to obtain or which, in the opinion of Franchisor, are
necessary at any time during the Initial Term, in the opinion of Franchisor, to comply with
any Legal Requirements.

(2) Franchisor has the right exercisable at its option, to submit, or to require Franchisee to
submit, this Agreement to any Agency for registration or approval in the event Franchisor
determines such registrations or approvals are necessary in order to comply with any Legal
Requirements. If the Agency requires that any amendments be made to this Agreement
as a condition to such approval or registration and such amendments are acceptable to
Franchisor, Franchisor will deliver to Franchisee for execution an addendum to this
Agreement, or other appropriate documents, to reflect such amendments.

5.7 Compliance With Legal Requirements

(1) Franchisee must secure and maintain in force in its name all required licenses, permits,
and certificates relating to Franchisee’s obligations under this Agreement. For the
avoidance of doubt, Franchisee must ensure that it is qualified to import the Products, clear
the customs and do anything relating thereto at its Cost.

(2) All advertising by Franchisee must be completely factual and conform to high standards of
ethical advertising. Franchisee must adhere to high standards of honesty, integrity, fair
dealing and ethical conduct, and refrain from any practice which may be injurious to the
reputation of Franchisor and the goodwill associated with the Marks and Outlets.

(3) Franchisee must notify Franchisor immediately when it becomes aware of the
commencement of any action, suit, or proceeding, and of the issuance of any order, writ,
injunction, award, or decree of any court, agency, or other governmental instrumentality,
which may adversely affect the operation or financial condition of Franchisee or the Outlet.

5.8 Products and Supply Arrangements

(1) Franchisee must establish and maintain supply arrangements on competitive terms and
conditions for Products, the shop-fitting and signage of the Outlet and equipment to be sold
by or used in the operation of the Outlet. Such suppliers will be subject to Franchisor’s prior
written approval and, upon approval, will be deemed to be Approved Suppliers. Franchisor

Chatime Franchise Agreement (2023) | Page 22

(2) If Franchisee requests approval of a new alternate supplier, Franchisee shall provide
Franchisor with samples of the proposed alternate supplier’s product, all information and
back-up documentation requested by Franchisor concerning the proposed alternate
supplier and its products, and access to inspect the proposed alternate supplier’s
production facilities, and Franchisee shall pay Franchisor for all of its costs and expenses
in evaluating and deciding upon the request, including without limitation out of pocket
expenses, compensation for the time spent evaluating the request, and overhead
expenses.

(3) Approval of a supplier by Franchisor may be conditional on the supplier meeting

Franchisor’s quality and standards requirements. Franchisor may require any supplier
applying for approval to allow Franchisor to inspect the proposed supplier’s facilities to
assist Franchisor in determining if the proposed supplier meets Franchisor’s criteria.

(4) Franchisee acknowledges that Franchisor may from time to time vary the range of
Products.

(5) Unless otherwise provided in writing by Franchisor, Franchisee must purchase all Raw
Materials sold in the Outlet from Franchisor on the then-current Terms of Trade. Otherwise,
Franchisee must purchase all Raw Materials from suppliers approved by Franchisor in
writing.

(6) Franchisee must ensure that all Raw Materials and other Products and equipment used in
the operation of the Outlet comply with the System Standards.

(7) Franchisor or its Affiliates may receive payments from Approved Suppliers on account of
such suppliers’ dealings with Franchisee and may use all amounts so received without
restriction and for any purpose Franchisor or its Affiliates deem appropriate (unless
Franchisor or its Affiliates agree otherwise with the supplier).

5.9 Payment and Trading Terms

(1) Franchisee must pay all Approved Suppliers for all Raw Materials and other Products by
the due date for payment and in the manner specified by the Approved Suppliers and
comply with the terms of any supplier agreements or terms of trade of the Approved
Suppliers.

(2) In the purchase of Raw Materials and other Products and any other miscellaneous goods
from Franchisor, Franchisee must pay:

(a) The total amount owing to Franchisor for Raw Materials, other Products and any
other miscellaneous goods provided to Franchisee by Franchisor from time to time,
in accordance with Franchisor’s credit policy and Terms of Trade;

(b) All amounts in full, net of any bank charges by direct deposit into Franchisor’s bank
account, as specified in Item 15 of Schedule 1, or in such other manner as
Franchisor notifies Franchisee in writing, including direct debit from Franchisee’s
bank or credit account. Franchisee must execute any forms or documents required
by Franchisor in order to effect payments by way of direct debit or any other
electronic method.

5.10 Chatime Menu

(1) Franchisee acknowledges that the Chatime Menu forms a key part of the Chatime brand
and image. Accordingly, Franchisee must ensure that it strictly complies with the
Chatime Franchise Agreement (2023) | Page 23
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accuracy of this information. Any action you take upon the information you find on this website ([Link]), is strictly at your own risk. We will not be liable for any losses and/or damages in connection with the use of our website.
requirements of Franchisor relating to:

(a) The Chatime Menu; and

(b) The areas and manner of preparation of food items for sale from the Outlet,

as set out in the Operations Manual or as otherwise specified from time to time by
Franchisor.

(2) Franchisee must ensure that it:

(a) Offers for sale from the Outlet the complete range of food and beverages on the
Chatime Menu and that such food and beverage items are prepared in accordance
with the Chatime Menu;

(b) Does not offer, sell, or supply any food or beverages that are not specified on the
Chatime Menu; and
(c) Acquires all products (including Raw Materials) required to prepare Products on
the Chatime Menu only from Approved Suppliers.

6 Initial and Continuing Fees

6.1 New Outlet Fee

Franchisee must pay the New Outlet Fee to Franchisor upon signing this Franchise Agreement.

6.2 Royalty

Franchisee must pay the Royalty to Franchisor on the tenth day of each Month. The Royalty is
calculated based on the Gross Sales of the Outlet for the previous Month.

6.3 Brand Marketing Fee

Franchisee must pay the Brand Marketing Fee to Franchisor in accordance with clause 7.2.

6.4 Renewal Outlet Fee

Where an existing Outlet i s being renewed for a further term, Franchisee must pay the Renewal
Outlet Fee to Franchisor upon granting the right to renew.

6.5 Calculation of Payments

(1) If Franchisee fails to:

(a) Pay the Royalty or the Brand Marketing Fee; or

(b) Supply Franchisor with:

(i) The Monthly Gross Sales information for the Outlet as required under
clause 5.4(2)(c) within the timeframe specified in 5.4(2)(c); or

(ii) Any other reports set out in the Operations Manual or in any Operations
Manual Addendum and as specified in clauses 5.4(1) to 5.4(5) within the
timeframes set out in the Operations Manual or in any Operations Manual
Addendum and as specified in clauses 5.4(1) to 5.4(5),

such that Franchisor is unable to calculate the Royalty and/or the Brand Marketing Fee
Chatime Franchise Agreement (2023) | Page 24
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accuracy of this information. Any action you take upon the information you find on this website ([Link]), is strictly at your own risk. We will not be liable for any losses and/or damages in connection with the use of our website.
payable by Franchisee or issue an invoice to Franchisee for payment of the Royalty and/or
the Brand Marketing Fee, then:

(c) Franchisor may estimate the Royalty and/or the Brand Marketing Fee for the
relevant Month by taking into consideration the total Gross Sales for all Outlets in
the Territory for the previous Quarter and dividing this by 3 (Estimated Fees);

(d) Franchisor will notify Franchisee of the Estimated Fees; and

(e) Franchisee must pay to Franchisor the Estimated Fees in accordance with, and
within the time specified in, the notice provided by Franchisor pursuant to clause
6.5(1)(d).

(2) Franchisor will adjust on Franchisee’s account every Quarter any overpayment or
underpayment of the Estimated Fees provided that Franchisee has supplied Franchisor
with:

(a) The Monthly Gross Sales information for the Outlet as required under clause
5.4(2)(b); and

(b) Any other reports set out in the Operations Manual or in any Operations Manual
Addendum and in clauses 5.4(1) to 5.4(5),

such that Franchisor is able to properly calculate the Royalty and the Brand Marketing
Fee actually payable by Franchisee for the relevant Months.

6.6 Interest on Late Payments

(1) If Franchisee fails to pay any amount to Franchisor, Franchisee must pay interest on that
amount at the Interest Rate, from the time the amount should have been paid until it is paid.
Interest accrues daily, may be capitalized by Franchisor, and is payable on demand.

(2) Franchisee acknowledges that this clause 6.6 does not constitute any agreement by
Franchisor to accept such payments after they are due or a commitment by Franchisor to
extend credit to, or otherwise finance Franchisee or the Outlet.

6.7 Withholding

(1) All withholding taxes shall be borne by Franchisee. That is to say, all payments by
Franchisee must be made without deduction or withholding (including, without limitation,
by way of set-off, counterclaim, duty, tax (including goods and services tax, value added
tax, and other government imposts) or charge) unless Franchisee is prohibited by law from
doing so, in which case Franchisee must:

(a) Promptly pay to Franchisor any additional amount necessary to ensure that the net
amount received by Franchisor equals the full amount which would have been
received by Franchisor if no deduction or withholding had been made;

(b) Pay to the relevant authority within the period for payment permitted by law the full
amount of the deduction or withholding (including the full amount of any deduction
or withholding from any additional amount paid under clause 6.7(1)(a));

(c) Give Franchisor the official receipt from the authority for the amount paid to it within
7 days after Franchisee receives it; and

(d) Assist Franchisor with any reasonable requests for information or supporting
documents regarding the calculation and/or payment of the amount paid.

Chatime Franchise Agreement (2023) | Page 25

(1) All payments by Franchisee to Franchisor under this Agreement will be made in U.S.
Dollars unless otherwise specified by Franchisor.
(2) All payments in this Agreement are to be calculated in the currency of the Territory and
converted into Dollars for payment to Franchisor and must be converted at a rate equivalent
to the measurement notified by Franchisor on the date the payment is due. However, in the
event a payment is remitted after the date payment is due, the currency exchange rate
used will be the rate as of:

(a) The date the payment was due; or

(b) The date the payment is remitted,

whichever rate is the greater.

(3) All payments from Franchisee to Franchisor under this Agreement must be made in full,
net of any bank charges, by direct deposit into Franchisor’s bank account as specified in
Item 15 of Schedule 1, or in such other manner as Franchisor notifies Franchisee in writing,
including direct debit from Franchisee’s bank or credit account. Franchisee must execute
any forms or documents required by Franchisor in order to give effect to payments by way
of direct debit or any other electronic method.

6.9 Exchange Controls

(1) Franchisee must use its best efforts to obtain any consents or authorizations which may be
necessary in order to permit timely payments in Dollars of all amounts payable pursuant to
this Agreement.

(2) If at any time, any legal restriction is imposed upon the purchase of Dollars or the transfer
to or credit of a non-resident party with payments in Dollars, Franchisee must notify
Franchisor immediately. While such restrictions are in effect, Franchisor may require
payment in any currency designated by Franchisor that is available to Franchisee or, at
Franchisor’s option, may require Franchisee to deposit all amounts due but unpaid as a
result of such a restriction in any type of account, in any bank or institution in the Territory
designated by Franchisor. Franchisor will be entitled to all interest earned on such
deposits. Franchisor may also elect to receive payment in the form of products or services
available to Franchisee, the value of which will be based on the actual cost of such products
or services to Franchisee. If payment is made in products or services, Franchisee agrees
to deliver such products or services to Franchisor or its designated agent or shipper within
the Territory.

6.10 Stamp Duties

Franchisee must pay all stamp duties and comparable duties and taxes (including any penalties for
late payment) assessed to be payable on or in respect of this Agreement or any Collateral
Agreement.

6.11 Set-off

Franchisor may in its sole discretion set-off against any payment due to Franchisee by Franchisor
any unpaid debts (including contingent debts) of Franchisee to Franchisor.

7 Marketing
7.1 Local Marketing Expenditure

Chatime Franchise Agreement (2023) | Page 26

(b) Direct the creation and implementation of advertising, marketing, and promotional
programs for the Territory;

(d) Keep full details and records of all Local Marketing Expenditure receipts and
expenditure on a monthly basis;

(e) Allow Franchisor full and free access at all reasonable times to all details of the
Local Marketing Expenditure and records;

(f) Comply with all reasonable directions given by Franchisor from time to time in
relation to the administration of the Local Marketing Expenditure and in relation to
the content, style, nature or manufacture of any advertising, sales promotion and
customer satisfaction surveys;

(g) Comply with Franchisor’s brand guidelines and obtain the prior written approval of
Franchisor for all of its local advertising and promotional plans and all materials it
would like to use. Achieving compliance and obtaining such approval shall be at
the expense of Franchisee;

(h) At all times ensure that all marketing, promotion, and advertising complies with all
applicable laws; and

(i) Follow Franchisor’s policy on marketing funds as specified in the Operations

Manual or the Global Policies and Procedures as amended from time to time. The
provisions of such policies and procedures will override this clause to the extent of
any inconsistency.

7.2 Brand Marketing Fee

Franchisee must pay the Brand Marketing Fee to Franchisor on the tenth day of each Month. The
Brand Marketing Fee will be determined based on the Gross Sales of the Outlet for the previous
Month.

7.3 Use of the Brand Marketing Fee

(1) Franchisor may, in its sole discretion, use the Brand Marketing Fee to pay the Costs of:

(a) Developing and conducting local, regional or national advertising and promotional
campaigns, including advertising in international or regional publications;

(b) Engaging advertising agencies and marketing and research consultants;

(c) Providing Franchisee with samples of brochures and marketing materials used by
Franchisor or its Affiliates, for amendment and use, subject to clause 7.3(4),
by Franchisee in the Territory;
(d) Coordinating and administering the activities set out in clauses 7.3(1)(a) to
7.3(1)(c), including reasonable overhead and administrative Costs (including
employee costs), the Cost of materials and printing Costs; and

Chatime Franchise Agreement (2023) | Page 27

(2) In applying the Brand Marketing Fee for the purposes set out above, Franchisor may
combine the Brand Marketing Fee with other brand marketing fees provided by other
franchisees. There is no assurance that any portion of your Brand Marketing Fee or the
Brand Marketing Fund will be allocated or spent for advertising in your Territory or region
of the country. The monies paid to the Brand Marketing Fund do not constitute a trust fund.

(3) If Franchisee requests any additional marketing assistance from Franchisor that, in the
opinion of Franchisor, is not within the scope of assistance provided for by the Brand
Marketing Fee, then Franchisee must pay to Franchisor upon invoice by Franchisor any
additional fees and charges levied by Franchisor for such additional marketing assistance.

(4) Franchisee must not use any marketing or promotional materials unless that marketing or
promotional material has been first approved in writing by Franchisor.

7.4 Websites

(1) Franchisee must not establish a website referring to the Marks, the Outlet, or the System
without Franchisor’s prior written consent.

(2) Franchisee must not register the Domain Name or any other domain name or Internet
address incorporating the Network Name or any part of that name or any similar names or
any of the Marks or any part of the Marks or any words or names similar to the Marks.
Franchisee acknowledges that Franchisor has a prior and superior right to registration of
any such domain names. If a domain name or Internet address is to be used in The
Franchised Business, it must be registered in the name of Franchisor or any other nominee
of Franchisor. However, all fees must be paid by Franchisee.

(3) Franchisor may, but is not obliged to, designate one or more webpages to describe
Franchisee and/or the Outlet, such webpages to be located within Franchisor’s Website. If
Franchisor approves a separate Website to be established by Franchisee, then:

(a) Before establishing the Website, Franchisee must submit to Franchisor, for
Franchisor’s prior written approval, a sample of the proposed Website domain
name, format, visible content (including, without limitation, proposed screen shots),
and non-visible content (including, without limitation, metatags) in the form and
manner that Franchisor may reasonably require; and Franchisee must not use or
modify such Website without Franchisor’s prior written approval as to such
proposed use or modification;

(b) In addition to any other applicable requirements, Franchisee must comply with
Franchisor’s standards, policies and procedures and specifications for Websites as
prescribed by Franchisor from time to time in the Operations Manual or otherwise
in writing;

(c) If required by Franchisor, Franchisee must at its Cost update the Website from to
time to time so that it is consistent with the then-current image, standards and
specifications as notified by Franchisor;
(d) Franchisee must ensure that none of Franchisor’s Confidential Information, such
as the Operations Manual and any Operations Manual Addendum is accessible to
the public via any Website;

(e) Franchisee must not offer any products or services on the Website without
Franchisor’s prior written consent and if Franchisor permits Franchisee to sell
products or services on the Website, Franchisee must use the web hosting

Chatime Franchise Agreement (2023) | Page 28

(f) If required by Franchisor, Franchisee must establish such hyperlinks to

Franchisor’s Website and others as Franchisor may request in writing; and

(g) Franchisor may revoke its approval at any time, in writing, and require that
Franchisee discontinue use of a separate Website. If Franchisor revokes its
approval under this clause Franchisee must if required by Franchisor, immediately
take all steps and execute all documents reasonably necessary to assign or
transfer any domain name license to Franchisor or its nominee or if necessary,
cancel any domain name used in connection with The Franchised Business.

(4) If Franchisee becomes aware of any Person using or referring to the Marks on their
Website, then it must immediately notify Franchisor.

(5) Franchisor may require Franchisee to offer and sell certain Products and services on
Franchisee’s Website.

8 Confidential Information
8.1 Obligation to Maintain Confidentiality

(1) Franchisee and Guarantor acknowledge and agree that neither Franchisee nor any
Guarantor will acquire any interest in the Confidential Information, other than the right to
utilize the Confidential Information in performing their obligations under this Agreement,
and that the use or duplication of any Confidential Information would constitute an unfair
method of competition.

(2) Franchisee and Guarantor hereby agree that during the term of this Agreement and
following the expiration or termination of this Agreement that they:

(a) Will not use the Confidential Information in any other business operation or
capacity;

(b) Will maintain the absolute confidentiality of the Confidential Information;

(d) Will adopt and implement all reasonable procedures that Franchisor prescribes
from time to time to prevent unauthorized use or disclosure of the Confidential
Information including, without limitation, restrictions on the disclosure of the
Confidential Information to Outlet personnel and others; and

(3) Notwithstanding anything to the contrary contained in this Agreement, the restrictions set
out in clause 8.1(2) will not apply to information that:
(a) Is or becomes publicly available, other than by breach of this Agreement;

(b) Franchisee or Guarantor (as applicable) is legally compelled to disclose, provided

Franchisee/Guarantor must have used its best efforts and afforded Franchisor the
opportunity to obtain an appropriate protective order or other assurance
satisfactory to Franchisor of confidential treatment for the information required to
be disclosed; or

(c) Is otherwise permitted under the terms of this Agreement.

(4) If required by Franchisor, Franchisee must ensure that Franchisee’s Owner managers,
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directors, shareholders, agents, employees, and any Interested Party enter into a
confidentiality agreement in a form that is acceptable to Franchisor.

9 Protection of Goodwill

9.1 Acknowledgements and Restriction

Franchisee Parties acknowledge that:

(1) The System used in connection with Franchisee’s conduct of The Franchised Business,
the Marks, the Raw Materials and other Products is unique and has been developed by
Franchisor at great effort and expense;

(2) Franchisor has considerable and recognized goodwill in the conduct of its business of
developing and promoting the System;

(3) Franchisor should be entitled to protect that goodwill for its own benefit by restricting
Franchisee’s and Guarantor’s ability to damage that goodwill by competing with Franchisor;
and

(4) Each of the restraints imposed upon Franchisee and Guarantor under clause 9.2 is fair and
reasonable and is no greater than is reasonably necessary to protect this goodwill.

9.2 No Other Business Interests

Franchisee Parties jointly and severally agree with Franchisor that neither Franchisee nor any
Guarantor will:

(1) During the Initial Term or any New Term finance, invest in or have a financial interest in
any business other than the Franchised Business without the prior written consent of
Franchisor; or

(2) During the Restraint Period, in the Restraint Area, directly or indirectly do any of the following
things:

(a) be concerned or interested in any Restrained Business (directly or indirectly, or

through any interposed corporate entity, trust, partnership, or entity as trustee,
principal, agent, shareholder, beneficiary, or as an independent contractor,
consultant, adviser or in any other capacity);

(b) advise, assist, consult with or for or in connection with any Restrained Business or
any person associated with or in any manner whatsoever connected to or engaged
by or in connection with any Restrained Business;

(c) hold or own (beneficially or non-beneficially) whether directly or indirectly and

whether absolutely or contingently or hold options over shares or any other securities
or units of any entity engaging in a Restrained Business; and

(d) procure, employ, seek to employ or engage, or appoint in any capacity (whether as
a consultant, director or otherwise), any person who is or has been in the 12 months
prior to such action an employee, independent contractor, or prospective franchisee
of the Franchisor, its affiliates, or any Chatime Restaurant Business.

9.3 Restraint Applies to Conduct in Any Capacity

The agreement by Franchisee Parties in clause 9.2 applies to any of them, the Interested Parties,
and those acting:

Chatime Franchise Agreement (2023) | Page 30

(2) As principal, agent, representative, director, officer, employee, or financier;

(3) As member, shareholder, debenture holder, note holder, or holder of any other security;

(4) As trustee of or as a consultant or adviser to any person; or

(5) In any other capacity.

9.4 Separate Restraint Agreements

Clauses 9.2 and 9.3 have effect as comprising each of the separate provisions which results from
each combination of a capacity referred to in clause 9.3, a category of conduct referred to in clause
9.2, a geographical area specified in Item 7 of Schedule 1 and a period of time specified in Item 8
of Schedule 1. Each of these separate provisions operates concurrently and independently. If any
separate provision is unenforceable, illegal, or void, that provision is severed and the other separate
provisions remain in force.

9.5 Directors, Managers, and Key Employees

Franchisee must ensure that any of its directors who are not a party to this Agreement, any
Interested Party, manager, and any of its key employees nominated by Franchisor enter into
confidentiality and non-competition agreements before they receive or are granted access to any
of the Confidential Information.

9.6 Other Interested Parties

Franchisee must procure that any Interested Party specified by Franchisor enters into a non-
compete and confidentiality agreement with Franchisor that contains:

(1) Similar reasonable restraints as imposed on Franchisee and Guarantor pursuant to

clause 9.2; and

(2) Similar confidentiality obligations to the obligations imposed pursuant to clause 8,

as and when required by Franchisor.

9.7 Acceptable Conduct

Nothing in this clause prevents Franchisee or Guarantor from:

(1) Owning less than 5%, by value, of securities in a listed corporation;

(2) Engaging or being concerned or interested in the Franchised Business in accordance

with this Agreement; or

(3) Engaging or being concerned or interested in any business or activity pursuant to which
Franchisor has given its prior written consent.

9.8 Disgorgement

In addition to all other remedies and rights of Franchisor under this Agreement, if any of Franchisee,
Guarantor, or their Interested Parties breaches clause 9.2 or 9.3, Franchisee must account for and
pay to Franchisor all compensation, profits, monies, accruals, increments, or other benefits derived
or received as a result of any such breach.

Chatime Franchise Agreement (2023) | Page 31

(1) Franchisee Parties indemnify Franchisor and each of its Affiliates (Chatime Group)
against all:

(a) Losses incurred by the Chatime Group;

(b) Liabilities incurred by the Chatime Group; and

(c) All Legal Costs and other Costs and expenses incurred by the Chatime Group in
connection with a demand, action, arbitration, or other proceeding (including
mediation, compromise, out of court settlement or appeal),

arising directly or indirectly as a result of or in connection with:

(d) A breach by Franchisee Parties of this Agreement or any Collateral Agreement;

(e) Any injury to, or loss of property of, any person in or on premises from which the
business is conducted;

(f) Franchisee’s taxes, liabilities or Costs of The Franchised Business;

(g) Any negligent or willful act or omission of Franchisee, its employees, agents,
servants, or contractors; and

(h) Any warranty, promise, or representation made by Franchisee Parties or any

employee, agent, or other person acting on behalf of Franchisee Parties being
incomplete, inaccurate, or misleading.

(2) Franchisor’s rights at law and under this Agreement, including its right to be indemnified
under this clause, are not affected by:

(a) Franchisor ending the Franchise or the termination of any Collateral Agreement;

(b) Franchisor accepting Franchisee’s repudiation of this Agreement or any related

Agreement; or

(c) Anything else.

10.2 Limitation of Liability

To the extent permitted by law, Franchisor will have no liability in relation to:

(1) Any approval of premises or a site for the Outlet provided by Franchisor to Franchisee
pursuant to the terms of this Agreement;

(2) Any other approvals provided by Franchisor to Franchisee in connection with the
Franchised Business pursuant to the terms of this Agreement;

(3) The conduct of the Franchised Business by Franchisee, the success or failure of which
largely depends upon the business abilities and efforts of Franchisee; and

(4) The location, design, construction, or renovation of the Outlet or the furnishings, fixtures,
and equipment to be required, notwithstanding the right of Franchisor to approve any plans,
and to inspect the construction and/or renovation work and such Outlet. Such rights of
Franchisor are exercised solely for the purpose of ensuring compliance with the terms and
Chatime Franchise Agreement (2023) | Page 32
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accuracy of this information. Any action you take upon the information you find on this website ([Link]), is strictly at your own risk. We will not be liable for any losses and/or damages in connection with the use of our website.
conditions of this Agreement.

11 Intellectual Property

11.1 License to Use Intellectual Property

Franchisor grants Franchisee a license to use the Intellectual Property in the Territory only during
the Initial Term.

11.2 Use of Intellectual Property

(1) Franchisee must:

(a) Only use the Intellectual Property as authorized by Franchisor;

(b) Not alter the Intellectual Property, except with Franchisor’s prior written consent;
and

(c) Not do anything which may prejudice Franchisor’s ownership of, or the goodwill
associated with, the Intellectual Property.

(2) Franchisee must not use any other trademarks, corporate or business names, trade names,
slogans, domain names, or other items of Intellectual Property without the prior written
consent of Franchisor.

11.3 Ownership of Intellectual Property

Franchisee acknowledges that by its use of the Intellectual Property, it does not acquire any right
to, title or interest in the Intellectual Property. All rights to, and interests in, the Intellectual Property
reside with Franchisor. All documents, advertisements, or other work created by Franchisee in
connection with the Franchised Business shall be the property of the Franchisor, and shall be
considered “work for hire.”

11.4 Protection of Intellectual Property

(1) Franchisee must:

(a) Provide all reasonable assistance to Franchisor to register and enforce

Franchisor’s intellectual property rights in the Territory;
(b) Take all reasonable steps to protect the Intellectual Property against any action or
infringement by any person;

(c) Immediately notify Franchisor of any actual or potential threat or claim of

infringement with respect to the Intellectual Property.

(2) Franchisor, at its absolute discretion, will determine whether to commence or defend legal
proceedings relating to the Intellectual Property.

(3) Payment of all Costs incurred in commencing or defending legal proceedings relating to
the Intellectual Property will be made by Franchisor, provided that Franchisor has
authorized the taking of any such action.

(4) Franchisee must cooperate fully with Franchisor in relation to any actions conducted under
this clause 11.4 and must not bring any actions itself relating to the Intellectual Property.

(5) Save for remittance of Costs under clause 11.4(3) (if any), Franchisor will be entitled to
receive the proceeds of all actions conducted under this clause 11.4.
Chatime Franchise Agreement (2023) | Page 33
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11.5 Goodwill

Franchisee acknowledges that:

(1) Franchisor is the owner of all goodwill in the Intellectual Property;

(2) All goodwill associated with Franchisee’s use of the Intellectual Property, and its activities
under this Agreement, inures to the benefit of Franchisor; and

(3) When this Agreement ends, Franchisee is not entitled to any payment from Franchisor for
goodwill which may exist in relation to The Franchised Business.

11.6 Franchisee and Guarantor Must Not Register Similar Intellectual Property

Franchisee and Guarantor must:

(1) If it is the owner of any intellectual property (e.g., business or corporate names, trademarks,
domain names) similar or identical to the Intellectual Property in the Territory, immediately
upon execution of this Agreement, take all steps necessary to transfer ownership of that
intellectual property to Franchisor at Franchisee’s cost;

(2) If, during the Initial Term, either Franchisee or any Guarantor registers any intellectual
property (e.g., business or corporate names, trademarks, domain names) similar or
identical to the Intellectual Property in the Territory, the relevant party must immediately
upon such registration, take all steps necessary to transfer ownership of that intellectual
property to Franchisor at Franchisee’s cost; and

(3) Not, except as otherwise agreed or directed by Franchisor in writing, register any
intellectual property (e.g., business or corporate names, trademarks, domain names)
similar or identical to the Intellectual Property or that contains or consists of any Intellectual
Property or anything that is substantially identical or deceptively similar thereto or
otherwise relates to the Chatime brand or the System. In particular, if Franchisee or
Guarantor is a corporation, each must not use the word “Chatime” or any other similar word
or derivatives of that word in its corporate name, with acknowledgement that the factors
determining similarity of trademarks as stated above
include, without limitation, the appearances, concepts, pronunciations, designated
classes and designated goods and services of trademarks.

11.7 Franchisee’s Improvements

(1) If any Franchisee’s Improvements are developed by or on behalf of Franchisee during the
Initial Term from which Franchisee obtains any intellectual property rights, Franchisee
assigns all of Franchisee’s rights to and intellectual property in Franchisee’s Improvements
to Franchisor or its nominee as and when the intellectual property rights are created, free
of all encumbrances.

(2) If Franchisee’s rights to or intellectual property rights in Franchisee’s Improvements are not
capable of assignment to Franchisor, Franchisee grants to Franchisor or its nominee as
and when the intellectual property rights are created an exclusive, worldwide, royalty free,
fully assignable perpetual license for Franchisee’s Improvements, which may only be
terminated by Franchisor, for Franchisor to use Franchisee’s Improvements and grant
others the right to use Franchisee’s Improvements.

(3) If Franchisor wishes to register the intellectual property rights in any of Franchisee’s
Improvements and Franchisee is the owner, or a necessary applicant for that registration,
Franchisee must immediately upon the request by Franchisor apply in Franchisee’s own
name for registration and then sign all documents and deeds, perform all acts and do all
Chatime Franchise Agreement (2023) | Page 34
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accuracy of this information. Any action you take upon the information you find on this website ([Link]), is strictly at your own risk. We will not be liable for any losses and/or damages in connection with the use of our website.
things necessary to assign that registration or application to Franchisor or its nominee.

12 Transfer and Other Dealings by Franchisor

12.1 Assignment or Novation

Franchisor may transfer all or any part of its rights, interests, obligations, or liabilities under this
Agreement by assignment or novation.

12.2 Refinancing and Restructuring

Franchisor may, in addition to or as part of an assignment or novation pursuant to clause 12.1:

(1) Sell itself, its assets and any of the Intellectual Property which it owns to a third party;

(2) Issue additional shares or other securities in itself;

(3) Engage in a private placement of some or all of its securities; and

(4) Undertake a refinancing, recapitalization, leveraged buyout, or other economic or financial

restructuring.

12.3 Acknowledgment and Agreement

If Franchisor elects to:

(1) Assign all or any part of its rights, interests, obligations, or liabilities under this Agreement,
Franchisee Parties must, upon request by Franchisor, execute any deed, agreement, or
notice of assignment acknowledging and agreeing to the assignment by Franchisor; or

(2) Transfer all or any part of its rights, interests, obligations, or liabilities under this Agreement
by novation to a third party, Franchisee Parties must, upon request by Franchisor,
execute a deed or agreement of novation, in a form prepared by Franchisor, substituting in
place of Franchisor a third party as being entitled to the benefits, and responsible for the
rights, obligations, and liabilities of Franchisor under this Agreement.

12.4 Merger

Franchisor may purchase, merge, acquire, or affiliate with an existing competitive or non-
competitive franchise network, chain or any other business and operate, franchise or license those
businesses to operate using the Marks and Intellectual Property of Franchisor from premises
wherever located.

12.5 Consent

Franchisee Parties consent to Franchisor at any time assigning or novating any of its rights,
interests, obligations, or liabilities under this Agreement or undertaking any of the actions outlined
in clauses 12.1, 12.2, and 12.4 and waive any requirement for prior notice to Franchisee Parties of
the action.

13 Transfer and Other Dealings by Franchisee

13.1 Acknowledgements by Franchisee

Franchisee acknowledges that:

(1) The Franchise has been granted to Franchisee following a consideration by Franchisor of
Chatime Franchise Agreement (2023) | Page 35
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accuracy of this information. Any action you take upon the information you find on this website ([Link]), is strictly at your own risk. We will not be liable for any losses and/or damages in connection with the use of our website.
the character, business experience and capability and financial capacity of Franchisee
Parties; and

(2) Because of this, there are important restrictions in this clause 13 on Franchisee’s ability to
deal with the Franchise and The Franchised Business.

13.2 Prohibition Against Transfer by Franchisee

(1) Franchisee must not sell or otherwise Dispose of its interest in the Franchise or The
Franchised Business, whether in whole or in part, voluntarily or involuntarily, by operation
of law (including as a result of bankruptcy, divorce, death or disability, without Franchisor’s
prior written consent and without first offering to sell the Ownership Interest of the Outlet
(Business) to Franchisor in accordance with clause 13.4.

(2) If an offer made by Franchisee pursuant to clause 13.2(1) is not accepted, Franchisee may
sell or otherwise Dispose of its interest in the Franchise or the Franchised Business subject
to obtaining Franchisor’s written consent which must not be unreasonably withheld if all of
the conditions mentioned in clause 13.3 have been satisfied.

(3) A request for Franchisor’s consent under clause 13.2(2) must be made in writing.

13.3 Conditions to be Satisfied Before Assignment can be Approved

Franchisor must not unreasonably withhold its consent under clause 13.2(2) if the sale, assignment
or other Disposal is of the whole of Franchisee’s interest in the Franchise and the Franchised
Business and each of the following conditions are satisfied:

(1) Franchisee establishes to Franchisor’s reasonable satisfaction that the proposed assignee
(and its Owners and directors if the assignee is a company):
(a) Possesses the financial resources necessary to conduct and operate the
Franchised Business as a franchisee and to service any borrowings it makes in
order to acquire The Franchised Business;

(b) Is a reputable and responsible party and has the business experience and
capabilities necessary to operate the Franchised Business successfully; and

(2) Franchisee pays to Franchisor the Transfer Fee;

(3) Franchisee, both when seeking consent to the assignment and when the assignment is to
occur, is not in default under this Agreement or any Collateral Agreement;

(4) At the option of Franchisor:

(a) The assignee executes Franchisor’s then-standard form franchise agreement for
the balance remaining of the Initial Term (including any existing option for a New
Term); or

(b) Franchisee and the assignee execute an assignment of Franchisee’s rights and
obligations under this Agreement to the assignee in a form required by Franchisor,

and Franchisee and the assignee execute any other documents then used by Franchisor
for the grant of Chatime franchises;

(5) When the assignee is a company, those directors and shareholders or other Affiliates of
the assignee nominated by Franchisor each:

Chatime Franchise Agreement (2023) | Page 36

(b) Executed and deliver a confidentiality and non-competition agreement in the form
attached as Exhibit 4; and

(6) The assignee’s proposed manager is approved by Franchisor and successfully completes
Franchisor’s required training program;

(7) Franchisee:

(a) Gives to Franchisor all details of the proposed assignment including a copy of the
applicable contract (which must comply with Franchisor’s requirements) and any
other agreements between Franchisee and the assignee. Franchisee
acknowledges that:

(i) These documents must be provided to Franchisor so that Franchisor can

ensure that its interests are protected (for example, that the contract of sale
does not purport to sell the Intellectual Property); and

(ii) Franchisor will not sell the Franchised Business on behalf of Franchisee or
negotiate the sale on behalf of Franchisee and does not hold itself out as
performing these functions; and
(b) Sells to the assignee all of Franchisee’s essential assets used in the business;

(8) Franchisee establishes to Franchisor’s reasonable satisfaction that the proposed

assignment will not have a significantly adverse effect on the System or the Network;

(9) Franchisee pays all Franchisor’s Costs in connection with or incidental to the request for
Franchisor’s consent to the transfer of the Franchise and the sale of the Business, whether
or not the assignment or sale is actually completed or the consent is granted; and

(10) Franchisee and its Owners execute and deliver to Franchisor a Release in substantially the
form attached as Exhibit 1.

13.4 Franchisor’s Right of First Refusal

(1) If Franchisee wants to:

(a) Sell The Franchised Business; or

(b) Allow the Disposal of shares or units,

Franchisee must first offer to sell the Franchised Business to Franchisor on the same terms
as any offer Franchisee has received from an arm’s length third party (Third Party Offer)
by giving to Franchisor a written notice (Offer Notice) setting out the terms and conditions
of the Third Party Offer.

(2) Franchisor may accept the offer contained in the Offer Notice by giving notice of
acceptance (Acceptance Notice) to Franchisee before the end of the Offer Period.

(3) For the purpose of this clause 13.4, “Offer Period” means the period of 45 days after
Franchisor receives the Offer Notice.

Chatime Franchise Agreement (2023) | Page 37

(5) If Franchisee receives the Acceptance Notice during the Offer Period Franchisee must sell
and Franchisor must purchase the Business upon the terms and conditions contained in
the Offer Notice as may be varied by the Acceptance Notice.

(6) If Franchisor does not accept the offer contained in the Offer Notice within the Offer Period,
Franchisee is entitled to sell the Business or allow the Disposal of shares or units to a third
party within 60 days after the end of the Offer Period as long as the:

(a) Franchisee complies with clause 13.3; and

(b) Sale or Disposal is not made for less than the price specified in the Offer Notice or
on terms and conditions more favorable to the third party than those contained in
the Offer Notice.

(7) If Franchisee does not sell the Business or allow the Disposal of shares or units within the
period referred to in clause 13.4(6), the rights of Franchisor are revived and Franchisee
must not permit any sale or Disposal without first offering the Business to Franchisor in
accordance with this clause 13.4.
13.5 No Encumbrances

Franchisee must not create or allow the creation of any encumbrance over this Agreement, the
Franchise, or the Franchised Business without first obtaining Franchisor’s written consent.

13.6 No Subfranchises

Franchisee must not lease, license, franchise, or part with possession of the Franchised Business
or the Franchise without first obtaining Franchisor’s written consent.

13.7 Transfer Upon Death or Incapacitation. Upon the death or permanent incapacity (mental or physical)
of any person with a majority or controlling interest in this Agreement, in you, or in all or substantially
all of the assets of the Franchisee’ Operations, the executor, administrator, or personal representative
of such person shall transfer such interest to a third party approved by Franchisor within one year
after such death or mental incapacity. Such transfers, including transfers by devise or inheritance,
shall be subject to the requirements in this Clause 13.

13.8 Transfers Void. Any purported or attempted transfer, by operation of law or otherwise, made without
Franchisor’s prior written consent will be considered null and void and will be considered a material
breach of this Agreement.

14 Temporary Operation by Franchisor

14.1 Circumstances of Operation by Franchisor

If Franchisee ceases to conduct the Franchised Business or abandons the Franchise, Franchisor
or its nominee may, but does not have to, enter Franchisee’s business premises and operate and
manage the Franchised Business until Franchisee complies with any direction or notice of
Franchisor requiring Franchisee to recommence operation of the Franchise in accordance with its
obligations under this Agreement.

Chatime Franchise Agreement (2023) | Page 38

(1) Franchisee must pay to Franchisor a reasonable management fee prescribed by

Franchisor for operating and managing the Franchise and any traveling, accommodation,
meals, or other expenses in relation to such operation and management.

(2) Franchisor must account to Franchisee for all net income received by Franchisor while
operating and managing the Franchise less a reasonable management fee prescribed by
Franchisor for operating and managing the Franchise and any traveling, accommodation,
or other expenses in relation to such operation and management. Franchisee must bear
any losses incurred during Franchisor’s operation and management of the Franchise and
pay or reimburse such losses to Franchisor upon demand.

14.3 Liability for Temporary Operation

Franchisor will not be liable to Franchisee in any way for anything done by Franchisor while it
operates and manages the Franchise in accordance with this clause 14, except for acts or
omissions arising from the gross negligence or willful misconduct of Franchisor. Franchisee
indemnifies Franchisor and its employees and agents against all damages, sums of money, costs,
charges, expenses, actions, claims, liabilities, injuries, and demands made against or suffered by
Franchisor, its employees, and agents for the period Franchisor operates and manages the
Franchise pursuant to this clause 14.

15 Termination of Agreement

15.1 Franchisee may terminate during cooling off period as follows:

(1) Franchisee may terminate this Agreement by giving written notice to Franchisor within 7
days of the date of this Agreement.

(2) If Franchisee terminates this Agreement in accordance with clause 15.1(1), Franchisor
must, within 14 days after receiving the notice of termination, return all payments (whether
of money or other valuable consideration) made by Franchisee to Franchisor under this
Agreement less the following amounts which constitute the reasonable Costs of Franchisor
in connection with the grant of this Agreement:

(a) 20% of the New Outlet Fee representing the reasonable Costs of Franchisor in
relation to the selection and induction of Franchisee;

(b) The amount of $5,000 representing the reasonable Costs of Franchisor in

connection with the instructions for and the negotiation, preparation and execution
of this Agreement and the Collateral Agreements; and

(c) All reasonable Costs of Franchisor in connection with the training of Franchisee,
including all payments made to Franchisee by Franchisor during the course of
training.

15.2 Termination by Franchisee

(1) If:

(a) Franchisee is in substantial compliance with this Agreement and Franchisor

materially breaches this Agreement;

(b) Franchisee gives written notice of such breach to Franchisor (which notice must
include details of the breach and what is required by Franchisor to rectify the
Chatime Franchise Agreement (2023) | Page 39
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breach) and gives Franchisor a reasonable period (of no less than 60 days) to
remedy the breach; and

(c) Franchisor does not remedy the breach within the time set out in the breach notice
or, in a case where Franchisor’s breach cannot reasonably be remedied within 60
days after Franchisor receives written notice of its breach, fails to provide
Franchisee with reasonable evidence of Franchisor’s continuing efforts to correct
its breach within a reasonable time,

then Franchisee may terminate this Agreement by providing 60 days’ written notice of
termination to Franchisor.

(2) Any termination of this Agreement by Franchisee other than as provided in clause 15.2(1)
will be deemed a termination by Franchisee without cause.

15.3 Termination by Franchisor

(1) Franchisor may terminate this Agreement if:

(a) Franchisee or Guarantor (Defaulting Party) breaches any provision of this

Agreement or any Collateral Agreement;

(b) Franchisor gives to the Defaulting Party a written notice that:

(i) Specifies the breach;

(ii) Tells the Defaulting Party what Franchisor wants the Defaulting Party to
do to remedy the breach;

(iii) Gives the Defaulting Party a reasonable time (which can be any number
of days between 3 days and 30 days) to remedy the breach; and
(iv) States that Franchisor proposes to terminate this Agreement and the
Franchise if the breach is not remedied within that time; and

(2) If the breach is remedied in accordance with, and within the time allowed by, a notice issued
under clause 15.3(1)(b), Franchisor cannot terminate this Agreement because of that
breach.

(3) If Franchisee does not perform or observe any obligation under this Agreement Franchisor
may, but does not have to, remedy that default. In doing so, Franchisor is entitled to rely
on the power of attorney in clause 24.

(4) Notwithstanding any other provision in this clause 15, Franchisor may terminate this
Agreement immediately upon written notice to Franchisee if:

(a) The Defaulting Party breaches any provision under clause 6 (Initial and Continuing
Fees), 9.2 (No Other Business Interests) or 9.3 (Restraint Applies to Conduct in
Any Capacity).

(b) A force majeure event (as referred to in clause 23) continues for more than 180
days;

Chatime Franchise Agreement (2023) | Page 40

(e) Franchisee or a Guarantor is convicted of a serious offense;

(f) The Franchised Business is operated in a way that endangers public health or
safety;

(g) Franchisee is fraudulent in connection with the operation of The Franchised

Business;

(h) Franchisee files a voluntary petition in bankruptcy, files any pleading seeking any
reorganization, liquidation or dissolution under any law, admits or fails to contest
the material allegations of any such pleading filed against it, or is adjudicated a
bankrupt or insolvent; or

(i) A receiver, manager, liquidator, or other Person acting in a comparable capacity is

appointed for a substantial part of the assets of Franchisee.

15.4 Other Remedies. In the event of grounds for a default by the Franchisee, Franchisor is entitled in
its sole discretion to exercise any other remedies in lieu of or prior to terminating the Agreement,
which may include but are not limited to termination or suspension of any and all services provided
to Franchisee by Franchisor, its Affiliates, or approved suppliers; suspension of delivery of product
or supplies to Franchisee by Franchisor, its Affiliates, or approved suppliers; imposition of different
credit terms for delivery of product or supplies to Franchisee by Franchisor, its Affiliates or approved
suppliers; temporary operation of the Franchised Business pursuant to Section 14 of this
Agreement; removal of Franchisee from the Franchisor’s website, directory, or social media;
execution and delivery of a Release in the form attached as Exhibit 1, and imposition of any
additional or different requirements for Franchisee to maintain its right to continue operating the
Franchised Business. Franchisor’s exercise of any of these other remedies shall not in any way
impair or waive Franchisor’s right in the future to terminate the Agreement or to exercise any other
rights under this Agreement.

16 Dispute Resolution
16.1 Notice of Dispute. If a dispute arises relating to or in connection with this Agreement or the
relationship of the parties (“Dispute”), a party to the Dispute must give to the other party or parties
to the dispute notice specifying the dispute and requiring its resolution under this clause 16 (“Notice
of Dispute”).

16.2 Mediation. If the parties cannot resolve their Dispute within 30 days from the date of service of the
Notice of Dispute, either party may refer the matter to a mediator and if the parties cannot agree
upon the appointment of a mediator, either party may submit the matter to JAMS and obtain the
appointment of a mediator under the JAMS mediation rules.

(1) The mediation may take place by videoconference, unless the parties agree upon a
different location. The mediator may decide the date and time for mediation and the parties
will attend the mediation and use reasonable endeavors to resolve the dispute.

(2) The parties to the mediation agree that: everything that occurs before the mediator will be
in confidence and in closed session; all discussions will be without prejudice; and no
documents brought into existence specifically for the purpose of the mediation process will
be called into evidence in any subsequent litigation by either of the parties. The mediator
will deal with any matter as expeditiously as possible by no later than 30 Business Days
after referral to the mediator.

(3) The parties to the mediation will bear the costs of the mediation on an equal basis. Each
party will bear its own costs of attending and preparing for the mediation.
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(4) The mediator will have no power to make any decision binding on the Parties to resolve
the dispute.

16.3 Arbitration. Except as otherwise provided in this Agreement, if the mediation is not successful, any
controversy, claim, cause of action or dispute arising out of, or relating to this Agreement or related
agreements, or the relationship of the parties, shall be resolved exclusively by binding arbitration.

(1) The right and duty of the parties to this Agreement to resolve any disputes by arbitration
shall be governed exclusively by the Federal Arbitration Act, as amended, and arbitration
shall be conducted pursuant to the then-prevailing Commercial Arbitration Rules of JAMS.

(2) The arbitration shall be conducted in New York, New York, and parties and witnesses may
appear by videoconference, unless the parties agree otherwise.

(3) Any dispute as to the arbitrability of any controversy, claim, cause of action or dispute shall
also be determined by arbitration.

(4) All proceedings in the Arbitration shall be strictly confidential, and everything that occurs
before the arbitrator will be in confidence and in closed session

(5) The arbitration panel shall consist of three arbitrators. JAMS shall send each of the Parties
a separate list of at least at least ten (10) Arbitrator candidates. JAMS shall also provide
each Party with a brief description of the background and experience of each Arbitrator
candidate.

(6) Within seven (7) calendar days of service upon the Parties of their list of names, each Party
may select one Arbitrator from their respective list. The two party-appointed Arbitrators
shall name a third Arbitrator who shall act as the Chairperson.

(7) The fees and expenses of the proceeding may be awarded by the Arbitrator to the
prevailing party. If not so awarded, the parties shall bear their own fees, costs and
expenses, and the charges of the arbitration service and arbitrator shall be split between
the parties.

(8) After accepting the appointment and during the arbitration, the arbitrator may: require the
parties to lodge security or further security towards the arbitrator’s fees and expenses; and
apply any security towards those fees and expenses, but the arbitrator may not direct a party
to the dispute to provide security for the costs of the arbitration to be incurred by any other
party.

(9) The arbitrator shall have no authority to amend or modify the terms of this Agreement.

(10) The arbitrator must include in the arbitration award the findings on material questions of law
and of fact, including references to the evidence on which the findings of fact were based.

(11) An arbitration initiated by a Franchisee can only be brought by a single franchisee, and shall
only resolve the claims by the Franchisee. Franchisee is not permitted to bring or participate in
any group, collective, multi-party, or class action claims against Franchisor or its Affiliates or
their respective owners and officers. An Arbitrator shall not have authority to decide any group,
collective, multi-party or class action claims against Franchisor or its Affiliates or their respective
owners and officers.

(12) Despite anything in this clause 16, a party at any time may commence court proceedings
in relation to any dispute or claim arising under or in connection with this Agreement solely
for the purpose of obtaining urgent interlocutory relief pending resolution of the Arbitration.

(13) Subject to this clause 16, a party must not commence or maintain a court action or

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16.4 Waiver of Jury Trial. EACH PARTY HERETO HEREBY ACKNOWLEDGES AND
AGREES THAT ANY CONTROVERSY THAT MAY ARISE UNDER THIS
AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES
AND, THEREFORE, EACH SUCH PARTY IRREVOCABLY AND
UNCONDITIONALLY WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN
RESPECT OF ANY LEGAL ACTION ARISING OUT OF OR RELATING TO THIS
AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
16.5 Survival of Dispute Resolution Provisions. This clause 16 continues in force even where the
Agreement has been fully performed, terminated or rescinded or where the parties or any of them
have been discharged from the obligation to further perform the Agreement for any reason. The
obligations with respect to dispute resolution outlined in this Article shall survive termination or
expiration of this Agreement. This clause 16 applies even where the Agreement is otherwise void or
voidable.

17 Rights and Obligations Upon Termination or Expiration

17.1 Consequences of Termination

Franchisee agrees that upon the termination or expiration of this Agreement, it will:

(1) Not directly or indirectly identify itself as a current or former franchisee of, or as otherwise
associated with, Franchisor;

(2) Immediately deliver to Franchisor:

(a) All copies of the Operations Manual, the Operations Manual Addendum, and
Global Policies and Procedures (contained in any medium) and once delivered to
Franchisor, uninstall and permanently delete any copies of the Operations Manual,
the Operations Manual Addendum, and Global Policies and Procedures
electronically stored by Franchisee;

(b) All forms, stationery, business cards, advertising material, and any other printed
matter and signs used by Franchisee which bear the Network Name or any of the
Marks;

(d) All other property of Franchisor;

(3) Immediately discontinue use of and forever cease to use:

(a) The Network Name;

(b) Any trade name, trademark, or commercial symbol that suggests or indicates a
connection or association with Franchisor;

(c) The Marks, Confidential Information, and other Intellectual Property and remove all
signs containing any Marks or any marks deceptively similar to the Marks (including
from any Outlets) and promptly return to Franchisor or destroy all forms and
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materials containing any Mark, in accordance with Franchisor’s instructions; and

(d) Any Mark, trade name, trademark, or commercial symbol that is deceptively similar
to any Mark in any manner or for any purpose;

(4) Not register the Marks or the Network Name or the Domain Name or any part of the Marks
or Network Name or any words or names similar to the Network Name or Marks or any
combination of those names;

(5) Do everything necessary and execute all documents required by Franchisor to transfer,
assign or, if necessary, cancel any trademarks, service marks, domain names, or other
commercial symbols or Intellectual Property applied or registered by Franchisee in the
Territory;

(6) Immediately cease to use any Confidential Information of Franchisor disclosed to or

otherwise learned or acquired by Franchisee and return to Franchisor all Confidential
Information which has been loaned or made available to it by Franchisor pursuant to this
Agreement without itself retaining any copies of the same in any medium;
(7) Provide to Franchisor:

(a) All agreements, records, files, and any other materials or information reasonably
requested by Franchisor pertaining to this Agreement which are assigned to
Franchisor or its nominee;

(b) All agreements, records, files, and any other materials or information reasonably
requested by Franchisor pertaining to the Local Marketing Expenditure; and

(8) Within 10 Business Days of the effective date of termination or expiration of the Agreement,
pay all money owed to Franchisor or any Affiliate and Franchisee’s employees, contractors,
and material trade creditors which are then unpaid.

17.2 Transfer of Franchise Agreement

(1) Upon termination or expiration of this Agreement:

(a) Franchisee agrees to assign, or otherwise transfer, to Franchisor or its nominee, at

the option of Franchisor, all of its rights and obligations under this Agreement
nominated by Franchisor and Franchisor may exercise its right to require an
assignment or other transfer of this Agreement at any time after termination or
expiration of this Agreement. Such assignment or other transfer will take effect
automatically and immediately upon transmittal by Franchisor of a written notice to
Franchisee stating that this Agreement is assigned or otherwise transferred from
Franchisee to Franchisor or its nominee and Franchisee must do all things
necessary to formalize any such assignment; and

(b) Immediately upon request by Franchisor, Franchisee must take all necessary steps
(including signing any document) to assign or otherwise transfer its rights under
the documents granting the relevant Occupancy Right to Franchisee to Franchisor
or its nominee.

(2) If Franchisor does not require an assignment or other transfer of this Agreement, then this
Agreement may, as determined by Franchisor, continue for the remainder of its term, in
which case Franchisee must continue to perform all obligations under this Agreement other
than in relation to any continued development.

(3) If upon termination or expiration of this Agreement, Franchisor exercises its right to take an
assignment of this Agreement pursuant to clause 17.2(1), then Franchisee will not be
entitled to receive payment under this Agreement from the date of the assignment of this
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Agreement.

18 Guarantee and Indemnity

18.1 Interested Party’s Guarantee

Franchisee must ensure that:

(1) Each Interested Party give a guarantee and indemnity on the terms set out in this
clause 18, in the form attached as Exhibit 3; and

(2) Any new Interested Party, upon becoming an Interested Party, sign a guarantee and
indemnity in respect of Franchisee’s obligations under this Agreement on the then-current
terms used by Franchisor.
18.2 Consideration

Guarantor has requested Franchisor to enter into this Agreement with Franchisee and Franchisor
does so in consideration of this guarantee and indemnity.

18.3 Guarantee

Guarantor unconditionally and irrevocably guarantees to Franchisor prompt performance of all of

the obligations of Franchisee contained or implied in this Agreement. If the obligation is to pay
money, Franchisor may recover the money from Guarantor as a liquidated debt.

18.4 Indemnity

(1) If Franchisee is not bound by some or all of its obligations under this Agreement, Guarantor
agrees, by way of indemnity and principal obligation, to pay to Franchisor the amount which
would have been payable by Guarantor to Franchisor under the guarantee in clause 18.3
had Franchisee been bound.

(2) Guarantor indemnifies Franchisor and agrees to hold it harmless in respect of any failure
by Franchisee to perform any of its obligations under this Agreement including any
obligation to pay money to Franchisor.

18.5 Continuing Security

This guarantee and indemnity is a continuing security, and is not discharged or prejudicially affected
by any settlement of accounts, but remains in full force until a final release is given by Franchisor.

18.6 Matters Not Affecting Guarantor’s Liability

Guarantor’s liability under clauses 18.3 and 18.4 is not affected by:

(1) The granting of time, forbearance, or other concession by Franchisor to Franchisee or any
Guarantor;

(2) An absolute or partial release of Franchisee or any Guarantor or a compromise with

Franchisee or any Guarantor;

(3) A variation of this Agreement;

(4) A transfer of this Agreement by Franchisee;

(5) The termination of this Agreement;

Chatime Franchise Agreement (2023) | Page 45

(7) The fact that this Agreement is wholly or partially void, voidable, or unenforceable;

(8) The non-execution of this Agreement by one or more of the persons named as Guarantor
or the unenforceability of the guarantee or indemnity against one or more of Guarantors; or

(9) The exercise or purported exercise by Franchisor of its rights under this Agreement.
18.7 Payment Later Avoided

Guarantor’s liability is not discharged by a payment to Franchisor which is later avoided by law. If
that happens, the parties are restored to their respective rights and obligations as if the payment
had not been made.

18.8 Indemnity on Disclaimer

If a liquidator or trustee in bankruptcy disclaims this Agreement, Guarantor indemnifies Franchisor

against any resulting loss.

18.9 Guarantor Not to Prove in Liquidation or Bankruptcy

Until Franchisor has received all money payable to it by Franchisee, Guarantor must:

(1) Not prove or claim in any liquidation, bankruptcy, composition, arrangement, or assignment
for the benefit of creditors; and

(2) Hold any claim it has and any dividend it receives on trust for Franchisor.

18.10 Guarantee to Continue on Transfer of Rights

If Franchisor transfers its rights under this Agreement, the benefit of the guarantee and indemnity
in this clause 18 extends to the transferee and continues concurrently for the benefit of Franchisor
regardless of the transfer unless Franchisor releases Guarantor in writing.

18.11 Certificate as to Liability

A certificate signed by Franchisor or its solicitors about a matter or about a sum payable to
Franchisor in connection with this Agreement is sufficient evidence of the matter or sum stated in
the certificate unless the matter or sum is proved to be false.

19 Corporate Franchisee
19.1 Application of Clause

This clause 19 applies if Franchisee is a corporation, limited liability company, or other business entity.

19.2 Constitution

(1) Before the Commencement Date, Franchisee must give to Franchisor a certified copy of
Franchisee’s constitution and certified copies of any other documents requested by
Franchisor from Franchisee’s company register.

(2) Franchisee warrants that the constitution does not preclude Franchisee from being granted
the Franchise or otherwise from exercising its rights and performing its obligations under
this Agreement.

19.3 Directorship and Ownership of Franchisee

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Franchisee:

(1) Warrants that the Owners, directors and officers of Franchisee as at the date of execution
are as notified to Franchisor by Franchisee; and
(2) Must provide to Franchisor immediately upon request details of the Owners of Franchisee,
including the number and class of Ownership Interests held by each Owner as of:

(a) The date of execution of this Agreement; and

(b) Any other date specified by Franchisor.

19.4 No Changes Without Franchisor’s Consent

(1) Franchisee must not allow any of the following to occur without first obtaining Franchisor’s
written consent:

(a) Any change in the composition of Franchisee’s Owners, directors, and officers;

(b) Any alteration to Franchisee’s constitution;

(c) Any Disposal of Ownership Interests in Franchisee; or

(d) Any reduction or alteration of Franchisee’s capital.

(2) Franchisor must not withhold consent unreasonably if:

(a) In the case of a Disposal of Ownership Interests, the requirements of clause 19.5 are
met;

(b) Franchisee executes and delivers to Franchisor a Release in substantially the form
attached as Exhibit 1;

(d) All new Owners executed and delivered to Franchisor a signed Confidentiality and Non-
Competition Agreement in the form attached as Exhibit 4; and

(e) In any case, the change does not adversely affect Franchisee’s ability to
perform its obligations under this Agreement.

19.5 Transfer of Ownership Interests

Any Disposal of Ownership Interests in Franchisee must be treated as a Disposal by Franchisee

of the Franchise and clause 13 will apply to that Disposal.

20 Trust Provisions
20.1 Warranty if Franchisee Not a Trustee

If Franchisee is not described in this Agreement as trustee of a trust, Franchisee Parties warrant
that Franchisee enters into this Agreement in its own right and not as a trustee for any person.

20.2 Application of Clause if Franchisee is a Trustee

The remainder of this clause applies if Franchisee enters into this Agreement as trustee of any
trust.
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20.3 Warranties as to Trusts

Franchisee Parties warrant that:

(1) Franchisee enters into this Agreement as trustee for the trust;

(2) Franchisee is the sole trustee of the Trust;

(3) Franchisee enters into this Agreement for the purposes and benefit of the Trust and has
obtained the consent or approval of any person which is needed to ensure that the property
of the Trust is bound upon the execution of this Agreement;

(4) Franchisee has given to Franchisor a certified copy of the Trust Deed and certified copies
of any other documents relating to the Trust;

(5) Franchisee has power under the Trust Deed to enter into this Agreement, to undertake the
obligations and liabilities in the manner and the extent contemplated by this Agreement,
and to apply the assets of the Trust in satisfaction of any money payable under this
Agreement;

(6) Franchisee has an unrestricted right to be fully indemnified out of the assets of the Trust;

(7) The vesting date for the Trust occurs after the Franchise is expected to end by effluxion of
time; and

(8) All information or documents supplied to Franchisor or to any person on Franchisor’s behalf
for the purposes of the Franchise are true and accurate and leave no material facts
undisclosed.

20.4 No Changes Without Franchisor’s Consent

(1) Franchisee must not allow any of the following to occur without first obtaining Franchisor’s
written consent:

(a) Any alteration to the Trust Deed;

(b) Any Disposal of units in the Trust (in the case of a unit trust);

(d) The appointment of any person as a new or substitute trustee under the Trust Deed;

(e) The delegation of any power or duty conferred upon Franchisee under the Trust
Deed other than as expressly authorized by this Agreement; or

(f) Anything which will or may harm Franchisee.

(2) Franchisor must not unreasonably withhold consent to a Disposal of units if the
requirements of clause 20.5 are met.

(3) If Franchisee contravenes clause 20.4(1)(d) and appoints any new or substitute trustee of
the Trust, Franchisee:

(a) Acknowledges that this Agreement will bind the new trustee; and

(b) Must arrange for the new trustee to enter into a deed prepared by Franchisor’s
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solicitors at Franchisee’s Cost by which the new trustee agrees to be bound by the
terms of this Agreement.
20.5 Transfer of Units

Any Disposal of units in the Trust, must be treated as a Disposal by Franchisee of the Franchise
and clause 13 apply to that Disposal.

20.6 Recourse Against Trust and Other Assets

Franchisee:

(1) Agrees that the assets of the Trust and also those beneficially held by Franchisee on its
own behalf will be available to satisfy Franchisee’s obligations under this Agreement; and

(2) Must, if Franchisor requires, exercise its rights of indemnity against the assets of the Trust
to satisfy any of its obligations under this Agreement.

21 Acknowledgements, Representations, and Warranties

21.1 Acknowledgements and Representations

(1) Franchisee and Guarantor each acknowledge that:

(a) They have relied upon their own investigations and judgment in entering this
Agreement;

(b) Before signing this Agreement, they have undertaken their own due diligence and
sought such professional advice and assistance as they consider appropriate in
relation to Franchisor and all other matters relevant to this Agreement;

(c) They are not entering into this Agreement on the basis of any financial or other
information provided by Franchisor or any express or implied statement or
representation by Franchisor or any Affiliate of Franchisor or any of their officers,
employees, agents or representatives; and

(d) They have not been introduced to Franchisor by any broker or agent acting or
purporting to act on behalf of Franchisor.

(2) Franchisee acknowledges that Franchisor has agreed to grant the Franchise to Franchisee
in reliance on the character, skills, and financial capacity of Franchisee, the Owners and
the General Manager, that the establishment and operation of the Franchised Business will
involve significant financial risks, and that the success of the Franchised Business will
depend upon the skills and financial capacity of Franchisee and the Owners and also upon
changing economic and market conditions.

(3) Franchisee acknowledges and agrees that it has conducted an independent investigation
of the business contemplated by this Agreement and recognizes that it involves business
risks making the success of the venture largely dependent on the business abilities of
Franchisee. Franchisor expressly disclaims the making of, and Franchisee acknowledges
that it has not received or relied upon, any express or implied warranty or guarantee
regarding the potential volume, profits, or success of the business venture contemplated
by this Agreement.

(4) Franchisee and Guarantor represent that all information provided to Franchisor in support
of Franchisee’s application to acquire the Franchise, including in relation to its financial
capacity, resources, business experience and skills are complete, true, and correct.

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(6) Franchisor is not responsible for the acts or omissions of any person involved in the design
of the Outlet, including any architects or consultants engaged by Franchisor.

21.2 Warranties

(1) If Franchisee is a corporate entity, Franchisee represents and warrants that it is duly
organized and validly existing in good standing under the laws of the jurisdiction of its
incorporation.

(2) Franchisee warrants that it has done everything necessary to do business lawfully in all
jurisdictions in which its business is carried on, has the power to enter into and perform this
Agreement, and has obtained all necessary consents and fulfilled all necessary Legal
Requirements to enable it to do so.

(3) Franchisee and Guarantor represent and warrant that the terms and conditions of this
Agreement have been explained to each of them by an independent legal adviser and an
independent business adviser and that they understand and accept the terms and
conditions of this Agreement.

(4) If Franchisee and Guarantor are corporate entities, they represent and warrant that the
execution of this Agreement is in accordance with the requirements of their respective
articles of incorporation and creates a binding obligation on them in accordance with the
terms of this Agreement.

22 Notices
22.1 A notice or other communication connected with this Agreement (Notice) has no legal effect
unless it is in writing.

22.2 In addition to any other method of service provided by law, the Notice may be:

(1) Sent by prepaid priority post to the address of the addressee set out in this Agreement or
subsequently notified;

(2) Sent by email to the email address of the addressee set out, respectively, in Item 16 -
Item 18 of Schedule 1, or subsequently notified; or

(3) Delivered at the address of the addressee set out in this Agreement or subsequently
notified.

22.3 If the Notice is sent or delivered in a manner provided by clause 22.2, it must be treated as given
to and received by the party to which it is addressed:

(1) If sent by post, on the third Business Day (at the address to which it is posted) after posting;

(2) If sent by email before 5 pm on a Business Day at the place of receipt, on the day it is sent
and otherwise on the next Business Day at the place of receipt; or

(3) If otherwise delivered before 5 pm on a Business Day at the place of delivery, upon delivery,
and otherwise on the next Business Day at the place of delivery.
23 Force Majeure
23.1 A party (Affected Party) is not liable for any delay or failure to perform an obligation (other than
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to pay money) under this Agreement caused by:

(1) Act of God;

(2) War, terrorism, riot, insurrection, vandalism, or sabotage;

(3) Strike, lockout, ban, limitation of work, or other industrial disturbance; or

(4) Law, rule, or regulation of any government or governmental agency and executive or
administrative order or act of general or particular application.

23.2 The Affected Party must notify each other party as soon as practical of any anticipated delay or
failure caused by an event referred to in clause 23.1 (Event).

23.3 The performance of the Affected Party’s obligation is suspended for the period of delay caused by
the Event.

24 Power of Attorney
(1) To secure performance by Franchisee of its obligations under this Agreement, Franchisee
Parties irrevocably appoint Franchisor and each of its officers severally to be their attorney
(Attorney) to exercise the powers described in this clause 24.

(2) If Franchisee Parties breach any provision of this Agreement or any Collateral Agreement
or at the end of the Franchise the Attorney may, in the name and at the Cost of either
Franchisee or Guarantor, do anything required to be done by Franchisee Parties that
Franchisee Parties have not done or have not done promptly or properly. This includes the
execution and delivery of documents, transfers, assignments, deeds, forms, notices, or
other instruments specifically relating to the Marks and the Website.

(3) The powers granted under this clause 24 commence when this Agreement is executed and
continue despite the end of the Franchise.

(4) Franchisee Parties:

(a) Ratify and confirm anything an Attorney lawfully does under this clause 24; and

(b) Must pay on demand all the Costs or other liabilities incurred by or on behalf of
Franchisor or the Attorney under this clause 24.

25 Changes in Laws
25.1 Taxes and Charges

If any laws are changed or new laws are introduced or courts or any relevant authority interpret
laws differently which results in Franchisor having to pay a tax, duty, excise, or levy (Impost) on
amounts received from Franchisee under this Agreement (other than income tax) or on goods or
services supplied by Franchisor under this Agreement, Franchisee must pay to Franchisor an
additional amount so that after Franchisor has paid the Impost its yield under this Agreement is
unchanged.
25.2 Amend Agreement to Comply with Future Laws

The parties agree that if any laws are changed or introduced or any relevant authority publishes or
issues any statement, rules, code, or requirement which in the reasonable opinion of Franchisor or
its legal representatives renders or is likely to render all or part of this Agreement unenforceable,
illegal, or void, the parties will immediately amend this Agreement and do all things (including
executing documents) necessary or desirable to ensure that this Agreement is not unenforceable,
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illegal, or void.

26 Miscellaneous
26.1 Choice of Law. This Agreement, and any dispute or controversy arising from or relating to this
Agreement, shall be governed and decided by the law of the State of Delaware, without reference to any
choice of law rules.

26.2 Taxes

Franchisor will have no liability for any sales, value added, use, service, stamp duty, occupation,
excise, gross receipts, income, property, payroll, or other taxes, whether levied upon this
Agreement, Franchisee, one or more Outlets, Franchisee, or Franchisee’s property, or upon
Franchisor, in connection with operations conducted by Franchisee (except any taxes that
Franchisor is required by law to collect from Franchisee with respect to purchases from Franchisor
or taxes described in clause 6.7(1)). Payment of all such taxes will be the responsibility of
Franchisee.

26.3 Subcontracting and Agency

(1) Franchisor is entitled to subcontract the performance of any of its obligations to be

performed in the Territory under this Agreement and exercise any of its rights in the
Territory under this Agreement to any person nominated by Franchisor, and any notice
required to be given by Franchisor shall be validly given if given by such person.

(2) Franchisee must not subcontract the performance of any of its obligations to be performed
in the Territory under this Agreement without the prior consent of Franchisor.

26.4 Exercise of Rights

A party may exercise a right, power or remedy at its discretion, and separately or concurrently with
another right, power, or remedy. A single or partial exercise of a right, power, or remedy by a party
does not prevent a further exercise of that or of any other right, power, or remedy. Failure by a
party to exercise or delay in exercising a right, power, or remedy does not prevent its exercise.

26.5 Approvals and Consents

(1) Franchisor may give conditionally or unconditionally or withhold its approval or consent in
its absolute discretion unless this Agreement expressly provides otherwise.

(2) Franchisor may require Franchisee and its Owners to execute and deliver to Franchisor a
Release in the form attached as Exhibit 1 as a condition for granting any approval or
consent or for agreeing to any amendment of this Agreement.

26.6 Indemnities

Each indemnity in this Agreement is a continuing obligation, separate, and independent from the
other obligations of the parties and survives termination of this Agreement. It is not necessary for
a party to incur expense or make payment before enforcing a right of indemnity conferred by this
Agreement. Any indemnities and assumptions of liabilities or obligations under this Agreement
survive termination or expiration of this Agreement.

26.7 Translations and English Language

(a) Franchisee must at its Cost: Translate this Agreement from English into the
language or languages of the Territory and submit a copy of such translations to
Franchisor for its approval; and
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(b) Translate the Operations Manual and the Operations Manual Addendum for use in
the Territory from English into the main languages used in the Territory.

(2) Franchisee must pay all Franchisor’s Costs of translating or verifying any translation of this
Agreement and any related documents or agreements into the language or languages of
the Territory if such translation is required to comply with the Legal Requirements in the
Territory.

(3) If this Agreement is translated into a language other than English, the English version of
this Agreement shall alone govern all matters of interpretation of this Agreement.

26.8 Survival of Obligations After Termination and Expiration

Termination or expiration of this Agreement does not release any party from that party’s obligations
which expressly survive of or are capable of survival of this Agreement and specifically without
limitation clauses 3.7, 4.10(2), 8.1, 9.1, 9.8, 10, 16, 17, 18, 11, 24, and 26.6.

26.9 Costs and Expenses

(1) Franchisee must pay, or reimburse Franchisor on demand for, all Franchisor’s Costs
(including Legal Costs) in connection with or incidental to:

(a) Any default by Franchisee in observing or performing any of its obligations under
this Agreement;

(b) Any termination of this Agreement; and

(c) The contemplated, attempted, or actual enforcement, preservation, or exercise of

any right under this Agreement including the obtaining by Franchisor of any advice
or information as to its rights under this Agreement or otherwise arising from a
breach of this Agreement by Franchisee.

26.10 Authority to Complete

By their execution of this Agreement, Franchisee Parties authorize Franchisor to complete any
items in Schedule 1 that are blank on the date of execution, with the details that Franchisor
determines.

26.11 Severability

(1) If any provision in this Agreement is unenforceable, illegal, or void or makes this Agreement
or any part of it unenforceable, illegal, or void, then that provision is severed and the rest
of this Agreement remains in force.

(2) If any provision in this Agreement is unenforceable, illegal, or void in one jurisdiction but
not in another jurisdiction or makes this Agreement or any part of it unenforceable, illegal,
or void in one jurisdiction but not in another jurisdiction, then that provision is severed only
in respect of the operation of this Agreement in the jurisdiction where it is unenforceable,
illegal, or void.
26.12 Entire Understanding

Subject to the provisions of any written material entered into and approved by Franchisor and to
which Franchisor and Franchisee are parties, this Agreement:

(1) Is the entire agreement and understanding between the parties on everything connected
with the subject matter of this Agreement; and

Chatime Franchise Agreement (2023) | Page 53

Notwithstanding the foregoing, nothing in any agreement is intended to disclaim the express
representations made in Franchisor’s Franchise Disclosure Document, its exhibits and
amendments.

26.13 Variation

An amendment or variation to this Agreement is not effective unless it is in writing and signed by
the parties.

26.14 Waiver

(1) A party’s failure or delay to exercise a power or right does not operate as a waiver of that
power or right.

(2) The exercise of a power or right does not preclude either its exercise in the future or the
exercise of any other power or right.

(3) A waiver is not effective unless it is in writing.

(4) Waiver of a power or right is effective only for the specific instance to which it relates and
for the specific purpose for which it is given.

(5) Nothing contained in this section shall diminish the jury trial waiver in this Agreement.

26.15 Adverse Effect

In exercising, or deciding not to exercise, any right or discretion under this Agreement, a party is
not required to take into account any adverse effect on another party.

26.16 Further Assurance

Each party must promptly at its own Cost do all things (including executing and if necessary,
delivering all documents) necessary or desirable to give full effect to this Agreement.

26.17 Governing Law and Jurisdiction

The law of the jurisdiction set out in Item 22 of Schedule 1 governs this Agreement.

26.18 Non-merger

Each obligation which expressly survives or is capable of surviving the end of the Franchise,
continues in force despite the termination of this Agreement and the end of the Franchise.

26.19 Time of the Essence

(1) Time is of the essence in this Agreement.

(2) If the parties agree to vary a time requirement the time requirement so varied is of the
essence of this Agreement.

(3) An agreement to vary a time requirement must be in writing.

26.20 Execution of Counterparts

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(1) This Agreement may be executed in any number of counterparts. Each counterpart is an
original but the counterparts together are one and the same agreement.

(2) This Agreement is binding on the parties on the exchange of executed counterparts. A
copy of an original executed counterpart sent by facsimile machine or by email:

(a) Must be treated as an original counterpart;

(b) Is sufficient evidence of the execution of the original; and

26.21 Special Conditions

Any conditions set out in Schedule 1 form part of this Agreement. If there is any inconsistency
between a provision of the Special Conditions and a provision of this Agreement, the provision of
the Special Conditions prevails to the extent of the inconsistency.

[signature page follows]

Chatime Franchise Agreement (2023) | Page 55

Item 1 Franchisee

Name:______________________________________________________________

Address:___________________________________________________________

___________________________________________________________________

Item 2 Owner(s) (Designate the “Managing Owner”)

Name:_____________________________________________________________

Percentage Interest:__________________________________________________

Address:________________________________________________________

__________________________________________________________________

Name:______________________________________________________________

Percentage Interest:__________________________________________________

Address:___________________________________________________________

___________________________________________________________________

Item 3 Guarantor(s)

Name:______________________________________________________________

Address:___________________________________________________________

___________________________________________________________________

Name:______________________________________________________________

Address:___________________________________________________________

___________________________________________________________________

Item 4 Initial Term: Ten years

Item 5 New Term: Ten years

Item 6 Territory and Premises

Territory: (describe and attach map)____________________________________________________

___________________________________________________________________________________
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(Attach Map)

Premises address: (if not yet determined, address shall be filled in and initialed by the parties
when the address is determined):

_________________________________________________________________________________

Item 7 Restraint Area

means (a) the Territory, (b) any area within twenty five (25) miles from any Outlet operated by
Franchisee, and (c) any area within twenty five (25) miles of any Chatime Restaurant.

Item 8 Restraint Period

A continuous uninterrupted period of two (2) years commencing on and from the expiration or
termination date of this Agreement,

Item 9 New Outlet Fee

$49,900

Item 10 Initial Training Fee

$10,000

Item 11 Royalty

5% of Gross Sales

Item 12 Brand Marketing Fee (IMF) & Local Marketing Expenditure (LME)

IMF: 2.0% of Gross Sales (payable by Franchisee to Franchisor

LME: 2.0% of Gross Sales (required to be used for local marketing)

Item 13 Renewal Outlet Fee 25% of the then-current New Outlet Fee

Item 14 Transfer Fee $10,000

Item 15 Franchisor’s Bank Account

Name of Bank: _____________________________________________

Address of Bank: _____________________________________________

SWIFT CODE: _______________________________________________

Account name: _______________________________________________

Account Number: _______________________________________________

Item 16 Franchisor’s Address for Service

Chatime Franchise Agreement (2023) | Page 57

Item 17 Franchisee’s Address for Service (if different than above)

Address:________________________________________________

Attn: ___________________________________________________

Email address:____________________________________________

Contact: __________________________________________________

Item 18 Guarantor’s Address for Service (if different than above)

Address:________________________________________________

Attn: ___________________________________________________

Email address:____________________________________________

Contact: __________________________________________________

Address:________________________________________________

Attn: ___________________________________________________

Email address:____________________________________________

Contact: __________________________________________________

Item 19 Insurance Policies

We currently require that you maintain the following insurance coverages

(a) general liability coverage with minimums of $1 million per occurrence, $2
million general and products/completed operations aggregate, $1 million
personal/advertising injury, $50,000 rented premises damage, and $5,000
medical expenses;
(b) franchisee commercial auto insurance with a $1 million combined single limit;
(c) workers compensation insurance with coverage limits of $1 million for bodily
injury by disease per accident, $1 million policy limit, and $1 million per
employee, regardless of state laws and cannot exclude owner-operators;
(d) property/business interruption coverage business personal property, tenant
improvements, equipment, business interruption, and franchisor royalties, for
a minimum of 12 months’ actual loss sustained;
(e) cyber liability insurance with minimum coverage limits of $250,000 per
occurrence and $250,000 aggregate;
(f) employment practices liability insurance with minimum coverage limits of
$500,000 per occurrence and $500,000 aggregate, which includes third party
liability and wage & hour coverage of at least $25,000, with a maximum
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deductible that does not exceed $25,000; and
(g) crime insurance with a minimum coverage of $100,000 for each claim.

We also recommend that you obtain build-out insurance coverage including hard
costs and soft costs, business interruption. Hard costs should be $125,000 or higher,
or the full replacement value, whichever is greater.

We reserve the right to update the insurance requirements for franchises in the
future, in order to address changing exposures and evolving risk factors.
Franchisees will be notified of any changes to the insurance requirements and are
expected to comply with the updated coverage standards. Some property owners
may require higher levels of commercial general liability insurance or other insurance
coverage under their leases.

Item 20 Financial Year

means a year commencing on January 1 and finishing on December 31.

Item 21 Opening Date

_________________________________________________

Item 22 Governing Law

State of Delaware

Item 23 Arbitration Jurisdiction

New York, New York

Item 24 Terms of Trade

Trading condition: FOB Taiwan

Payment terms: T/T in advance (without any bank charges)

Item 25 Special Condition(s) (if any)

______________________________________________________________________

_______________________________________________________________________

Chatime Franchise Agreement (2023) | Page 59

Marks – Registered
Registration Date of
Trademark Registered Owner Jurisdiction
Number Registration
La Kaffa International United October 31,
Chatime 5321339
Co., Ltd. States 2017
La Kaffa International United
4178239 July 24, 2012
Co., Ltd. States
La Kaffa International United January 11,
3905609
Co., Ltd. States 2011

La Kaffa International 6817092 United States August 16, 2022

Co., Ltd.

La Kaffa International 6310008 United States March 30, 2021

Co., Ltd.

Marks – Application Lodged, Registration Pending

Application Date of
Trademark Applicant Jurisdiction
Number Application

La Kaffa International United December 10,

88721635
Co., Ltd. States 2019

La Kaffa International 97182620 United States December 21,

Co., Ltd. 2021

Websites

Meta: #insert#

Instagram: #insert#

Twitter: #insert#

Other: #insert#
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EXECUTED and delivered on the date shown on the first page.

FRANCHISOR

Signed, sealed, and delivered for and on

behalf of Chatime Franchise, LLC by its
authorized representative:

Signature of authorized signatory

Name of authorized signatory

(BLOCK LETTERS)

FRANCHISEE

Signed, sealed, and delivered for and on

behalf of #insert name of Franchisee# by its
authorized representative in the presence of:

Signature of witness Signature of authorized representative

Name of witness Name of authorized representative

(BLOCK LETTERS) (BLOCK LETTERS)

Address of witness

GUARANTOR

Signed, sealed, and delivered for and on

behalf of #insert name of Guarantor# by its
authorized representative in the presence of:

Signature of witness Signature of #insert name of Guarantor#

Name of witness (BLOCK LETTERS)

Address of witness

Chatime Franchise Agreement (2023) | Page 61

Form of Release

THIS GENERAL RELEASE is made this day of , 20_ .

WITNESSETH:

I,______ , a resident(s) in the State of _, and

_____________________________, a [State of Incorporation] company
having its principal place of business at
______________________________________________ (each of the foregoing being
collectively referred to herein as the “UNDERSIGNED”) for and in consideration of the sum of
One Dollar ($1.00) paid to them by Chatime Franchise, LLC and other good and valuable
consideration, the receipt of which is hereby acknowledged, the UNDERSIGNED, individually and
for itself, its parent, subsidiaries, affiliates, agents, servants, employees, shareholders, officers,
directors, partners, heirs, successors and assigns, do each hereby forever release, remise, and
discharge Chatime Franchise, LLC, their predecessors, successors and assigns, parents,
subsidiaries, and affiliated entities and their respective managers, members, officers, directors,
agents, employees, and representatives, past and present, of any and all of such entities (all
collectively referred to herein as “FRANCHISOR”), of and from any and all claims, demands,
causes of action, suits, debts, dues, duties, sums of money, accounts, reckonings, covenants,
contracts, agreements, promises, damages, judgments, extents, executions, liabilities and
obligations, both contingent and fixed, known and unknown, of every kind and nature whatsoever
in law or equity, or otherwise, under local, state, or federal law, against any of them, which the
UNDERSIGNED or any one of them or their predecessors in interest, if any, ever had, now have,
or which they, their heirs, executors, administrators, successors, or assigns hereafter can, will, or
may have, for, upon, or by reason of, any matter, cause, or thing whatsoever, from the beginning
of the world to the date of have, for, upon, or by reason of, any matter, cause, or thing whatsoever,
from the beginning of the world to the date of these presents.

Without limiting the generality of the foregoing, but by way of example only, the foregoing release
will apply to any and all state or federal antitrust claims or causes of action, state or federal
securities law claims or causes of action, state or federal RICO claims or causes of action, breach
of contract claims or causes of action, claims or causes of action based on misrepresentation or
fraud, breach of fiduciary duty, unfair trade practices (state or federal), and all other claims and
causes of action whatsoever.

The UNDERSIGNED (and each of them) further agree for themselves and for their successors and
assigns, to indemnify and hold harmless forever, FRANCHISOR their predecessors, successors
and assigns, parent, subsidiaries, and affiliated entities and their respective managers, members,
officers, directors, agents, employees, and representatives, past and present, against any and all
claims or actions which hereafter may be brought or instituted against any or all of them, or their
successors and assigns, by or on behalf of anyone claiming under rights derived from the
UNDERSIGNED, or any of them, and arising out of or incidental to the matters to which this
release applies.

1
Form of Release

Any individual who signs this release in a representative capacity for the UNDERSIGNED
entity hereby represents and warrants that they are duly authorized by action of the officers
of the UNDERSIGNED entity to execute this release on its behalf.

With respect to the matters hereinabove released, the UNDERSIGNED knowingly waive all
rights and protection, if any, under §1542 of the Civil Code of the State of California, or any
similar law of any state or territory of the United States of America. §1542 provides as
follows:

1542 General Release; Extent. A general release does not extend to claims which
the creditor does not know or suspect to exist in his favor at the time of executing the
release, which, if known by him, must have materially affected his settlement with
the debtor.

If any restriction set forth in this General Release is found by any court of competent
jurisdiction to be unenforceable because it extends in too broad a scope, it will be interpreted
to extend only over the maximum scope of release as to which it may be enforceable. This
General Release does not apply to any release or waiver which would relieve any person
from liability imposed to the FRANCHISOR by applicable laws.

IN WITNESS WHEREOF, the UNDERSIGNED executed this General Release on the day
and year first above written.

FRANCHISEE:

Witness:
(Signature)

__________________________________
(Signature)

By:
(Print name) __________________________________

(Print name)

Title:

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accuracy of this information. Any action you take upon the information you find on this website ([Link]), is strictly at your own risk. We will not be liable for any losses and/or damages in connection with the use of our website.
LEASE ADDENDUM

PARTIES:

Franchisor: Chatime Franchise, LLC (“Franchisor”)

6000 Sepulveda Blvd.
Culver City, CA 90230

Tenant: __________________________________________________________ (“Tenant”)

Name
__________________________________________________________________
Address

Landlord: ________________________________________________________ (“Landlord”)

Name
_________________________________________________________ (“Address”)

PREMISES:

Address: ________________________________________________________ (“Premises”)

THIS AGREEMENT is made and entered into on , 20 , by and among

Franchisor, Tenant, and Landlord.
BACKGROUND
A. Landlord and Tenant have executed a lease agreement dated _____________________, 20__
(“Lease”) for the Premises (“Leased Premises”) for use by Tenant as a business to be opened
pursuant to Franchisor’s proprietary marks and system in connection with a Franchise
Agreement dated_________________________, 20___ by and between Franchisor and
Tenant (“Franchise Agreement”);
B. A condition to the approval of Tenant’s specific location by Franchisor is that the Lease for the
Leased Premises designated for the operation of a Chatime Restaurant (“Franchised Business”)
contain the agreements set forth herein;
C. Landlord acknowledges that Franchisor requires the modifications to the Lease set forth herein
as a condition to its approving the Leased Premises as a site for the Franchised Business, and
that Landlord agrees to modify and amend the Lease in accordance with the terms and
conditions contained herein; and
AGREEMENT
In consideration of the mutual undertakings and commitments set forth herein, the receipt and
sufficiency of which are hereby acknowledged, agree as follows:
1. Use Clause. The Leased Premises shall be used solely for the operation of a Chatime
Restaurant and identified by the mark Chatime or such other name as may be specified by
Franchisor. Landlord acknowledges that such use shall not violate any then-existing exclusive
rights granted to any existing tenant of Landlord. Landlord consents to Tenant’s use of
Franchisor’s marks and signs, décor items, color schemes and related components of
Franchisor’s proprietary system. Landlord further acknowledges that during the term of this
Lease or any extension thereof, Landlord will not lease space to another business in the same
building, shopping center or facility as the Leased Premises which serves primarily bubble tea
or other specialized tea drinks.
2. Termination of the Franchise Agreement. If the Franchise Agreement between Franchisor and

1
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of Lease Addendum
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Tenant is terminated for any reason during the term of the Lease or any extension thereof,
Tenant, upon the written request of Franchisor, shall and does hereby assign to Franchisor all
of its rights, title and interest in and to the Lease, and Franchisor or any affiliate designated by
Franchisor may agree to assume from the date of assignment all of Tenant’s obligations
remaining under the Lease, and may assume Tenant’s occupancy rights, and the right to
sublease the premises, for the remainder of the term of the Lease. If Franchisor elects to accept
the assignment of the Lease from Tenant, it shall give Tenant and Landlord written notice of
its election to acquire the leasehold interest. Landlord hereby consents to the assignment of the
Lease from Tenant to Franchisor and shall not charge any fee or accelerate rent under the
Lease. Alternatively, in the event of a termination of the Franchise Agreement, Franchisor may
elect to enter into a new lease with Landlord containing terms and conditions no less favorable
than the Lease. Upon Landlord’s receipt of written notice from Franchisor advising Landlord that
Franchisor elects to enter into a new lease, Landlord shall execute and deliver such new lease
to Franchisor for its acceptance. Landlord and Tenant shall deliver possession of the Leased
Premises to Franchisor, free and clear of all rights of Tenant or third parties, subject to Franchisor
executing an acceptance of the assignment of Lease or new lease, as the case may be.
3. Tenant’s Agreement to Vacate Leased Premises. Tenant agrees to peaceably and promptly
vacate the Leased Premises and, subject to Franchisor’s right to acquire any such property
pursuant to its Franchise Agreement with Tenant, to remove its personal property therefrom upon
the termination of the Franchise Agreement. Any property not removed or otherwise disposed of
by Tenant shall be deemed abandoned.
4. Delivery of Possession. If Landlord may not legally obtain possession of the Leased Premises
or if Landlord is unable to deliver the Leased Premises to Franchisor within six (6) months from
the date Franchisor notifies Landlord of its election to continue the use of the Leased Premises,
then Franchisor shall have the right at any time thereafter to rescind its election to acquire a
leasehold interest in the Leased Premises and to terminate the Lease or any new lease between
it and Landlord for the Leased Premises, and Landlord shall release Franchisor from all of its
obligations under the Lease or any new lease.
5. Entry. Franchisor may enter the Leased Premises without the consent of Landlord or Tenant to
make any modification necessary to protect Franchisor’s proprietary system or marks or to cure
any default under the Franchise Agreement or under the Lease, without being guilty of trespass
or any other crime or tort.
6. Amendment of Lease. Landlord and Tenant agree not to amend the Lease in any respect,
except with the prior written consent of Franchisor.
7. Franchisor Not a Guarantor. Landlord acknowledges and agrees that notwithstanding any terms
or conditions contained in this Agreement or any other agreement, Franchisor shall in no way be
construed as a guarantor or surety of Tenant’s obligations under the Lease. Notwithstanding the
foregoing, in the event Franchisor becomes the tenant by assignment of the Lease in accordance
with the terms hereof or enters into a new lease with Landlord, then Franchisor shall be liable for
all obligations of Tenant on its part to be performed or observed under the Lease or a new lease.
8. Document to Govern. The terms and conditions contained herein modify and supplement the
Lease. Whenever any inconsistency or conflict exists between this Agreement and the Lease,
the terms of this Agreement shall prevail.
9. Waiver. Failure of Franchisor to enforce or exercise any of its rights hereunder shall not
constitute a waiver of the rights hereunder or a waiver of any subsequent enforcement or
exercise of its rights hereunder.
10. Amendment of Agreement. This Agreement may be amended only in writing signed by all parties
hereto.
11. Notices. Landlord shall mail to Franchisor copies of any letters and notices it gives to Tenant
related to the Lease or the Leased Premises concurrently with giving such letters and notices to
Tenant. If Tenant fails to cure any default within the period provided in the Lease, if any, Landlord

2
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shall give Franchisor immediate written notice of such failure to cure. All notices shall be
delivered by certified mail at the addresses designated in the heading of this Agreement or to
such other addresses as the parties hereto may, by written notice, designate.
12. Binding Effect. This Agreement shall be binding upon the parties hereto, their heirs, executors,
successors, assigns and legal representatives.
13. Severability. If any provision of this Agreement or any part thereof is declared invalid by any
court of competent jurisdiction, such act shall not affect the validity of this Agreement and the
remainder of this Agreement shall remain in full force and effect according to the terms of the
remaining provisions or part of provisions hereof.
14. Remedies. The rights and remedies created herein shall be deemed cumulative and no one
such right or remedy shall be exclusive at law or in equity of the rights and remedies which
Franchisor may have under this or any other agreement to which Franchisor and Tenant are
parties.
15. Attorneys’ Fees. If any of the parties to this Agreement commences a legal action against another
party arising out of or in connection with this Agreement, the prevailing party shall be entitled to
have and recover from the other party its reasonable attorneys’ fees and costs of suit; the term
“prevailing party” means a party that is awarded actual relief in the form of damages, declaratory
relief, or injunctive relief, as well as a party that successfully defends a legal action commenced
against it.
16. Applicable Law. This Agreement shall be governed by and construed in accordance with the
laws of the State of Delaware.
IN WITNESS WHEREOF, the undersigned, intending to be legally bound, have executed this
Lease Rider to be effective on the day and year first written above.
CHATIME FRANCHISE LLC

By:
(Signature)

Name:_________________________________
(Print Name)
Title:__________________________________
(Print Title)

LANDLORD

By:
(Signature)

Name:________________________________
(Print Name)
Title:_________________________________
(Print Title)

TENANT

By:
(Signature)

Name:_______________________________
(Print Name)
Title:________________________________
(Print Title)

3
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EXHIBIT C to the Franchise Agreement
Form of Personal Guarantee

THIS GUARANTY AND ASSUMPTION OF OBLIGATIONS IS GIVEN THIS date of

, by (each a “Guarantor”).

In consideration of, and as an inducement to, the issuance or assignment of that certain
Franchise Agreement of even date (the “Agreement”) by Chatime Franchise LLC (the
“Franchisor”), to _________________________________________________(“Franchisee”),
each Guarantor hereby personally and unconditionally (a) guarantees to Franchisor, and its
successor and assigns, for the term of the Agreement and as provided in the Agreement, that
Franchisee shall punctually pay and perform each and every undertaking, agreement and
covenant set forth in the Agreement; and (b) agrees to be personally bound by, and personally
liable for the breach of, each and every provision in the Agreement, both monetary obligations
and obligations to take or refrain from taking specific actions or to engage or refrain from
engaging in specific activities.

Each Guarantor hereby waives: (1) acceptance and notice of acceptance by Franchisor
of the foregoing undertakings; (2) notice of demand for payment of any indebtedness or
nonperformance of any obligations guaranteed; (3) protest and notice of default to any party
with respect to the indebtedness or nonperformance of any obligations guaranteed; (4) any
right such Guarantor may have to require that an action be brought against Franchisee or any
other person as a condition of liability; and (5) the defense of the statute of limitations in any
action hereunder or the collection of any indebtedness or the performance of any obligation
hereby guaranteed.

Each Guarantor hereby consents and agrees that:

(a) Guarantor’s liability under this undertaking shall be direct, immediate, and
independent of the liability of, and shall be joint and several with, Franchisee and other
Guarantors;

(b) Guarantor shall render any payment or performance required under the
Agreement upon demand if Franchisee fails or refuses punctually to do so;

(c) Guarantor’s liability shall not be contingent or conditioned upon pursuit by

Franchisor of any remedies against Franchisee or any other person;

(d) Guarantor’s liability shall not be diminished, relieved or otherwise affected by

any extension of time, credit or other indulgence which Franchisor may grant to Franchisee or
to any other person, including the acceptance of any partial payment or performance, or the
compromise or release of any claims, none of which shall in any way modify or amend this
guaranty, which shall be continuing and irrevocable during the term of the Agreement;

(e) This undertaking will continue unchanged by the occurrence of any bankruptcy
with respect to Franchisee or any assignee or successor of Franchisee or by any abandonment
of the Agreement by a trustee of Franchisee.

(g) Franchisor may proceed against Guarantor and Franchisee jointly and severally,
or Franchisor may, at its option, proceed against Guarantor, without having commenced any
action, or having obtained any judgment against Franchisee; and

(h) Guarantor shall pay all reasonable attorneys’ fees and all costs and other
expenses incurred in any collection or attempt to collect amounts due pursuant to this
undertaking or any negotiations relative to the obligations hereby guaranteed or in enforcing
this undertaking against Guarantor.

IN WITNESS WHEREOF, the undersigned have executed and delivered this Guaranty
and Assumption of Obligations as of the date set forth above.

GUARANTOR(S):

Guarantor

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CONFIDENTIALITY AND NON-COMPETITION AGREEMENT
(for shareholders, owners, members, partners,
officers, directors, and managers of Franchisee and the Franchised Business)

Pursuant to a Franchise Agreement dated _______, 20_ (the “Franchise

Agreement”), the Franchisee_____________________________________________________
has acquired from Chatime Franchise LLC, a Delaware corporation (“Franchisor”) the right to
operate a Chatime Franchised Business and the right to use in the operation of the Franchised
Business the Business System, as it may be changed, improved and further developed from time
to time in the Franchisor’s sole discretion, at the Premises.

In consideration of my being a
___________________________________________________[state position or relationship to
the Franchisee or the Franchised Business] of Franchisee or the Franchised Business, and
other good and valuable consideration, the receipt and sufficiency of which is acknowledged, I
hereby acknowledge and agree as follows:

1. DEFINITIONS

The following definitions apply in this document (this "Agreement"):

Business Name means Chatime any other name or logo associated with operation of the
Chatime Restaurant Business as the Franchisor shall notify the Franchisee of in accordance with
the terms of the Franchise Documents from time to time.

Business System means the: (a) distinctive image (including characteristics, features
presentation and image of a member of the network as portrayed in advertising, marketing and
promotions), visual appearance, reputation and presentation of the Franchisor and franchisees in
the market; (b) Franchisor name, the Intellectual Property, and the brand names, logos and
slogans associated with the Franchisor; (c) goodwill and the business reputation established in
the Intellectual Property; (d) business procedures and systems developed by the Franchisor for
the operation of the Franchised Business and concerning a consistent high quality approach to
customer service, uniform operating techniques and business management generally, including
the methods and quality systems included in the Manual; and (e) any other innovations, products
or services that the Franchisor may introduce to the Franchisor's franchisees from time to time.

Chatime Restaurant Business means a business operated, including by a franchisee of the

Franchisor, using the Business System, Corporate Image, Marks and other Intellectual Property
(or any of them).

Chatime Group means the Franchisor and each of its parents, subsidiaries, and affiliates and
each of their respective directors, officers, employees, agents and contractors.

Confidential Information means any confidential, commercially sensitive or valuable information

belonging to the Franchisor or its affiliates concerning the Franchisor or the Business System and
includes, but is not limited to: (a) the provisions of the Franchise Agreement and any subject
matter dealt with or contemplated therein; (b) all information concerning the Franchisor's
business, the Business System, as it is now and in the future; (c) the Intellectual Property; (d) the
methodology, affairs and procedures that the Franchisor specifies in the Business System that
the Franchisee must use in the Franchised Business; (e) all information concerning the

1
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Franchisor's price lists, customer lists and client information, marketing and promotional
procedures and activities, surveys, techniques, data, research and development, Franchisor's
methodology and procedures for operating a Chatime Restaurant Business, knowhow and trade
secrets, processes and formula, benchmarks for operation of a Franchised Business, customer
information, lists and data, strategies, marketing plans, business plans and information; (f) any
accounting procedures or financial information used in the Business System; (g) the contents of
the Manual and each of the other Franchise Documents; (h) the Software and computer software
programs if any (other than commercially available software packages) developed or
implemented by the Franchisor for use in the Franchised Business, whether it is written, conveyed
orally, stored or recorded by electronic, magnetic or other means and whether in original form or
recompiled; and (i) all other information of a confidential nature.

Corporate Image includes: (a) the Names, the Marks, all characters, mascots, logos, product
and service ranges, trade dress, signs, advertising and other promotional material; (b) any
common uniform to be used by the franchisees from time to time; (c) the type, quality, dimension,
design, layout, placement and colours of and all materials, signs, equipment, and build-out, used
for decorating or identifying the Premises or marketing the Franchised Business, including without
limitation the corporate colours and décor; and (d) the manner of conducting dealings with
customers and other members of the public including the manner, method and techniques used
when the Franchisor or the Franchisee conduct the Services in the operation of the Business
System and the Franchised Business and specified by the Franchisor from time to time.

Franchisees mean, collectively, the individuals or entities that have been granted a right to
operate a Chatime Restaurant Business franchise by the Chatime Group anywhere in the world.

Franchise Documents means: (a) the Franchise Agreement; (b) the Operations Manual; (c) the
Franchisee’s lease for the Premises; and (d) any other document produced by the Franchisor
from time to time that relates to the occupation of the Premises or the operation and procedure of
the Franchised Business, and Franchise Document means any one of the foregoing.

Franchised Business means the Chatime Restaurant Business operated by the Franchisee from
the Premises in accordance with the Franchise Documents.

Intellectual Property means the: (a) the Business Names; (b) the Marks; (c) the Confidential
Information; (d) the Business System; (e) the Franchise Documents; (f) the Database; (g) the
POS Software System; (h) any other forms, documents, patents, patent applications, drawings,
discoveries, inventions, improvements, trade secrets, technical data, formulae, computer
programs, data bases (but not including the Franchisee Membership Data), know-how, logos,
designs, design rights and copyright materials associated with or used in the Franchised
Business; (i) existing and future copyright that the Franchisor owns or will own or that is licensed
to the Franchisor, in all Manuals, materials or other original works relating to the Business System;
(j) the Franchisor's Internet domain name and any Internet home page that the Franchisor may
develop; (k) any social media sites operated by the Franchisor using the Franchisor's Marks
including, but not limited to, Facebook, Instagram, Twitter, YouTube, LinkedIn and Snapchat; (l)
the Franchisor's marketing emblems, logos, promotional materials, advertorials, publications and
any other materials imparted to the Franchisee by the Franchisor; and (m) the Corporate Image.

Intellectual Property Rights means: (a) patents, copyright, registered and unregistered design
rights, registered and unregistered trademarks, rights in know-how and confidential information
and all other intellectual and industrial property rights (without limitation); (b) all similar or
analogous rights existing under the laws of any country; and (c) all rights to apply for or register
such rights.

2
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Manual means the operations manuals and documents produced by the Franchisor and
accessible via the internet specifying in greater detail aspects of the Business System and the
Franchisor's standards as amended from time to time.

Marks means the Name, trademarks, service marks, and such other registered or unregistered
trade names, trademarks, logos, symbols, internet domain names, web site identifiers, colour
schemes, layout and design or items used to identify or promote the Franchised Business by the
Franchisor as designated from time to time.

Member means any person who registers as a member of the Franchised Business.

Name means the name "Chatime" and“日出茶太” and includes such other names or Marks that
the Franchisor may substitute, amend or vary from time to time.

Permitted Purpose means the operation of the Franchised Business by the Franchisee in
accordance with the terms of the Franchise Agreement.

Premises means the location identified for the operation of the Franchised Business in the
Franchise Agreement.

Products means the products offered by the Franchised Business or other Chatime Restaurant
Businesses.

Restrained Business means a business which is the same as or substantially similar to the
Franchised Business, or engaged, concerned or interested in or carrying on any retailing or
supplying of products or services the same as or substantially similar to the Products or Services
offered by the Franchised Business or other Chatime Restaurant Businesses.

Restraint Area means all or any of the following:

(a) Within a 25-mile radius of the boundary of the Territory;

(b) Within a 25-mile radius from the Premises;

(d) Within the Territory.

Restraint Period means during the term of the Covenantor’s business or employment
relationship with the Franchisee and the Franchised Business, and for a continuous uninterrupted
two-year period after the end of the Covenantor’s business or employment relationship with the
Franchisee and the Franchised Business. The Restraint Period shall be extended during the
period in which any of the Relevant Persons (as defined in the Franchise Agreement) are violating
the Restraint, and shall continue after any violations have ended so that Franchisor shall receive
the benefit of a continuous uninterrupted period of no violations equal to the length of time of the
Restraint Period.

Services means the services provided by the Franchised Business or other Chatime Restaurant
Businesses.

Software includes: (a) operating systems, word processing, accounting, spread sheeting,
database, point of sale software, or other business software; (b) materials on which the software

3
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may be supplied or recorded; (c) materials about the software or terms of use; and (d) upgrades
to each of the aforementioned software goods.

Territory means the geographic area specified in the Franchise Agreement.

1. CONFIDENTIAL INFORMATION

(a) I agree that, I must hold the Confidential Information in strict confidence and must not
disclose any of the Confidential Information to any person. I may only use of the
Confidential Information for the Permitted Purpose, or as required by law, and not for any
other purpose. I must take all necessary and reasonable steps to protect the confidentiality
of the Confidential Information. I must inform the Franchisee if I become aware of an
actual or suspected breach of this. I must not use the Confidential Information in a way
that may be detrimental to the Business System, Network or the other party; or copy or
duplicate the Confidential Information unless permitted by this Agreement, the Manual or
the other party.

(b) Notwithstanding any other provision of this Agreement, I may disclose the Confidential
Information:

(i) to Franchisee’s directors, employees and professional advisers provided that they
agree to keep the Confidential Information confidential;

(ii) if the disclosure is necessary solely for the Permitted Purpose; or

(iii) in order to comply with any applicable law or legally binding order of any court,
Government Authority, or administrative or judicial body.

2. NON-COMPETITION DURING AND AFTER THE RELATIONSHIP WITH FRANCHISEE

I agree that I shall not, and I will ensure that any person or entity which I control shall not:

(a) be concerned or interested in any Restrained Business (directly or indirectly,

or through any interposed corporate entity, trust, partnership, or entity as trustee,
principal, agent, shareholder, beneficiary, or as an independent contractor,
consultant, adviser or in any other capacity);
(b) advise, assist, consult with or for or in connection with any Restrained Business or
any person associated with or in any manner whatsoever connected to or engaged
by or in connection with any Restrained Business;
(c) hold or own (beneficially or non-beneficially) whether directly or indirectly and
whether absolutely or contingently or hold options over shares or any other
securities or units of any entity engaging in a Restrained Business; and
(d) procure, employ, seek to employ or engage, or appoint in any capacity (whether
as a consultant, director or otherwise), any person who is or has been in the 12
months prior to such action an employee or independent contractor of the
Franchisor or any Chatime Restaurant Business

during the Restraint Period in the Restraint Area.

4
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Nothing in this Agreement, including this Section 3, prevents the Covenantor (or any of its
affiliates) from:

(a) owning less than 5%, by value, of securities in a listed corporation; or

(b) engaging or being concerned or interested in the Franchised Business in
accordance with this Agreement.

4. RESTRICTIONS ARE REASONABLE AND SEVERABLE

(a) The covenants in this Agreement will have the effect as if they were several covenants
consisting of:

(i) each separate covenant set out in Section 3, combined with;

(ii) each Restrained Business, combined with;
(iii) each Restraint Period, combined with;
(iv) each Restraint Area.

(b) I acknowledge and agree with the Franchisor that if any of the rights of the Franchisee
or Franchisor resulting from the interpretation of this Agreement are in any way invalid or
unenforceable, then such invalidity or unenforceability shall not prejudice or in any way affect the
validity or enforceability of the remainder of this Agreement and the invalid or unenforceable part
shall be severed from this Agreement and, for the purposes of this Agreement, the next
geographically largest, temporally longest and most expansive with regard to subject matter
combination of the Restraint Area, Restraint Period and Restrained Business remains in force.

(c) I acknowledge and agree that each of the restrictions contained in this Agreement (i) is
reasonable as to period, territorial limitation and subject matter; (ii) the restrictions in this
Agreement are intended to help protect or preserve the Franchisee’s and the Franchisor’s
legitimate business interests, including: (A) the Franchisor’s relationship with other Franchisees;
(B) the investment of the Franchisee in developing the Franchised Business and training its
employees; (C) the investment of the Franchisor and its Affiliates in developing the Business
System and training its Franchisees; (C) the revenue earned from the business conducted by the
Franchisor and members of the Network; (D) the goodwill of the Franchised Business and the
Franchisor; (E) the goodwill of other Chatime Restaurant Businesses; (F) the ability for the
Franchisor to appoint any person to operate the Franchised Business; and (iii) confers a benefit
on the Franchisee and the Franchisor which is no more than that which is reasonably and
necessarily required by the Franchisor for the maintenance and protection of the Franchisee and
the Franchisor, the members of the Network, and the Business System. All of the restrictions in
this Agreement are intended to prevent: (i) the owners, members, shareholders, officer, directors,
managers and employees of the Franchised Business from taking unfair advantage of the benefits
that may be provided by a franchise for a Chatime Restaurant Business; (ii) the misappropriation,
misuse or unauthorised use of the Intellectual Property including the Business System or
Confidential Information; and (iii) damage to the Network.

5. DAMAGES NOT AN ADEQUATE REMEDY

I acknowledge and agree that without prejudice to any right or remedy available to the Franchisee

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or the Franchisor:

(a) damages are not an adequate remedy if a person breaches this Agreement;
(b) the Franchisee or the Franchisor may apply for and obtain, without the necessity
of posting a bond, injunctive relief if:

(i) a person breaches or threatens to breach any provision of this Agreement;

or
(ii) it believes a person is likely to or threatening to breach any provision of this
Agreement.

6. ENFORCEMENT

(a) Franchisor is a third-party beneficiary of this Agreement and may enforce it, solely
and/or jointly with the Franchisee. I am aware that my violation of this Agreement
will cause the Franchisor and the Franchisee irreparable harm; therefore, I
acknowledge and agree that the Franchisee and/or the Franchisor may apply for
the issuance of an injunction preventing me from violating this Agreement, and I
agree to pay to the Franchisee and the Franchisor all the costs it/they incur(s),
including, without limitation, legal fees and expenses, if this Agreement is enforced
against me.

(b) Due to the importance of this Agreement to the Franchisee and the Franchisor, any
claim I might have against the Franchisee or the Franchisor is a separate matter
and does not entitle me to violate, or justify any violation of this Agreement.

(c) This Agreement shall be construed under the laws of the State of Delaware. The
only way this Agreement can be changed is in writing signed by both the
Franchisee, Franchisor, and me.

COVENANTOR:

_________________________________________
Signature

Print name: _______________________________

_________________________________________
Address

Date:___________________________________

FRANCHISEE:

________________________________________

6
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By:_____________________________________
Signature

Print Name:_______________________________

Position:__________________________________

Date:____________________________________

7
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EXHIBIT C to the FRANCHISE DISCLOSURE DOCUMENT
MULTI-UNIT DEVELOPMENT AGREEMENT

Chatime Multi-Unit
Development Agreement

Parties

Chatime Franchise, LLC (Franchisor)

Developer specified in Schedule 1 (Developer) Guarantor specified in

Schedule 1 (Guarantor)
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Contents

1 Definitions and Interpretation .................................................................................................. 1

2 Grant of Rights and Development Obligations ........................................................................8

3 Developer’s Development and Operational Obligations .......................................................13

4 Other Obligations of Developer.............................................................................................14

5 Initial and Continuing Fees ................................................................................................... 18

6 Confidential Information ........................................................................................................ 20

7 Protection of Goodwill .......................................................................................................... 21

8 Indemnity and Limitation of Liability .......................................................................................23

9 Intellectual Property ..............................................................................................................24

10 Transfer and Other Dealings by Franchisor ..........................................................................26

11 Transfer and Other Dealings by Developer ..........................................................................27

12 Temporary Operation by Franchisor .................................................................................... 30

13 Termination of Agreement.....................................................................................................30

14 Dispute Resolution ................................................................................................................32

15 Rights and Obligations Upon Termination or Expiration .......................................................34

16 Guarantee and Indemnity ......................................................................................................35

17 Corporate Developer ............................................................................................................36

18 Trust Provisions ....................................................................................................................37

19 Acknowledgements, Representations, and Warranties .........................................................39

20 Notices ................................................................................................................................. 40

21 Force Majeure........................................................................................................................40

22 Power of Attorney..................................................................................................................41

23 Changes in Laws ...................................................................................................................41

24 Miscellaneous .......................................................................................................................42

Schedule 1 .........................................................................................................................................46
Schedule 2 – Marks and Websites.....................................................................................................49

Chatime Multi-Unit
Development Agreement I Page i
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Agreement is made and entered into by and between:

Parties Chatime Franchise, LLC being a Delaware limited liability company located at
6000 Sepulveda Blvd., Culver City, CA 90230
(Franchisor)

The party identified as Developer in Item 1 of Schedule 1

(Developer)

The party identified as Guarantor in Item 3 of Schedule 1

(Guarantor)

Introduction

A. Franchisor’s indirect parent company, La Kaffa International Co., Ltd., has developed a business
and proprietary know-how, information, systems, and procedures including distinctive business
formats, specifications, and the Marks for the establishment and operation of retail businesses
offering for sale gourmet coffees, teas, other beverages, and certain complementary products
(including food products), accessories, and services.

B. Franchisor has been licensed by La Kaffa International Co., Ltd. to use the System and has the
right to grant third parties the right to establish and operate Outlets.

C. Developer and Guarantor have requested, and Franchisor has agreed, to grant Developer a
Development Business on the terms and conditions set out in this Agreement.
D. In consideration of Franchisor complying with Guarantor’s request, Guarantor has agreed to give a
guarantee and indemnity to Franchisor for the performance of Developer’s obligations under this
Agreement.

It is Agreed

1 Definitions and Interpretation

1.1 Definitions

The following words have these meanings in this Agreement unless the contrary intention
appears:

(1) Affiliate means any Person that directly or indirectly Controls, that is directly or indirectly
Controlled by, or that is under Common Control or Controlling Interest with, a specified
Person.
(2) Agency means any governmental entity or agency.

(3) Agreement means this document, including any schedule or annexure to it.

(5) Approved Supplier means Franchisor or a supplier or suppliers approved in writing by

Franchisor for the supply of Products and equipment to Developer and/or Franchisees.

Chatime Multi-Unit
Development Agreement I Page 1
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(6) Business Day means a day that is not a Saturday or Sunday or any other day which is a
public holiday in the place where an act is to be performed or a payment is to be made.

(7) Business Hours means the hours of operation of each Outlet pursuant to any Legal
Requirements and/or the terms of any lease or other document conferring a right to occupy
the premises at which an Outlet is located.

(8) Chatime Menu means the food and beverage items specified in the Operations Manual or
otherwise in writing by Franchisor which must be offered for sale by Franchisees from
Outlets and includes, as relevant, any specifications in relation to those products.
(9) Chatime Network means the network of Chatime Outlets in the Development Area.

(10) Chatime Restaurant means a full service retail store that:

(a) Offers Products listed on the Chatime Menu for sale;

(b) Meets Franchisor’s standards and specifications;

(c) Operates under the Marks and the System; and

(d) is operated by Developer pursuant to a valid Franchise Agreement.

(11) Collateral Agreement means any agreement between Franchisor and Developer or any
agreement between Developer and an Affiliate of Franchisor in connection with this
Agreement and Developer’s Operation.

(12) Confidential Information means:

(a) Plans and specifications for the development of Outlets;

(c) Marketing and advertising programs;

(d) Knowledge of specifications for and suppliers of Raw Materials and certain other
Products, materials, supplies, equipment, fixtures, furnishings and services and
knowledge of operating results and financial performance of Outlets;

(e) The Operations Manual (as applicable from time to time), Operations Manual
Addendum, and all other materials;

(f) Global Policies and Procedures;

(g) Information concerning the business and financial affairs of Franchisor and their
Affiliates including, without limitation, the identity of prospective franchisees,
prospective developers, developer, and Franchisees;

(h) The System Standards;

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(j) Any information that would at law be considered secret or confidential information
of Franchisor or any Affiliate of Franchisor.

(13) Control, Controlled by, or under Common Control or Controlling Interest means direct
or indirect possession of the power to direct or cause the direction of the management or
policies of any other Person, whether through more than 50% of the ownership of voting
interest, by contract, or otherwise.
(14) Cost means any cost charge, expense, outgoing, payment or other expenditure of any
nature and where appropriate includes fees and disbursements payable to contractors,
consultants, lawyers, and other advisers (including Legal Costs).

(15) Developer Affiliate means an Affiliate of Developer that is partially (but at least more than
50%) or wholly-owned by Developer.
(16) Development Area means the geographic area or areas specified in Item 6 of Schedule 1.

(17) Development Business means the rights granted to Developer by virtue of this Agreement
to conduct Developer’s Operation including:

(a) Granting Franchises to Developer to establish and operate Outlets; and

(b) Training, supporting, motivating, managing, and administering the Chatime

Network in the Development Area.

(18) Development Fee means a non-recurring development fee in the amount specified in Item
10 of Schedule 1.
(19) Developer’s Improvements means any works, marks, designs, ideas, know- how, or trade
secrets developed by Developer which are derived from or incorporate the Intellectual
Property or which are otherwise developed by Developer during the conduct of Developer’s
Operation, from which Developer obtains any intellectual property rights.

(20) Developer’s Operation means the business conducted by Developer under this
Agreement developing, coordinating, supporting, and administering the Chatime Network
in the Development Area in accordance with the terms of this Agreement.
(21) Developer Parties means Developer and Guarantor.

(22) Development Period means each period of time defined as a Development Period in Item
7 of Schedule 1.
(23) Development Quota has the meaning given in Item 7 of Schedule 1.

(24) Dispose includes, in relation to a share or a unit, entering into a transaction in relation to
the share or the unit (or any interest in the share or the unit), which results in a person other
than the registered holder of the share or the unit:
(a) Acquiring any legal or equitable interest in the share or the unit, including an
equitable interest arising from a declaration of trust, an agreement for sale and
purchase or an option agreement or an agreement creating a charge or other
encumbrance in the share or the unit;

(b) Acquiring any right to receive directly or indirectly any dividends payable in respect
of the share or the unit;

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(d) Acquiring any rights of control over the exercise of any voting rights or rights to
appoint directors attaching to the share or the unit; or

(25) Dollars and $ means the legal currency of the United States of America unless the contrary
intention appears.
(26) Domain Name means the domain name controlled or under license by Franchisor for which
registration has been applied for, or which is specified for use by Franchisor and which
Franchisor authorizes Developer to use.
(27) Financial Year means the financial year of Developer set out in Item 17 of Schedule 1.

(28) Franchise means the right to develop and operate an Outlet at a specified location within
the Development Area and to use the Marks and the System in the operation of that Outlet
pursuant to a Franchise Agreement.

(29) Franchise Agreement means Franchisor’s then current standard form of franchise
agreement (including all schedules, ancillary documents and guarantees attached to the
franchise agreement).
(30) General Manager means a sufficiently experienced, skilled, and qualified person employed
by Developer who, after attending and successfully completing to Franchisor’s satisfaction,
the initial training, is responsible for the day-to-day supervision and management of
Developer’s Operation.

(31) Global Policies and Procedures means the written policies and procedures issued by
Franchisor from time to time in relation to the conduct of Developer’s Operation or
operational issues concerning Outlets.
(32) Gross Sales means the total actual gross charges for all products (including the Products),
merchandise, and services sold to customers of each Outlet for cash or credit, whether
such sales are made at or from the premises of an Outlet or any other location or other
channels of distribution if approved in writing in advance by Franchisor but excluding:

(a) Sales, use, service, or excise taxes collected from customers and paid to the
appropriate taxing authority; and

(b) All customer refunds, adjustments, and promotional discounts including any senior
citizens discount.

(33) Initial Store means the first Chatime Restaurant opened and operated by Developer under
this Agreement.
(34) Initial Store Opening Date means the date of opening of the Initial Store which is
anticipated to be the date specified in Item 18 of Schedule 1.

(35) Initial Term means the term specified in Item 4 of Schedule 1.

(36) Insurance Policies means the insurance policies specified in Item 16 of Schedule 1.

(37) Intellectual Property means:

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(a) The Marks, the Network Name, copyright in the Operations Manual, Operations
Manual Addendum and any advertising or promotional materials provided by
Franchisor to Developer, data collected via any point of sale system used by
Developer in the Development Area and includes all intellectual property rights in
the software, records, documents, specifications, plans, programs, menus, recipes,
or drawings;

(b) Any trade secrets, proprietary processes or know-how relating to the System,
Developer’s Operation;

(c) All Confidential Information necessary for or which may be used in connection with
the administration, operation, and marketing of Developer’s Operation; and

(d) The Domain Name.

(38) Interest Rate means interest at the rate of the lesser of 1.5% per month or the highest rate
allowed by law.
(39) Interested Party means any of the following persons designated by Franchisor:

(a) Any person with a direct or indirect legal or beneficial interest in Developer,
including an interest in any entity directly or indirectly controlling Developer
(Controlling Entity), or in Developer’s assets and any person who is an officer, as
defined in the applicable domestic legislation, of Developer or any Controlling
Entity; and

(b) A spouse, child, or person with an existing or former relationship of cohabitation,

lineal relatives by blood, or by marriage or collateral relatives by blood or by
marriage of any person specified in clause 1.1(20).

(40) Legal Costs means all fees, costs and disbursements actually paid or payable by
Franchisor or its Affiliates to its own legal representatives (whether or not assessed under
a retainer or costs agreement in place between Franchisor and its legal representatives)
and other expenses incurred by Franchisor or its Affiliates in connection with a demand,
action, arbitration, or other proceeding (including mediation, compromise, out of court
settlement, or appeal).

(41) Legal Requirements means all applicable laws, ordinances, regulations, rules,
administrative orders, decrees, and policies of any government, governmental agency, or
department including, without limitation, the governments of the Development Area and
Taiwan, unless otherwise stated in this Agreement.

(42) Marks means the trademarks, service marks, logos, and other commercial symbols or
indicia owned or controlled under license by Franchisor, which Franchisor authorizes
Developer to use under this Agreement, including but not limited to the Network Name.

(43) Month means a calendar month.

(44) Network Name means the name “Chatime” and “日出茶太” or such variation to “Chatime”
and “日出茶太” or such additional or replacement name or logos as Franchisor may from
time to time use as the name under which Outlets are operated.
(45) New Term means the term specified in Item 5 of Schedule 1.

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(46) Occupancy Right means any right to occupy the premises of an Outlet including as lessee,
sublessee, licensee, or the holder of some other interest in the premises conferring an
enforceable right to use or occupy them.

(47) Operations and Training Manager means the sufficiently experienced, skilled, and
qualified person employed by Developer on a full-time basis, who after attending and
successfully completing to Franchisor’s satisfaction the initial training, will oversee all
aspects of the operation of one or more Outlets and ensure each Outlet complies with the
operational standards of the System and that the staff of each Outlet are fully trained.

(48) Operations Manual means individually and collectively Franchisor’s manuals and written
materials (as amended from time to time) including, without limitation, papers, books,
binders, videos, CD-ROMs and other methods of transfer of information such as electronic
formats containing specifications, standards, and operating procedures prescribed by
Franchisor from time to time for Outlets.

(49) Operations Manual Addendum means an addendum to the Operations Manual including
specific operating procedures, standards, and specifications relevant for the Development
Area.

(50) Outlets means Chatime Restaurants located in the Development Area and such other
concepts as developed by Franchisor from time to time.
(51) Owners means all Persons holding Ownership Interests exceeding 10% of the total
Ownership Interests in Developer and all Persons who have other direct or indirect interests
in Developer or this Agreement. The Persons or entities who are Owners as at the date of
this Agreement are listed in Item 2 of Schedule 1.
(52) Ownership Interest means a direct or indirect, disclosed or undisclosed, legal or beneficial
ownership interest or voting right including, without limitation:
(a) In relation to a corporation. the ownership of shares, or other equity interests in
the company;

(b) In relation to a limited liability company, the ownership of membership interests or

other equity interests in the company;

(c) In relation to a partnership, the ownership of a general or limited partnership

interest;

(d) In relation to a trust, the ownership of the beneficial interest of such trust; or

(e) The right to cast some or all of the votes associated with such shares or interests.

(53) Person means an individual, corporation, general or limited partnership, limited liability
company, trust, association, or other legal entity.
(54) Products means all Raw Materials, products, food items, and merchandise which
Franchisor from time to time authorizes for sale by Developer and Franchisees at Outlets,
and includes products on the Chatime Menu and all products ancillary to the supply and
service of products on the Chatime Menu such as cups, utensils, and ingredients as
specified in the Operations Manual or any Operations Manual Addendum. This clause
specifically excludes those that Franchisor does not authorize for sale by Developer and
Franchisees at Outlets and those for sale outside of Outlets including, without limitation,
instant drink mix packets.

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(55) Quarter means 3 successive Months commencing on each of January 1, April 1, July 1,
and October 1 of the respective year.

(56) Raw Materials means the raw materials used to produce Products on the Chatime Menu
including coffee beans, tea, non-dairy creamer, Chatime exclusive concentrated juices, and
other raw materials for the Products that are produced and packaged under the Marks.
(57) Restrained Business means a business which is the same as or substantially similar to the
Chatime Restaurants, or engaged, concerned or interested in or carrying on any retailing or
supplying of products or services the same as or substantially similar to the Products offered by
Chatime Restaurants.

(58) Restraint Area means the restraint area specified in Item 8 of Schedule 1.

(59) Restraint Period means the restraint period specified in Item 9 of Schedule 1.

(60) Special Conditions means the special conditions (if any) specified in Item 22 of
Schedule 1.

(61) Special Distribution Channel means a special or non-traditional location or distribution

channel, such as airports, train stations, gas/convenience stores, limited-access highway
food facilities, hospitals, convention centers, schools, universities and colleges, hotels,
casinos and resorts, stadiums, arenas, ballparks, movie theaters, entertainment and
sports complexes, department stores and “big box” superstores, supermarkets, festivals,
fairs and other mass gathering locations or events, offices, factories, military facilities, and
any government buildings or other institutional facilities, designated by Franchisor, which
require Developer to obtain the prior written consent from Franchisor before selling the
Products.

(62) System means the distinctive business formats and methods for the development and
operation of Outlets including color schemes, signs, equipment, layouts, systems, methods,
procedures, designs, marketing and advertising standards, and formats which Franchisor
may improve, further develop, or otherwise modify from time to time.
(63) System Standards means the specifications, standards, operating procedures, and rules
of the System that Franchisor prescribes for the operation of Outlets included in the
Operations Manual, any Operations Manual Addendum, or the Global Policies and
Procedures, all of which Franchisor may improve, further develop, or otherwise modify from
time to time.

(64) Terms of Trade means Franchisor’s standard trading terms and conditions specified in
Item 21 of Schedule 1 as amended by Franchisor from time to time and conveyed either in
writing by Franchisor to Developer or specified in the Operations Manual.

(65) Transfer Fee means the fee set out in Item 11 of Schedule 1.

(66) Website means an interactive electronic document contained in a network of computers

linked by communications software (commonly referred to as the Internet) and including
any account, page, or other presence on a social or business networking media site such
as Meta, Twitter, LinkedIn, and on-line blogs and forums, or as listed in Schedule 2.

1.2 Interpretation

(1) Reference to:

(a) One gender includes the others;

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(b) The singular includes the plural and the plural includes the singular;

(c) A person includes a body corporate;

(d) A party includes the party’s executors, administrators, successors and assigns;

(e) Law includes any common law and the requirements of any present or future
statute, rule, regulation, proclamation, ordinance, or by-law whether state, federal,
or otherwise;

(f) A thing includes the whole and each part of it separately;

(g) A statute, regulation, or provision of a statute or regulation includes:

(i) Any amendment or replacement of it; and

(ii) Another regulation or other statutory instrument made under it, or made
under it as amended or replaced;

(h) Dollars means United States dollars unless otherwise stated.

(2) “Including” and similar expressions are not words of limitation.

(3) When a word or expression is given a particular meaning, other parts of speech and
grammatical forms of that word or expression have a corresponding meaning.

(4) Headings and the table of contents are for convenience only and do not form part of this
Agreement or affect its interpretation.

(5) A provision of this Agreement will not be construed to the disadvantage of a party merely
because that party was responsible for the preparation of the Agreement or the inclusion
of the provision in the Agreement.

(6) If an act must be done on a specified day which is not a Business Day, it must be done
instead on the next Business Day.

(7) A reference to the “end of the Development Business” means the expiry by effluxion of time
or sooner termination of the Development Business.

1.3 Parties

(1) If a party consists of more than one person, this Agreement binds each of them separately
and any two or more of them jointly.

(2) An obligation, representation, or warranty in favor of more than one person is for the benefit
of them separately and jointly.

(3) A party which is a trustee is bound both personally and in its capacity as a trustee.

1.4 Relationship of Parties

(1) Nothing in this Agreement constitutes a partnership, joint venture, agency, or other form of
fiduciary relationship between Developer and Franchisor.

(2) Neither party has the power to bind any other party except as authorized by this Agreement.

2 Grant of Rights and Development Obligations

2.1 Grant of Rights for Initial Term

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(1) Franchisor grants to Developer and Developer accepts:

(a) The right to use the Intellectual Property in the conduct of Developer’s operation
of Chatime Restaurants in the Development Area;

(b) The right to operate Chatime Restaurants in the Development Area on its own,
for the Initial Term subject to the terms and conditions of this Agreement.

(2) The rights granted to Developer pursuant to this Agreement are limited to the Development
Area and apply only for the Initial Term. Developer acknowledges and agrees that it is not
being granted any rights to franchise and that it will not operate or grant Franchises for
Outlets in locations outside the Development Area and will ensure that Developer Affiliates
do not operate or grant Franchises for Outlets in locations outside the Development Area.

2.2 Exclusivity

(1) Except as provided in clause 2.3, Franchisor will not operate or grant Franchises or other
development rights for Outlets to any other party within the Development Area during the
Initial Term.

(2) Upon the termination of this Agreement or expiration of the Initial Term (unless the parties
enter into a new agreement which prohibits Franchisor from operating or granting
Franchises), Franchisor and its Affiliates will be free to operate and grant Franchises for
Outlets within the Development Area.

2.3 Rights Retained by Franchisor

(a) operate or grant others the right to operate Outlets under or in association with the
Marks or any other trademarks or service marks at such locations outside the
Development Area, and on such terms and conditions as Franchisor, in its sole
discretion, deems appropriate;

(b) provide, franchise, license, sell, distribute and market any services or products
(under any brand, including but not limited to our Marks) through any Special
Distribution Channels, in or outside your Development Area, including, without
limitation, through airports, train stations, hotels, convention centers, sport
complexes, hospitals, schools or universities, or festivals.

(c) provide, franchise, license, sell, distribute and market any services or products
(under any brand, including but not limited to our Marks) through any Alternative
Methods of Distribution in or outside your Development Area, including, without
limitation, through retail establishments or via the internet;

(d) to establish and operate, and grant to others the right to establish and operate,
Chatime Restaurants at locations outside the Development Area, including
locations near, on or adjacent to your Development Area’s boundaries;

(e) offer and sell to persons outside your Development Area, using the Marks, services
and products that are the same as the services and products offered by Chatime
Restaurants, including without limitation the Products and the Raw Materials;

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(f) in or outside your Development Area, to offer and sell different services and
products not offered within a Chatime Restaurant, using the Marks, without offering
you the right to participate;

(g) acquire and continue to operate, directly or indirectly, any business operating under
different trademarks in or outside the Development Area;

(i) in or outside the Development Area, to establish and promote other franchise
systems involving different services or products using different trademarks, and to
establish company-owned or franchised outlets for those systems, without offering
you the right to participate;

(j) offer and sell franchising rights to Multi-Unit Developers who are located outside
the Development Area;

(k) be acquired, directly or indirectly, in whole or in part, by any person(s) who provide
products or services similar or dissimilar to those provided by Chatime Restaurants;

(m) develop, manufacture, distribute, and/or sell Raw Materials and other Products
through any alternate channel of distribution (including, without limitation, through
grocery stores or via the Internet) under or in association with the Marks or any
other trademark; and

(n) The right to operate or grant others the right to operate Outlets under or in
association with the Marks or any other trademarks or service marks at such
locations outside the Development Area, and on such terms and conditions as
Franchisor, in its sole discretion, deems appropriate.

2.4 Development Obligations

(1) Developer must comply with the Development Quota for each Development Period. The
determination as to whether Developer has met its development obligations will be made
by Franchisor and based on the number of Outlets opened and operating at the end of a
Development Period.

(2) For the purpose of determining whether the development obligations in clause 2.4(1) have
been satisfied, an Outlet that has been opened and in operation and is subsequently
rendered inoperable by fire or other casualty (and which is due to no fault of Developer or
the applicable Franchisee) or required to be closed due to a Force Majeure Event will be
counted towards the satisfaction of the Development Quota. Any other Outlet must be
opened and operating in compliance with the applicable Franchise Agreement to be
counted towards satisfaction of the Development Quota.

(3) Developer agrees that during the Initial Term, it will at all times faithfully, honestly, and
diligently perform its obligations under this Agreement and continuously use its best efforts

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to promote and enhance the development of the Chatime Network and operation of Outlets
within the Development Area.

2.5 Failure to Meet Development Quota

(1) If Developer fails to meet the Development Quota for any Development Period or fails to
comply with any financial obligation relating to the Development Rights, Franchisor may at
its absolute discretion:

(a) Terminate Developer’s Development Rights;

(b) Vary the Development Area by providing written notice to Developer; and/or

(c) Terminate the exclusivity attached to the Development Rights (following which
Franchisor may itself develop and operate Franchises in the Development Area, or
may grant a right to a third party to develop and operate Franchises in the
Development Area).

(2) Subject to clause 2.5(3), termination of Developer’s Development Rights pursuant to

clause 2.5(1) is without prejudice to Developer’s right to operate Outlets already developed
under this Agreement and in operation in the Development Area during the Initial Term.

(3) If Developer’s Development Rights are terminated by Franchisor pursuant to clause 2.5(1),
all other rights otherwise granted pursuant to this Agreement automatically become non-
exclusive.

2.6 Subcontracting

This Agreement is predicated on the ongoing, direct and exclusive involvement of Developer in
Developer’s Operation. No person other than an employee of Developer or a professional or other
advisor appointed on normal commercial terms may be involved in Developer’s Operation without
Franchisor’s prior written consent. Developer will not sub-franchise, sub-license, subcontract,
share, divide, or partition rights under this Agreement or any of the Franchise Agreements without
Franchisor’s prior written consent. Franchisor may in its absolute discretion withhold such consent.
Any unpermitted grant shall be null and void.

2.7 Option for New Term

(1) Franchisor grants to Developer the option to:

(a) Operate as Developer in the Development Area; and

(b) Enter into a new development business agreement with Franchisor (based on
Franchisor’s then-current multi-unit development business agreement),

for the New Term subject to the conditions set out in these clauses 2.7(1) to 2.7(4) (Option).

(2) Developer must notify Franchisor in writing of its intention to exercise the Option not more
than 12 Months and not less than 8 Months prior to the end of the Initial Term.

(3) The Option is subject to all of the following conditions being satisfied:

(a) At the time of notifying Franchisor of its intention to exercise the Option, Developer
delivers to Franchisor in writing a proposed development schedule (Revised
Development Schedule) for the New Term. During the 3-Month period following
Franchisor’s receipt of the Revised Development Schedule, Franchisor will either
notify Developer in writing that the Revised Development Schedule is acceptable

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or will attempt to negotiate a Revised Development Schedule that is mutually
agreeable to Franchisor and Developer. The parties will negotiate any Revised
Development Schedule in good faith and act reasonably in all negotiations.

(b) If the Revised Development Schedule proposed by Developer under clause

2.7(3)(a) is accepted by Franchisor, or if a Revised Development Schedule is
mutually agreed upon within the 3-Month period specified in clause 2.7(3)(a),
Franchisor will deliver to Developer its then-standard multi-unit development
business agreement (which may contain different terms and conditions to those set
out in this Agreement and other significant provisions, but deleting any references
to enter into a new development business agreement for a new term unless agreed
to the contrary by Franchisor) which will reflect the agreed Revised Development
Schedule.

(d) At the date of giving Franchisor notice of its intention to exercise the Option and as
at the end of the Initial Term, there is no outstanding breach of this Agreement or
any Collateral Agreement which has not been remedied.

(e) Developer pays the Renewal Development Fee, as provided under the terms of the
Franchisor’s then-current form of Multi-Unit Development Agreement, in
accordance with clause 5.3.

(f) Developer undertakes to the satisfaction of Franchisor any additional training

required by Franchisor. Developer must bear the full cost of attendance at such
training, including all travel, accommodation and meal expenses and payment of
any training fee charged by Franchisor.

(g) Developer and all guarantors required by Franchisor executing and returning to
Franchisor the Current MFA together with all other documents reasonably required
by Franchisor within 28 days of delivery to Developer.

(h) If required by Franchisor, Developer and all Affiliates, Owners, and Guarantors
execute a general release on terms satisfactory to Franchisor in its discretion of
any and all claims against Franchisor, its Affiliates, and their respective
shareholders, directors, officers, employees, agents, successors, and assigns.

(i) Each Owner executes and delivers to Franchisor a guaranty and assumption of
obligations.

(j) Developer ensures that all Outlets which have been in operations for 3 5 or more
years are renovated and refurbished (including replacing or upgrading any plant,
equipment, fixtures, fittings, and signs as Franchisor may reasonably require)
in order to bring each such Outlets up to Franchisor’s then-current standards and
specifications for new Outlets and to comply with any Legal Requirements.

(k) Franchisor confirming in writing to Developer that each of the conditions in these
clauses 2.7(3)(a) to 2.7(3)(j) have been satisfied.

(4) If the conditions specified in clauses 2.7(3)(a) to 2.7(3)(j) are not satisfied by the parties or
waived by Franchisor prior to the expiration date of the Initial Term, then this Agreement
will expire on the expiration date of the Initial Term and Franchisor will be free to operate
and grant franchises and development rights for Outlets in the Development Area.

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2.8 Collateral Agreements

Developer must comply with all terms and conditions of any Collateral Agreement and
acknowledges that a breach of any Collateral Agreement constitutes a breach of this Agreement.

3 Developer’s Development and Operational Obligations

3.1 Separate Franchise Agreement for each Outlet

For each Chatime Restaurant to be developed by Developer in the Development Area during the term of
this Agreement, Developer shall enter into Franchisor’s then-current form of Franchise Agreement,
which may contain materially different terms that the current form of Franchise Agreement.

3.2 Site Selection

(1) Franchisor may from time to time modify site selection criteria and processes. Developer
must use the site selection criteria and processes as approved by Franchisor
(Development Area Site Selection Criteria) for the selection of sites in the Development
Area.

(2) Developer must select sites in the Development Area that it reasonably believes conform
with the Development Area Site Selection Criteria.

3.3 Site Approval

(1) Developer must not establish an Outlet without first obtaining the written approval of
Franchisor. To obtain approval for a given site, Developer must comply with the process
set out in the Operations Manual.

(2) Subject to a reasonable belief by Franchisor that Developer will meet all requirements
under clause 5.5, Franchisor must provide its approval or non-approval to the proposed
Site within 30 days after receiving all the information required by Franchisor. When
Franchisor does not approve a proposed Site, it must provide to Developer a written notice:

(a) Specifying that approval is withheld; and

(3) Franchisor may approve a proposed Site for a new Outlet being opened subject to
reasonable conditions including, without limitation, renovating and remodeling the interior
and exterior of such a new Outlet according to Franchisor’s latest design guidelines, as
determined in its sole discretion.

(4) Promptly after receipt by Developer of written approval from Franchisor to establish a new
Outlet at the proposed Site, Developer must itself procure an Occupancy Right in relation
to the approved Site.

(5) Any relocation of an Outlet beyond a 2-km radius of the existing site and beyond 90 days
of closing the Outlet at the original location is deemed opening a New Outlet and subject
to all applicable provisions under this Agreement, and Franchisor shall be entitled to the
New Outlet Fee.

3.4 Lease of Site of Each Outlet

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(1) Developer must hold the lease or other Occupancy Right approved by Franchisor for the
premises at all Outlets or have step-in rights approved by Franchisor;

(2) Franchisee must obtain a Lease Addendum, signed by Franchisee, Franchisor, and the
Landlord, in the form required under the unit Franchise Agreement, which gives the
Franchisor the option but not the obligation to assume the Lease if the Franchisee defaults
on the Lase, and which requires the Landlord to give written notice to the Franchisor of any
defaults by the Franchisee..

(3) Unless prohibited by law or commercially impractical (which must be demonstrated to

Franchisor) Developer must ensure that all leases, subleases, licenses, or other documents
granting an occupancy right to Developer, include a provision which permits Developer’s
rights under such leases, subleases, licenses, or other documents to be assigned or
otherwise transferred to Franchisor or its nominee, at Franchisor’s option, on termination
or expiration of this Agreement.

3.5 Acknowledgment

Developer acknowledges that Franchisor has the right, but no obligation, to approve architects and
other design and construction professionals to help ensure consistency, uniformity, and quality with
the System and the Chatime image.

3.6 Franchisor’s Inspection Rights

Franchisor, its Affiliates, consultants and agents have the right to inspect each Outlet and the
construction work from time to time during the course of construction to verify the progress of
construction and Developer’s compliance with the terms of this Agreement.

3.7 Point of Sale System

(1) Developer must, and must ensure that all Outlets, use a point of sale system nominated or
approved by Franchisor. The supplier of the point of sale system must be approved by
Franchisor.

(2) Developer must ensure that connectivity at each Outlet is maintained and available at all
times to allow all data generated by the point of sale system to be captured by Franchisor’s
central polling server.

3.8 Compliance with the System

Developer agrees to diligently and continuously monitor compliance with the System and System
Standards, to strictly enforce compliance with the System and System Standards by all Chatime
Restaurants operated by Developer in the Development Area.

3.9 Customer Complaint System

Developer must establish a customer complaint system to redress all customer complaints. Such
system must be approved by Franchisor.

4 Other Obligations of Developer

4.1 Records and Reports

(1) Developer must maintain and preserve at its principal office, full, complete and accurate
records and reports pertaining to the development and operation of Outlets and the

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performance by Developer of its obligations under this Agreement. Such records must
include the information prescribed in the Operations Manual or the Global Policies and
Procedures.

(2) In addition to the reports referred to in clause 4.5(1), Developer must deliver to Franchisor
in the form periodically required by Franchisor, which may include in an electronic format,
the following:

(a) A notice of Outlet opening on or before the opening date of each Outlet, the lease
agreement, if any, for the site where an Outlet is located, and the Franchise
Agreement for such Outlet, including the serial number of such Outlet;

(b) By the end of each Wednesday for each Outlet, an audited report of Gross Sales
for the immediately preceding week;

(c) By the tenth day of each Month for each Outlet, an audited report of the daily Gross
Sales and an audited profit and loss account in the prior Month together with a
report of the number, location and owner of Outlets opened, closed and under
development during the immediately preceding Month;

(d) Within 90 days after the end of the Financial Year, financial statements of
Developer including an audited Financial Year-end balance sheet for Developer
and an audited profit and loss account for such Financial Year reflecting all year-
end adjustments, and an audited statement of changes in financial condition on a
basis consistent with generally accepted accounting principles of the Development
Area (or, at Franchisor’s option in accordance with any recognized international
accounting principles which may be adopted by appropriate standards-setting
bodies during the Initial Term);

(e) At least 60 days prior to the end of each Financial Year:

(i) A development plan to be implemented by Developer during Franchisor’s

next Financial Year, including capital and operating budgets and plans for
development of Outlets; and

(ii) A marketing plan and budget describing the proposed marketing activities
and expenditures for the Local Marketing Expenditure for the succeeding
Financial Year;

(g) Such other data, reports, information, financial statements and supporting records,
in relation to Developer’s Operation and Franchisees (including Gross Sales for
each Month), as determined and in a format required by Franchisor from
time to time, which may include the provision of reports and data in an electronic
format.

(3) Each such report and financial statement furnished by Developer must be verified as
correct and signed by Developer in the manner prescribed by Franchisor, such as audited
by a certified public accountant.

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(4) Developer must immediately report to Franchisor any events or developments which may
have a significant or materially adverse impact on the performance of Developer under this
Agreement or the goodwill associated with the Marks or the Outlets.

(5) Developer must fully disclose to Franchisor all information concerning Developer’s
Operation as Franchisor may reasonably require.

4.2 Inspections and Audits

(1) Franchisor and its agents may at any time during normal Business Hours inspect, audit and
make copies or extracts of the records and reports described in clauses 4.5(1) and 4.5(2)
and any other business records, bookkeeping and accounting records, electronic records
and files, value added, sales, use and service and income tax records and returns, and
other records of Developer’s Operation and of the Outlets and the books and records of
Developer.

(2) Franchisor may, at any time, during normal Business Hours and one hour before and
one hour after normal Business Hours, inspect the premises of any Outlet for the purpose
of:

(a) Monitoring compliance by Developer of its operational obligations under the terms
of this Agreement; and

(b) Ensuring compliance by Developer of its financial obligations under this Agreement
and for the purpose of verifying any financial information provided by Developer to
Franchisor.

(3) Franchisor may conduct an audit of Developer’s books of account (and, if applicable, the
books of account maintained by Franchisees). The audit may be performed by independent
accountants appointed by Franchisor.

(4) If any such audit discloses an understatement of the initial and/or recurring fees received
by Developer under the Franchise Agreements, Developer must pay to Franchisor within
15 days after receipt of the inspection or audit report the fees due on the amount of such
understatement plus interest at the rate and on the terms provided for in this Agreement
from the date originally due until the date of payment.

(5) If in Franchisor’s opinion an inspection or audit is required because of the failure of

Developer to furnish reports, supporting records, other information or financial statements
as required, or to furnish such reports, records, information or financial statements on a
timely basis, or if an understatement of fees received by Developer for the period of any
audit is determined by any such audit or inspection to be greater than 2%, Developer must
reimburse Franchisor for the cost of such inspection or audit, including, without limitation,
legal fees and accountants fees, and the travel and accommodation expenses applicable
per day for employees of Franchisor.

(6) The remedies referred to in this clause 4.2(6) will be in addition to all other remedies and
rights of Franchisor under this Agreement or under any applicable law.

4.3 Governmental Approvals

(1) Developer agrees to execute any and all instruments and documents, render such
assistance, and otherwise cooperate with Franchisor, in order to obtain all governmental
approvals Franchisor is required to obtain or which, in the opinion of Franchisor, are

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necessary at any time during the Initial Term, in the opinion of Franchisor, to comply with
any Legal Requirements.

4.4 Compliance with Legal Requirements

(1) Developer must secure and maintain in force in its name all required licenses, permits, and
certificates relating to Developer’s obligations under this Agreement. For the avoidance of
doubt, Developer must ensure that it is qualified to import the Products, clear the customs
and do anything relating thereto at its Cost.

(2) All advertising by Developer must be completely factual and conform to high standards of
ethical advertising. Developer must in all dealings with Franchisor, public officials and other
third parties adhere to high standards of honesty, integrity, fair dealing and ethical conduct,
and refrain from any practice which may be injurious to the reputation of Franchisor or
Developer and the goodwill associated with the Marks and Outlets.

(3) Developer must notify Franchisor immediately when it becomes aware of the
commencement of any action, suit, or proceeding, and of the issuance of any order, writ,
injunction, award, or decree of any court, agency, or other governmental instrumentality,
which may adversely affect the operation or financial condition of Developer, or an Outlet.

4.5 Products and Supply Arrangements

(1) Developer must establish and maintain supply arrangements on competitive terms and
conditions for Products, the shop-fitting and signage of Outlets and equipment to be sold
by or used in the operation of Outlets. Such suppliers will be subject to Franchisor’s prior
written approval and, upon approval, will be deemed to be Approved Suppliers. Franchisor
may, at any time and in its discretion, revoke its approval of any Approved Supplier.
Franchisor may itself be an Approved Supplier.

(2) Developer acknowledges that Franchisor may from time to time vary the range of Products.

(3) Approval of a supplier by Franchisor may be conditional on the supplier meeting

(4) Unless otherwise provided in writing by Franchisor, Developer must purchase all Raw
Materials sold in the Outlets from Franchisor on the then-current Terms of Trade.
Otherwise, Developer must purchase all Raw Materials from suppliers approved by
Franchisor in writing.

(5) Developer must ensure that all Raw Materials and other Products and equipment used in
the operation of Outlets comply with the System Standards.

(6) Franchisor or its Affiliates may receive payments from Approved Suppliers on account of
such suppliers’ dealings with Developer or Franchisees and may use all amounts so
received without restriction and for any purpose Franchisor or its Affiliates deem
appropriate (unless Franchisor or its Affiliates agree otherwise with the supplier).

4.6 Payment and Trading Terms

(1) Developer must pay all Approved Suppliers for all Raw Materials and other Products by the
due date for payment and in the manner specified by the Approved Suppliers and comply
with the terms of any supplier agreements or terms of trade of the Approved Suppliers.

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(2) In the purchase of Raw Materials and other Products and any other miscellaneous goods
from Franchisor, Developer must pay:

(a) The total amount owing to Franchisor for Raw Materials, other Products and any
other miscellaneous goods provided to Developer by Franchisor from time to time,
in accordance with Franchisor’s credit policy and Terms of Trade;

(b) All amounts in full, net of any bank charges by direct deposit into Franchisor’s bank
account, as specified in Item 18 of Schedule 1, or in such other manner as
Franchisor notifies Developer in writing, including direct debit from Developer’s
bank or credit account. Developer must execute any forms or documents required
by Franchisor in order to effect payments by way of direct debit or any other
electronic method.

4.7 Chatime Menu

(1) Developer acknowledges that the Chatime Menu forms a key part of the Chatime brand
and image. Accordingly, Developer must ensure that all outlets strictly comply with the
requirements of Franchisor relating to:

(a) The Chatime Menu; and

(b) The areas and manner of preparation of food items for sale from Outlets,

as set out in the Operations Manual or as otherwise specified from time to time by
Franchisor.

5 Initial and Continuing Fees

5.1 Development Fee

Developer must pay the Development Fee to Franchisor in accordance with the payment schedule
set out in Item 10 of Schedule 1. You must pay Development Fee in one lump sum when you sign
this Multi-Unit Development Agreement. The Development Fee replaces, and serves as a full credit
against, the Initial Franchise Fee for each Outlet you agree to open (including but not limited to your
first Outlet). The Development fee is fully earned by us upon our receipt, and it is not refundable
any circumstances, regardless of how many Outlets you actually open.

5.2 Renewal Development Fee

Where Developer exercises its option to enter into a new development business agreement for the
New Term in accordance with clause 2.7, Developer must pay to Franchisor the Renewal
Development Fee in accordance with the then-current form of Multi-Unit Development Agreement.

5.3 Interest on Late Payments

(1) If Developer fails to pay any amount to Franchisor, Developer must pay interest on that
amount at the Interest Rate, from the time the amount should have been paid until it is paid.
Interest accrues daily, may be capitalized by Franchisor and is payable on demand.

(2) Developer acknowledges that this clause 5.3 does not constitute any agreement by
Franchisor to accept such payments after they are due or a commitment by Franchisor to
extend credit to, or otherwise finance Developer or the Initial Store.

5.4 Withholding

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(1) All withholding taxes shall be borne by Developer. That is to say, all payments by
Developer must be made without deduction or withholding (including (without limitation) by
way of set-off, counterclaim, duty, tax (including goods and services tax, value added tax
and other government imposts) or charge) unless Developer is prohibited by law from doing
so, in which case Developer must:

(c) Give Franchisor the official receipt from the authority for the amount paid to it within
7 days after Developer receives it; and

(d) Assist Franchisor with any reasonable requests for information or supporting
documents regarding the calculation and/or payment of the amount paid.

5.5 Currency of Payment

(1) All payments by Developer to Franchisor under this Agreement will be made in Dollars
unless otherwise specified by Franchisor.

(2) All payments in this Agreement are to be calculated in the currency of the Development
Area and converted into Dollars for payment to Franchisor and must be converted at a rate
equivalent to the measurement notified by Franchisor on the date the payment is due.
However, if a payment is remitted after the date payment is due, the currency exchange
rate used will be the rate as of:

(a) The date the payment was due; or

(b) The date the payment is remitted,

whichever rate is the greater.

(3) All payments from Developer to Franchisor under this Agreement must be made in full, net
of any bank charges, by direct deposit into Franchisor’s bank account as specified in Item
18 of Schedule 1, or in such other manner as Franchisor notifies Developer in writing,
including direct debit from Developer’s bank or credit account. Developer must execute
any forms or documents required by Franchisor in order to give effect to payments by way
of direct debit or any other electronic method.

5.6 Exchange Controls

(1) Developer must use its best efforts to obtain any consents or authorizations which may be
necessary in order to permit timely payments in Dollars of all amounts payable pursuant to
this Agreement.

(2) If at any time, any legal restriction is imposed upon the purchase of Dollars or the transfer
to or credit of a non-resident party with payments in Dollars, Developer must notify
Franchisor immediately. While such restrictions are in effect, Franchisor may require
payment in any currency designated by Franchisor that is available to Developer or, at
Franchisor’s option, may require Developer to deposit all amounts due but unpaid as a

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result of such a restriction in any type of account, in any bank or institution in the
Development Area designated by Franchisor. Franchisor will be entitled to all interest
earned on such deposits. Franchisor may also elect to receive payment in the form of
products or services available to Developer, the value of which will be based on the actual
cost of such products or services to Developer. If payment is made in products or services,
Developer agrees to deliver such products or services to Franchisor or its designated agent
or shipper within the Development Area.

5.7 Stamp Duties

Developer must pay all stamp duties and comparable duties and taxes (including any penalties for
late payment) assessed to be payable on or in respect of this Agreement any Collateral Agreement.

5.8 Set-off

Franchisor may in its sole discretion set-off against any payment due to Developer by Franchisor
any unpaid debts (including contingent debts) of Developer to Franchisor.

(1) If Developer requests any additional marketing assistance from Franchisor that, in the
opinion of Franchisor, is not within the scope of assistance provided for by the International
Marketing Fee, then Developer must pay to Franchisor upon invoice by Franchisor any
additional fees and charges levied by Franchisor for such additional marketing assistance.

(2) Developer must not use any marketing or promotional materials unless that marketing or
promotional material has been first approved in writing by Franchisor.

5.9 Websites

(1) Developer must not and must ensure that no other Person establishes a Website referring
to the Marks, Outlets or the System without Franchisor’s prior written consent.

(2) Developer must not register the Domain Name or any other domain name or internet
address incorporating the Network Name or any part of that name or any similar names or
any of the Marks or any part of the Marks or any words or names similar to the Marks.
Developer acknowledges that Franchisor has a prior and superior right to registration of
any such domain names. If a domain name or Internet address is to be used in Developer’s
Operation, it must be registered in the name of Franchisor or any other nominee of
Franchisor. However, all fees must be paid by Developer.

(3) Franchisor may, but is not obliged to, designate one or more web pages to describe
Developer and/or the Outlets, such web pages to be located within Franchisor’s Website.

(4) If Developer becomes aware of any Person using or referring to the Marks on their Website,
then it must immediately notify Franchisor.

6 Confidential Information

6.1 Obligation to Maintain Confidentiality

(1) Developer and Guarantor acknowledge and agree that neither Developer nor any
Guarantor will acquire any interest in the Confidential Information, other than the right to
utilize the Confidential Information in performing their obligations under this Agreement,
and that the use or duplication of any Confidential Information would constitute an unfair
method of competition.

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(2) Developer and Guarantor hereby agree that during the term of this Agreement and
following the expiration or termination of this Agreement that they:

(a) Will not use the Confidential Information in any other business operation or
capacity;

(b) Will maintain the absolute confidentiality of the Confidential Information;

(d) Will adopt and implement all reasonable procedures that Franchisor prescribes
from time to time to prevent unauthorized use or disclosure of the Confidential
Information, including, without limitation, restrictions on the disclosure of the
Confidential Information to Franchisees, Outlet personnel and others;

(3) Notwithstanding anything to the contrary contained in this Agreement, the restrictions set
out in clause 6.1(2) will not apply to information that:

(a) Is or becomes publicly available, other than by breach of this Agreement;

(b) Developer or Guarantor (as applicable) is legally compelled to disclose, provided

Developer/Guarantor must have used its best efforts and afforded Franchisor the
opportunity to obtain an appropriate protective order or other assurance
satisfactory to Franchisor of confidential treatment for the information required to
be disclosed; or

(c) Is otherwise permitted under the terms of this Agreement.

(4) If required by Franchisor, Developer must ensure that Developer’s Owner managers,
directors, shareholders, agents, employees and any Interested Party enter into a
confidentiality agreement in a form that is acceptable to Franchisor.

7 Protection of Goodwill
7.1 Acknowledgements and Restriction

Developer Parties acknowledge that:

(1) The System used in connection with Developer’s conduct of Developer’s Operation, the
Marks, the Raw Materials and other Products is unique and has been developed by
Franchisor at great effort and expense;

(2) Franchisor has considerable and recognized goodwill in the conduct of its business of
developing and promoting the System;

(3) Franchisor should be entitled to protect that goodwill for its own benefit by restricting
Developer’s and Guarantor’s ability to damage that goodwill by competing with Franchisor;
and

(4) Each of the restraints imposed upon Developer and Guarantor under clause 7.2 is fair and
reasonable and is no greater than is reasonably necessary to protect this goodwill.

7.2 No Other Business Interests

Developer Parties jointly and severally agree with Franchisor that neither Developer nor any
Guarantor will:

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(1) During the Initial Term or any New Term finance, invest in or have a financial interest in
any business other than Developer’s Operation without the prior written consent of
Franchisor; or

(2) During the Restraint Period, in the Restraint Area, directly or indirectly do any of the
following things:

(a) be concerned or interested in any Restrained Business (directly or indirectly, or

(c) hold or own (beneficially or non-beneficially) whether directly or indirectly and

whether absolutely or contingently or hold options over shares or any other
securities or units of any entity engaging in a Restrained Business; and

(d) procure, employ, seek to employ or engage, or appoint in any capacity (whether as
a consultant, director or otherwise), any person who is or has been in the 12 months
prior to such action an employee, independent contractor, or prospective
franchisee of the Franchisor, its affiliates, or any Chatime Restaurant Business.

(e) These restraints shall not apply to the Developer’s or its affiliates’ continued
operation of individual Chatime Restaurants being operated under valid Franchise
Agreement, which have not been terminated and are not in default.

7.3 Restraint Applies to Conduct in Any Capacity

The agreement by Developer Parties in clause 7.2 applies to any of them, the Interested Parties,
and those acting:

(1) In partnership or association with another person;

(2) As principal, agent, representative, director, officer, employee, or financier;

(3) As member, shareholder, debenture holder, note holder, or holder of any other security;

(4) As trustee of or as a consultant or adviser to any person; or

(5) In any other capacity.

7.4 Separate Restraint Agreements

Clauses 7.2 and 7.3 have effect as comprising each of the separate provisions which results from
each combination of a capacity referred to in clause 7.3, a category of conduct referred to in clause
7.2, a geographical area specified in Schedule 1 and a period of time specified in Schedule 1. Each
of these separate provisions operates concurrently and independently. If any separate provision is
unenforceable, illegal or void that provision is severed and the other separate provisions remain in
force.

7.5 Directors, Manager, and Key Employees

Developer must ensure that any of its directors who are not a party to this Agreement, any
Interested Party, manager and any of its key employees nominated by Franchisor enter into a
confidentiality and non-competition agreement before they receive or are granted access to any of

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the Confidential Information. The agreements must contain a similar reasonable restraint as
imposed pursuant to clause 7.

7.6 Other Interested Parties

Developer must procure that any Interested Party specified by Franchisor enters into a non-
compete and confidentiality agreement with Franchisor that contains:

(1) Similar reasonable restraints as imposed on Developer and Guarantor pursuant to clause
7.2; and

(2) Similar confidentiality obligations to the obligations imposed pursuant to clause 6,

as and when required by Franchisor.
7.7 Acceptable Conduct

Nothing in this clause prevents Developer or Guarantor from:

(1) Owning less than 5%, by value, of securities in a listed corporation;

(2) Engaging or being concerned or interested in Developer’s Operation in

accordance with this Agreement; or

(3) Engaging or being concerned or interested in any business or activity pursuant to which
Franchisor has given its prior written consent.

7.8 Disgorgement

In addition to all other remedies and rights of Franchisor under this Agreement, if any of Developer,
Developer Affiliate, Franchisee, Guarantor or their Interested Parties breaches clause 7.2 or 7.3,
Developer must account for and pay to Franchisor all compensation, profits, monies, accruals,
increments or other benefits derived or received as a result of any such breach.

8 Indemnity and Limitation of Liability

8.1 Indemnity

(1) Developer Parties indemnify Franchisor and each of its Affiliates (Chatime Group)
against all:

(a) Losses incurred by the Chatime Group;

(b) Liabilities incurred by the Chatime Group; and

(c) All Legal Costs and other Costs and expenses incurred by the Chatime Group in
connection with a demand, action, arbitration or other proceeding (including
mediation, compromise, out of court settlement or appeal),

arising directly or indirectly as a result of or in connection with:

(d) A breach by Developer Parties of this Agreement or any Collateral Agreement;

(e) Any injury to, or loss of property of, any person in or on premises from which the
business is conducted;

(f) Developer’s taxes, liabilities or Costs of Developer’s Operation;

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(g) Any negligent or willful act or omission of Developer, its employees, agents,
servants, or contractors; and
(h) Any warranty, promise or representation made by Developer Parties or any
employee, agent, or other person acting on behalf of Developer Parties being
incomplete, inaccurate, or misleading.

(2) Franchisor’s rights at law and under this Agreement, including its right to be indemnified
under this clause, are not affected by:

(a) Franchisor ending the Franchise or the termination of any Collateral Agreement;

(b) Franchisor accepting Developer’s repudiation of this Agreement or any related

Agreement; or

(c) Anything else.

8.2 Limitation of Liability

To the extent permitted by law, Franchisor will have no liability in relation to:

(1) Any approval of premises or a site for an Outlet provided by Franchisor to Developer
pursuant to the terms of this Agreement;

(2) Any other approvals provided by Franchisor to Developer in connection with Developer’s
Operation pursuant to the terms of this Agreement;

(3) The conduct of Developer’s Operation by Developer, the success or failure of which largely
depends upon the business abilities and efforts of Developer; and

(4) The location, design, construction, or renovation of any Outlet or the furnishings, fixtures
and equipment to be required, notwithstanding the right of Franchisor to approve any plans,
and to inspect the construction and/or renovation work and such Outlet. Such rights of
Franchisor are exercised solely for the purpose of ensuring compliance with the terms and
conditions of this Agreement.

9 Intellectual Property
9.1 License to Use Intellectual Property

Franchisor grants Developer a license to use the Intellectual Property in the Development Area only
during the Initial Term.

9.2 Use of Intellectual Property

(1) Developer must:

(a) Only use the Intellectual Property as authorized by Franchisor;

(b) Not alter the Intellectual Property, except with Franchisor’s prior written consent;
and

(c) Not do anything which may prejudice Franchisor’s ownership of, or the goodwill
associated with, the Intellectual Property.

(2) Developer must not use any other trademarks, corporate or business names, trade names,
slogans, domain names or other items of Intellectual Property without the prior written
consent of Franchisor.

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9.3 Ownership of Intellectual Property

Developer acknowledges that by its use of the Intellectual Property, it does not acquire any right to,
title or interest in the Intellectual Property. All rights to, and interests in, the Intellectual Property
reside with Franchisor.
9.4 Protection of Intellectual Property

(1) Developer must:

(a) Provide all reasonable assistance to Franchisor to register and enforce

Franchisor’s intellectual property rights in the Development Area;

(b) Take all reasonable steps to protect the Intellectual Property against any action or
infringement by any person;

(c) Immediately notify Franchisor of any actual or potential threat or claim of

infringement with respect to the Intellectual Property.

(2) Franchisor, at its absolute discretion, will determine whether to commence or defend legal
proceedings relating to the Intellectual Property.

(4) Developer must co-operate fully with Franchisor in relation to any actions conducted under
this clause 9.4 and must not bring any actions itself relating to the Intellectual Property.

(5) Save for remittance of Costs under clause 9.4(3) (if any), Franchisor will be entitled to
receive the proceeds of all actions conducted under this clause 9.4.

9.5 Goodwill

Developer acknowledges that:

(1) Franchisor is the owner of all goodwill in the Intellectual Property;

(2) All goodwill associated with Developer’s use of the Intellectual Property, and its activities
under this Agreement, inures to the benefit of Franchisor; and

(3) When this Agreement ends, Developer is not entitled to any payment from Franchisor for
goodwill which may exist in relation to Developer’s Operation.

9.6 Developer and Guarantor Must Not Register Similar Intellectual Property Developer and Guarantor
must:

(1) If it is the owner of any intellectual property (e.g., business or corporate names, trademarks,
or domain names) similar or identical to the Intellectual Property in the Development Area,
immediately upon execution of this Agreement, take all steps necessary to transfer
ownership of that intellectual property to Franchisor at Developer’s cost;

(2) If, during the Initial Term, either Developer or any Guarantor registers any intellectual
property (e.g., business or corporate names, trademarks, or domain names) similar or
identical to the Intellectual Property in the Development Area, the relevant party must
immediately upon such registration, take all steps necessary to transfer ownership of that
intellectual property to Franchisor at Developer’s cost; and

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(3) Not, except as otherwise agreed or directed by Franchisor in writing, register any
intellectual property (e.g., business or corporate names, trademarks, or domain names)
similar or identical to the Intellectual Property or that contains or consists of any Intellectual
Property or anything that is substantially identical or deceptively similar thereto or otherwise
relates to the Chatime brand or the System. In particular, if Developer or Guarantor is a
corporation, each must not use the word “Chatime” or any other similar word or derivatives
of that word in its corporate name, with acknowledgement that the factors determining
similarity of trademarks as stated above include, without limitation, the appearances,
concepts, pronunciations, designated classes, and designated goods and services of
trademarks.

9.7 Developer’s Improvements

(1) If any Developer’s Improvements are developed by or on behalf of Developer during the
Initial Term from which Developer obtains any intellectual property rights, Developer
assigns all of Developer’s rights to and intellectual property in Developer’s Improvements
to Franchisor or its nominee as and when the intellectual property rights are created, free
of all encumbrances.

(2) If Developer’s rights to or intellectual property rights in Developer’s Improvements are not
capable of assignment to Franchisor, Developer grants to Franchisor or its nominee as and
when the intellectual property rights are created an exclusive, worldwide, royalty free, fully
assignable perpetual license in respect of Developer’s Improvements, which may only be
terminated by Franchisor, for Franchisor to use Developer’s Improvements and grant
others the right to use Developer’s Improvements.

(3) If Franchisor wishes to register the intellectual property rights in any of Developer’s
Improvements and Developer is the owner, or a necessary applicant for that registration,
Developer must immediately upon the request by Franchisor apply in Developer’s own
name for registration and then sign all documents and deeds, perform all acts and do all
things necessary to assign that registration or application to Franchisor or its nominee.

10 Transfer and Other Dealings by Franchisor

10.1 Assignment or Novation

Franchisor may transfer all or any part of its rights, interests, obligations, or liabilities under this
Agreement by assignment or novation.

10.2 Refinancing and restructuring

Franchisor may, in addition to or as part of an assignment or novation pursuant to clause 10.1:

(1) Sell itself, its assets, and any of the Intellectual Property which it owns to a third party;

(2) Issue additional shares or other securities in itself;

(3) Engage in a private placement of some or all of its securities; and

(4) Undertake a refinancing, recapitalization, leveraged buyout, or other economic or financial

restructuring.

10.3 Acknowledgment and Agreement If Franchisor elects to:

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(1) Assign all or any part of its rights, interests, obligations, or liabilities under this Agreement,
Developer Parties must, upon request by Franchisor, execute any deed, agreement or
notice of assignment acknowledging and agreeing to the assignment by Franchisor; or

(2) Transfer all or any part of its rights, interests, obligations, or liabilities under this Agreement
by novation to a third party, Developer Parties must, upon request by Franchisor, execute
a deed or agreement of novation, in a form prepared by Franchisor, substituting in place of
Franchisor a third party as being entitled to the benefits, and responsible for the rights,
obligations and liabilities, of Franchisor under this Agreement.

10.4 Merger

Franchisor may purchase, merge, acquire, or affiliate with an existing competitive or non-
competitive franchise network, chain, or any other business and operate, franchise, or license those
businesses to operate using the Marks and Intellectual Property of Franchisor from premises
wherever located.

10.5 Consent

Developer Parties consent to Franchisor at any time assigning or novating any of its rights,
interests, obligations, or liabilities under this Agreement or undertaking any of the actions outlined
in clauses 10.1, 10.2, and 10.4 and waive any requirement for prior notice to Developer Parties of
the action.

11 Transfer and Other Dealings by Developer

11.1 Acknowledgements by Developer

Developer acknowledges that:

(1) The Franchise has been granted to Developer following a consideration by Franchisor of
the character, business experience, and capability and financial capacity of Developer
Parties; and

(2) Because of this there are important restrictions in this clause 11 on Developer’s ability to
deal with the Franchise and Developer’s Operation.

11.2 Prohibition Against Transfer by Developer

(1) Developer must not sell or otherwise Dispose of its interest in the Franchise or Developer’s
Operation, whether in whole or in part, voluntarily or involuntarily, by operation of law
(including as a result of bankruptcy, divorce, death or disability, without Franchisor’s prior
written consent, and without first offering to sell the Ownership Interest of Outlets
(Business) to Franchisor in accordance with clause 11.4.
(2) If an offer made by Developer pursuant to clause 11.2(1) is not accepted, Developer may
sell or otherwise Dispose of its interest in the Developer’s Operation subject to obtaining
Franchisor’s written consent which must not be unreasonably withheld if all of the
conditions mentioned in clause 11.3 have been satisfied.

(3) A request for Franchisor’s consent under clause 11.2(2) must be made in writing.

11.3 Conditions to be Satisfied Before Assignment can be Approved

Franchisor must not unreasonably withhold its consent under clause 11.2(2) if the sale, assignment,

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or other Disposal is of the whole of Developer’s interest in the Developer’s Operation and each of
the following conditions are satisfied:

(1) Developer establishes to Franchisor’s reasonable satisfaction that the proposed assignee
(and its directors and Owners if the assignee is a business entity):

(a) Possesses the financial resources necessary to conduct and operate Developer’s
Operation as a Developer and to service any borrowings it makes in order to
acquire Developer’s Operation;

(b) Is a reputable and responsible and has the business experience and capabilities
necessary to operate Developer’s Operation successfully; and

(2) Developer pays to Franchisor the Transfer Fee;

(3) Developer, both when seeking consent to the assignment and when the assignment is to
occur, is not in default under this Agreement or any Collateral Agreement;

(4) At the option of Franchisor:

(a) The assignee executes Franchisor’s then-standard form development business

agreement for the balance remaining of the Initial Term (including any existing
option for a New Term); or

(b) Developer and the assignee execute an assignment of Developer’s rights and
obligations under this Agreement to the assignee in a form required by Franchisor,

and Developer and the assignee execute any other documents then used by Franchisor
for the grant of Chatime development business;

(5) When the assignee is a business entity, those directors and Owners or other Affiliates of
the assignee nominated by Franchisor each:

(a) Execute and deliver a personal guarantee and indemnity and undertake similar
personal restraints to those given by Guarantor under this Agreement in favor of,
and in a form required by, Franchisor; and

(b) Execute and deliver a confidentiality and non-competition agreement in the

Franchisor’s then-current form.

(6) Developer:

Developer acknowledges that:

(i) These documents must be provided to Franchisor so that Franchisor can

ensure that its interests are protected (for example, that the contract of sale
does not purport to sell the Intellectual Property); and

(ii) Franchisor will not sell Developer’s Operation on behalf of Developer or

negotiate the sale on behalf of Developer and does not hold itself out as
performing these functions; and

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(b) Sells to the assignee all of Developer’s essential assets used in the business;

(7) Developer establishes to Franchisor’s reasonable satisfaction that the proposed

assignment will not have a significantly adverse effect on the System or the Network;

(8) Developer pays all of Franchisor’s Costs in connection with or incidental to the request for
Franchisor’s consent to the transfer of the Franchise and the sale of the Business, whether
or not the assignment or sale is actually completed or the consent is granted; and

(9) Developer and its Owners execute and deliver to Franchisor a general release in the form
required under Developer’s then-current Franchise Agreement.

11.4 Franchisor’s Right of First Refusal

(1) If Developer wants to:

(a) Sell Developer’s Operation; or

(b) Allow the Disposal of shares or units,

Developer must first offer to sell Developer’s Operation to Franchisor on the same terms
as any offer Developer has received from an arm’s length third party (Third Party Offer)
by giving to Franchisor a written notice (Offer Notice) setting out the terms and conditions
of the Third Party Offer.

(2) Franchisor may accept the offer contained in the Offer Notice by giving notice of acceptance
(Acceptance Notice) to Developer before the end of the Offer Period.

(3) For the purpose of this clause 11.4, “Offer Period” means the period of 45 days after
Franchisor receives the Offer Notice.
(4) The Acceptance Notice may contain terms which vary the terms of the Offer Notice if the
terms upon which Franchisor agrees to buy the Business are not commercially less
favorable to Developer than those contained in the Offer Notice. For example, if the
consideration, terms and/or conditions offered by a third party are such that Franchisor is
not reasonably able to furnish the same types of consideration, terms and/or conditions,
then Franchisor may purchase the interests proposed to be transferred for the reasonable
equivalent in cash.

(5) If Developer receives the Acceptance Notice during the Offer Period Developer must sell
and Franchisor must purchase the Business upon the terms and conditions contained in
the Offer Notice as may be varied by the Acceptance Notice.

(6) If Franchisor does not accept the offer contained in the Offer Notice within the Offer Period
Developer is entitled to sell the Business or allow the Disposal of shares or units to a third
party within 60 days after the end of the Offer Period as long as the:

(a) Developer complies with clause 11.3; and

(b) Sale or Disposal is not made for less than the price specified in the Offer Notice or
on terms and conditions more favorable to the third party than those contained in
the Offer Notice.

(7) If Developer does not sell the Business or allow the Disposal of shares or units within the
period referred to in clause 11.4(6) the rights of Franchisor are revived and Developer must
not permit any sale or Disposal without first offering the Business to Franchisor in
accordance with this clause 11.4.

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11.5 No Encumbrances

Developer must not create or allow the creation of any encumbrance over this Agreement, the
Franchise or Developer’s Operation without first obtaining Franchisor’s written consent.

11.6 No Subfranchises

Developer must not lease, license, franchise, or part with possession of Developer’s Operation or
the Franchise without first obtaining Franchisor’s written consent.

11.7 Transfer Upon Death or Incapacitation. Upon the death or permanent incapacity (mental or physical)
of any person with a majority or controlling interest in this Agreement, in you, or in all or substantially
all of the assets of the Developer’s Operations, the executor, administrator, or personal representative
of such person shall transfer such interest to a third party approved by Franchisor within one year
after such death or mental incapacity. Such transfers, including transfers by devise or inheritance,
shall be subject to the requirements in this Clause 11.

11.8 Transfers Void. Any purported or attempted transfer, by operation of law or otherwise, made without
Franchisor’s prior written consent will be considered null and void and will be considered a material
breach of this Agreement.

12 Temporary Operation by Franchisor

12.1 Circumstances of Operation by Franchisor

If Developer ceases to conduct Developer’s Operation or abandons the Development Business,

Franchisor or its nominee may, but does not have to, enter Developer’s business premises and
operate and manage Developer’s Operation (including directing the Franchisees) until Developer
complies with any direction or notice of Franchisor requiring Developer to recommence operation
of the Development Business in accordance with its obligations under this Agreement.

12.2 Management Fees and Income Received

(1) Developer must pay to Franchisor a reasonable management fee prescribed by Franchisor
for operating and managing the Development Business and any travelling, accommodation
or other expenses in relation to such operation and management.

(2) Franchisor must account to Developer for all net income received by Franchisor while
operating and managing the Development Business less a reasonable management fee
prescribed by Franchisor for operating and managing the Development Business and any
travelling, accommodation or other expenses in relation to such operation and
management. Developer must bear any losses incurred during Franchisor’s operation and
management of the Development Business and pay or reimburse such losses to Franchisor
upon demand.

12.3 Liability of Temporary Operation

Franchisor will not be liable to Developer in any way for anything done by Franchisor while it
operates and manages the Development Business in accordance with this clause 12, except for
acts or omissions arising from the gross negligence or willful misconduct of Franchisor. Developer
indemnifies Franchisor and its employees and agents against all damages, sums of money, costs,
charges, expenses, actions, claims, liabilities, injuries and demands made against or suffered by
Franchisor, its employees and agents for the period Franchisor operates and manages the
Development Business pursuant to this clause 12.

13 Termination of Agreement

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13.1 Developer May Terminate During Cooling Off Period

(1) Developer may terminate this Agreement by giving written notice to Franchisor within 7
days of the date of this Agreement.

(2) If Developer terminates this Agreement in accordance with clause 13.1(1), Franchisor
must, within 14 days after receiving the notice of termination, return all payments (whether
of money or other valuable consideration) made by Developer to Franchisor under this
Agreement less the following amounts which constitute the reasonable Costs of Franchisor
in connection with the grant of this Agreement:

(a) 20% of the Development Fee representing the reasonable Costs of Franchisor in
relation to the selection and induction of Developer;

(b) The amount of $5,000 representing the reasonable Costs of Franchisor in

connection with the instructions for and the negotiation, preparation and execution
of this Agreement and the Collateral Agreements; and

(c) All reasonable Costs of Franchisor in connection with the training of Developer,
including all payments made to Developer by Franchisor during the course of
training.

13.2 Termination by Developer

(1) If:

(a) Developer is in substantial compliance with this Agreement and Franchisor

materially breaches this Agreement;
(b) Developer gives written notice of such breach to Franchisor (which such notice
must include details of the breach and what is required by Franchisor to rectify the
breach) and gives Franchisor a reasonable period (of no less than 60 days) to
remedy the breach; and

(c) Franchisor does not remedy the breach within the time set out in the breach notice
or, in a case where Franchisor’s breach cannot reasonably be remedied within 60
days after Franchisor receives written notice of its breach, fails to provide
Developer with reasonable evidence of Franchisor’s continuing efforts to correct its
breach within a reasonable time,

then Developer may terminate this Agreement by providing 60 days’ written notice of
termination to Franchisor.

(2) Developer does not have a separate right to terminate the Development Rights alone. It
only has the right to terminate this Agreement in its entirety. Any termination of this
Agreement by Developer other than as provided in clause 13.2(1) will be deemed a
termination by Developer without cause.

13.3 Termination by Franchisor

(1) Franchisor may terminate this Agreement if:

(a) Developer or Guarantor (Defaulting Party) breaches any provision of this

Agreement or any Collateral Agreement;
(b) Franchisor gives to the Defaulting Party a written notice that:

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(i) Specifies the breach;

(ii) Tells the Defaulting Party what Franchisor wants the Defaulting Party to
do to remedy the breach;

(iii) Gives the Defaulting Party a reasonable time (which can be any number
of days between 3 days and 30 days) to remedy the breach; and

(iv) States that Franchisor proposes to terminate this Agreement and the
Franchise if the breach is not remedied within that time; and

(2) If the breach is remedied in accordance with, and within the time allowed by, a notice issued
under clause 13.3(1)(b), Franchisor cannot terminate this Agreement because of that
breach.

(3) If Developer does not perform or observe any obligation under this Agreement Franchisor
may, but does not have to, remedy that default. In doing so, Franchisor is entitled to rely
on the power of attorney in clause 22.

(4) Notwithstanding any other provision in this clause 13, Franchisor may terminate this
Agreement immediately upon written notice to Developer if:

(a) The Defaulting Party breaches any provision under clause 6 (Initial and Continuing
Fees), 9.2 (No other business interests) or 9.3 (Restraint applies to conduct in any
capacity).

(b) A force majeure event (as referred to in clause 21) continues for more than 180
days;

(c) Developer voluntarily abandons Developer’s Operation;

(d) Developer or a Guarantor is convicted of a serious offense;

(e) Developer’s Operation is operated in a way that endangers public health or safety;

(f) Developer is fraudulent in connection with the operation of Developer’s Operation;

(g) Developer files a voluntary petition in bankruptcy, files any pleading seeking any
reorganization, liquidation, or dissolution under any law, admits or fails to contest
the material allegations of any such pleading filed against it, or is adjudicated a
bankrupt or insolvent; or

(h) A receiver, manager, liquidator or other Person acting in a comparable capacity is

appointed for a substantial part of the assets of Developer.

13.4 Other Remedies. In the event of grounds for a default by the Developer, Franchisor is entitled in its
sole discretion to exercise any other remedies in lieu of or prior to terminating the Agreement, which
may include but are not limited to reduction in the geographic area of the Development Area, removal
of exclusivity within the Development Area, termination or suspension of any and all services
provided to Developer by Franchisor, its Affiliates, or approved suppliers; suspension of delivery of
product or supplies to Developer by Franchisor, its Affiliates, or approved suppliers; imposition of
different credit terms for delivery of product or supplies to Developer by Franchisor, its Affiliates or
approved suppliers; temporary operation of the Developer’s Operation pursuant to this Agreement;
removal of Developer from the Franchisor’s website, directory, or social media; execution and

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delivery of a Release, and imposition of any additional or different requirements for Developer to
maintain its right to continue operating the Developer’s Operation. Franchisor’s exercise of any of
these other remedies shall not in any way impair or waive Franchisor’s right in the future to terminate
the Agreement or to exercise any other rights under this Agreement.

14 Dispute Resolution
14.1 Notice of Dispute. If a dispute arises relating to or in connection with this Agreement or the
relationship of the parties (“Dispute”), a party to the Dispute must give to the other party or parties
to the dispute notice specifying the dispute and requiring its resolution under this clause 14 (“Notice
of Dispute”).

14.2 Mediation. If the parties cannot resolve their Dispute within 30 days from the date of service of the
Notice of Dispute, either party may refer the matter to a mediator and if the parties cannot agree
upon the appointment of a mediator, either party may submit the matter to JAMS and obtain the
appointment of a mediator under the JAMS mediation rules.

(3) The parties to the mediation will bear the costs of the mediation on an equal basis. Each
party will bear its own costs of attending and preparing for the mediation.

(4) The mediator will have no power to make any decision binding on the Parties to resolve
the dispute.

14.3 Arbitration. Except as otherwise provided in this Agreement, if the mediation is not successful, any
controversy, claim, cause of action or dispute arising out of, or relating to this Agreement or related
agreements, or the relationship of the parties, shall be resolved exclusively by binding arbitration.

(2) The arbitration shall be conducted in New York, New York, and parties and witnesses may
appear by videoconference, unless the parties agree otherwise.

(3) Any dispute as to the arbitrability of any controversy, claim, cause of action or dispute shall
also be determined by arbitration.

(4) All proceedings in the Arbitration shall be strictly confidential, and everything that occurs
before the arbitrator will be in confidence and in closed session

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(6) Within seven (7) calendar days of service upon the Parties of their list of names, each Party
may select one Arbitrator from their respective list. The two party-appointed Arbitrators
shall name a third Arbitrator who shall act as the Chairperson.

(9) The arbitrator shall have no authority to amend or modify the terms of this Agreement.

(10) The arbitrator must include in the arbitration award the findings on material questions of law
and of fact, including references to the evidence on which the findings of fact were based.

(11) An arbitration initiated by a Developer can only be brought by a single franchisee or developer,
and shall only resolve the claims by the Developer. Developer is not permitted to bring or
participate in any group, collective, multi-party, or class action claims against Franchisor or its
Affiliates or their respective owners and officers. An Arbitrator shall not have authority to decide
any group, collective, multi-party or class action claims against Franchisor or its Affiliates or
their respective owners and officers.

(12) Despite anything in this clause 14, a party at any time may commence court proceedings
in relation to any dispute or claim arising under or in connection with this Agreement solely
for the purpose of obtaining urgent interlocutory relief pending resolution of the Arbitration.

(13) Subject to this clause 14, a party must not commence or maintain a court action or
proceeding upon a dispute in connection with this Agreement if the dispute is referred to
arbitration under this clause 14.

14.4 Waiver of Jury Trial. EACH PARTY HERETO HEREBY ACKNOWLEDGES AND AGREES THAT
ANY CONTROVERSY THAT MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE
COMPLICATED AND DIFFICULT ISSUES AND, THEREFORE, EACH SUCH PARTY
IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY
JURY IN RESPECT OF ANY LEGAL ACTION ARISING OUT OF OR RELATING TO THIS
AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.

14.5 Survival of Dispute Resolution Provisions. This clause 14 continues in force even where the
Agreement has been fully performed, terminated or rescinded or where the parties or any of them
have been discharged from the obligation to further perform the Agreement for any reason. The
obligations with respect to dispute resolution outlined in this Article shall survive termination or
expiration of this Agreement. This clause 14 applies even where the Agreement is otherwise void or
voidable.

15 Rights and Obligations Upon Termination or Expiration

15.1 Consequences of Termination

Developer agrees that upon the termination or expiration of this Agreement, it will:

(1) Not directly or indirectly identify itself as a current or former Developer of Franchisor;

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(2) Within 10 Business Days of the effective date of termination or expiration of the Agreement,
pay all money owed to Franchisor or any Affiliate and Developer’s employees, contractors
and material trade creditors which are then unpaid; and

(3) No longer have any Development Rights whatsoever, and it will cease all development efforts.

15.2 No Compensation Payable on Termination

No compensation is payable by Franchisor to Developer or any other person for the termination or
expiration of this Agreement and Developer will have no right of indemnity against Franchisor.

16 Guarantee and Indemnity

16.1 Interested Party’s Guarantee

Developer must ensure that:

(1) Each Interested Party give a guarantee and indemnity on the terms set out in this
clause 16; and
(2) Any new Interested Party, upon becoming an Interested Party, sign a guarantee and
indemnity in respect of Developer’s obligations under this Agreement on the then-current
terms used by Franchisor.

16.2 Consideration

Guarantor has requested Franchisor to enter into this Agreement with Developer and Franchisor
does so in consideration of this guarantee and indemnity.

16.3 Guarantee

Guarantor unconditionally and irrevocably guarantees to Franchisor prompt performance of all of

the obligations of Developer contained or implied in this Agreement. If the obligation is to pay
money, Franchisor may recover the money from Guarantor as a liquidated debt.

16.4 Indemnity

(1) If Developer is not bound by some or all of its obligations under this Agreement, Guarantor
agrees, by way of indemnity and principal obligation, to pay to Franchisor the amount which
would have been payable by Guarantor to Franchisor under the guarantee in clause 16.3
had Developer been bound.

(2) Guarantor indemnifies Franchisor and agrees to hold it harmless in respect of any failure
by Developer to perform any of its obligations under this Agreement including any
obligation to pay money to Franchisor.

16.5 Continuing Security

16.6 Matters Not Affecting Guarantor’s Liability

Guarantor’s liability under this clause 16 is not affected by:

(1) The granting of time, forbearance, or other concession by Franchisor to Developer or any
Guarantor;

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(2) An absolute or partial release of Developer or any Guarantor or a compromise with
Developer or any Guarantor;

(3) A variation of this Agreement;

(4) A transfer of this Agreement by Developer;

(5) The termination of this Agreement;

(6) Any disputes or differences between Developer and Franchisor;

(7) The fact that this Agreement is wholly or partially void, voidable, or unenforceable;

(8) The non-execution of this Agreement by one or more of the persons named as Guarantor
or the unenforceability of the guarantee or indemnity against one or more Guarantors; or

(9) The exercise or purported exercise by Franchisor of its rights under this Agreement.

16.7 Payment Later Avoided

If a liquidator or trustee in bankruptcy disclaims this Agreement, Guarantor indemnifies Franchisor

against any resulting loss.

16.9 Guarantor Not to Prove in Liquidation or Bankruptcy

Until Franchisor has received all money payable to it by Developer, Guarantor must:

(1) Not prove or claim in any liquidation, bankruptcy, composition, arrangement, or assignment
for the benefit of creditors; and

(2) Hold any claim it has and any dividend it receives on trust for Franchisor.

16.10 Guarantee to Continue on Transfer of Rights

If Franchisor transfers its rights under this Agreement, the benefit of the guarantee and indemnity
in this clause 16 extends to the transferee and continues concurrently for the benefit of Franchisor
regardless of the transfer unless Franchisor releases Guarantor in writing.

16.11 Certificate as to Liability

17 Corporate Developer
17.1 Application of Clause

This clause 17 applies if Developer is a business entity.

17.2 Constitution

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(1) Before the Commencement Date, Developer must give to Franchisor a certified copy of
Developer’s constitution and certified copies of any other documents requested by
Franchisor from Developer’s company register.

(2) Developer warrants that the constitution does not preclude Developer from being granted
the Franchise or otherwise from exercising its rights and performing its obligations under
this Agreement.

17.3 Directorship and Ownership of Developer

Developer:

(1) Warrants that the Owners, directors and officers of Developer as at the date of execution
are as notified to Franchisor by Developer; and
(2) Must provide to Franchisor immediately upon request details of the Owners of Developer,
including the number and class of Ownership Interests held by each Owner as at:

(a) The date of execution of this Agreement; and

(b) Any other date specified by Franchisor.

17.4 No Changes Without Franchisor’s Consent

(1) Developer must not allow any of the following to occur without first obtaining Franchisor’s
written consent:

(a) Any change in the composition of Developer’s Owners, directors, and officers;

(b) Any alteration to Developer’s constitution;

(c) Any Disposal of Ownership Interests in Developer; or

(d) Any reduction or alteration of Developer’s capital.

(2) Franchisor must not withhold consent unreasonably if:

(a) In the case of a Disposal of Ownership Interests, the requirements of clause 17.5 are
met;

(b) Developer executed and delivers to Franchisor a general release;

(d) All new Owners execute and deliver to Franchisor a confidentiality and non-competition
agreement in the form specified by Franchisor; and

(e) In any other case, the change does not adversely affect Developer’s ability to
perform its obligations under this Agreement.

17.5 Transfer of Ownership Interests

Any Disposal of Ownership Interests in Developer must be treated as a Disposal by Developer of

the Franchise and clause 17 will apply to that Disposal.

18 Trust Provisions
18.1 Warranty if Developer Not a Trustee

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If Developer is not described in this Agreement as trustee of a trust, Developer Parties warrant that
Developer enters into this Agreement in its own right and not as a trustee for any person.

18.2 Application of Clause if Developer is a Trustee

The remainder of this clause applies if Developer enters into this Agreement as trustee of any trust.

18.3 Warranties as to Trusts

Developer Parties warrant that:

(1) Developer enters into this Agreement as trustee for the trust;

(2) Developer is the sole trustee of the Trust;

(3) Developer enters into this Agreement for the purposes and benefit of the Trust and has
obtained the consent or approval of any person which is needed to ensure that the property
of the Trust is bound upon the execution of this Agreement;

(4) Developer has given to Franchisor a certified copy of the Trust Deed and certified copies of
any other documents relating to the Trust;

(5) Developer has power under the Trust Deed to enter into this Agreement, to undertake the
obligations and liabilities in the manner and the extent contemplated by this Agreement and
to apply the assets of the Trust in satisfaction of any money payable under this
Agreement;

(6) Developer has an unrestricted right to be fully indemnified out of the assets of the Trust;

(7) The vesting date for the Trust occurs after the Franchise is expected to end by effluxion of
time; and

(8) All information or documents supplied to Franchisor or to any person on Franchisor’s behalf
for the purposes of the Franchise are true and accurate and leave no material facts
undisclosed.

18.4 No Changes Without Franchisor’s Consent

(1) Developer must not allow any of the following to occur without first obtaining Franchisor’s
written consent:

(a) Any alteration to the Trust Deed;

(b) Any Disposal of units in the Trust (in the case of a unit trust);

(d) The appointment of any person as a new or substitute trustee under the Trust Deed;

(e) The delegation of any power or duty conferred upon Developer under the Trust
Deed other than as expressly authorized by this Agreement; or

(f) Anything which will or may harm Developer.

(2) Franchisor must not unreasonably withhold consent to a Disposal of units if the
requirements of clause 11.3 are met.

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(3) If Developer contravenes clause 18.4 and appoints any new or substitute trustee of the
Trust, Developer:

(a) Acknowledges that this Agreement will bind the new trustee; and

(b) Must arrange for the new trustee to enter into a deed prepared by Franchisor’s
solicitors at Developer’s Cost by which the new trustee agrees to be bound by the
terms of this Agreement.

18.5 Transfer of Units

Any Disposal of units in the Trust must be treated as a Disposal by Developer of the Franchise
and clause 11.3 will apply to that Disposal.

18.6 Recourse Against Trust and Other Assets Developer:

(1) Agrees that the assets of the Trust and also those beneficially held by Developer on its own
behalf will be available to satisfy Developer’s obligations under this Agreement; and

(2) Must, if Franchisor requires, exercise its rights of indemnity against the assets of the Trust
to satisfy any of its obligations under this Agreement.

19 Acknowledgements, Representations, and Warranties

19.1 Acknowledgements and Representations

(1) Developer and Guarantor each acknowledge that:

(a) They have relied upon their own investigations and judgment in entering this
Agreement;

(d) They have not been introduced to Franchisor by any broker or agent acting or
purporting to act on behalf of Franchisor.

(2) Developer acknowledges that Franchisor has agreed to grant the Development Business
to Developer in reliance on the character, skills and financial capacity of Developer, the
Owners and the General Manager, that the establishment and operation of Developer’s
Operation will involve significant financial risks, and that the success of Developer’s
Operation will depend upon the skills and financial capacity of Developer and the Owners
and also upon changing economic and market conditions.

(3) Developer acknowledges and agrees that it has conducted an independent investigation of
the business contemplated by this Agreement and recognizes that it involves business risks
making the success of the venture largely dependent on the business abilities of Developer.
Franchisor expressly disclaims the making of, and Developer acknowledges that it has not
received or relied upon, any warranty or guarantee expressed or implied as to the potential
volume, profits or success of the business venture contemplated by this Agreement.

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(4) Developer and Guarantor represent that all information provided to Franchisor in support
of Developer’s application to acquire the Development Business including in relation to its
financial capacity, resources, business experience and skills are complete, true and
correct.

(5) Franchisor makes no representation or warranty as to the suitability or otherwise of any

premises or the site for an Outlet approved by it or that the operation of an Outlet will
necessarily be profitable or successful.

(6) Franchisor is not responsible for the acts or omissions of any person involved in the design
of any Outlet, including any architects or consultants engaged by Franchisor.

19.2 Warranties

(1) If Developer is a corporate entity, Developer represents and warrants that it is duly
organized and validly existing in good standing under the laws of the jurisdiction of its
incorporation.

(2) Developer warrants that it has done everything necessary to do business lawfully in all
jurisdictions in which its business is carried on, and has the power to enter into and perform
this Agreement and has obtained all necessary consents and fulfilled all necessary Legal
Requirements to enable it to do so.

(3) Developer and Guarantor represent and warrant that the terms and conditions of this
Agreement have been explained to each of them by an independent legal adviser and an
independent business adviser and that they understand and accept the terms and
conditions of this Agreement.

(4) If Developer and Guarantor are corporate entities, they represent and warrant that the
execution of this Agreement is in accordance with the requirements of their respective
articles of incorporation and creates a binding obligation on them in accordance with the
terms of this Agreement.

20 Notices
20.1 A notice or other communication connected with this Agreement (Notice) has no legal effect
unless it is in writing.
20.2 In addition to any other method of service provided by law, the Notice may be:

(1) Sent by prepaid priority post to the address of the addressee set out in this Agreement or
subsequently notified;

(2) Sent by email to the email address of the addressee set out, respectively, in Item 13-14 of
Schedule 1, or subsequently notified; or

(3) Delivered at the address of the addressee set out in this Agreement or subsequently
notified.

20.3 If the Notice is sent or delivered in a manner provided by clause 20.2, it must be treated as given
to and received by the party to which it is addressed:

(1) If sent by post, on the third Business Day (at the address to which it is posted) after posting;

(2) If sent by email before 5:00 pm on a Business Day at the place of receipt, on the day it is
sent and otherwise on the next Business Day at the place of receipt; or

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(3) If otherwise delivered before 5:00 pm on a Business Day at the place of delivery, upon
delivery, and otherwise on the next Business Day at the place of delivery.

21 Force Majeure
21.1 A party (Affected Party) is not liable for any delay or failure to perform an obligation (other than
to pay money) under this Agreement caused by:
(1) Act of God;

(2) War, terrorism, riot, insurrection, vandalism, or sabotage;

(3) Strike, lockout, ban, limitation of work, or other industrial disturbance; or

(4) Law, rule, or regulation of any government or governmental agency and executive or
administrative order or act of general or particular application.

21.2 The Affected Party must notify each other party as soon as practical of any anticipated delay or
failure caused by an event referred to in clause 21.1 (Event).
21.3 The performance of the Affected Party’s obligation is suspended for the period of delay caused by
the Event.

22 Power of Attorney
(1) To secure performance by Developer of its obligations under this Agreement, Developer
Parties irrevocably appoint Franchisor and each of its officers severally to be their attorney
(Attorney) to exercise the powers described in this clause 22.

(2) If Developer Parties breach any provision of this Agreement or any Collateral Agreement
or at the end of the Development Business the Attorney may, in the name and at the Cost
of either Developer or Guarantor, do anything required to be done by Developer Parties
that Developer Parties have not done or have not done promptly or properly. This includes
the execution and delivery of documents, transfers, assignments, deeds, forms, notices or
other instruments, specifically relating to the Marks and the Website.

(3) The powers granted under this clause 22 commence when this Agreement is executed and
continue despite the end of the Development Business.

(4) Developer Parties:

(a) Ratify and confirm anything an Attorney lawfully does under this clause 22; and

(b) Must pay on demand all the Costs or other liabilities incurred by or on behalf of
Franchisor or the Attorney under this clause 22.

23 Changes in Laws
23.1 Taxes and Charges

If any laws are changed or new laws are introduced or courts or any relevant authority interpret
laws differently which results in Franchisor having to pay a tax, duty, excise or levy (Impost) on
amounts received from Developer, Developer Affiliate, and a Chatime Restaurant under this
Agreement (other than income tax) or on goods or services supplied by Franchisor under this
Agreement, Developer, Developer Affiliate and the Chatime Restaurant must pay to Franchisor an
additional amount so that after Franchisor has paid the Impost its yield under this Agreement is
unchanged.

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23.2 Amend Agreement to Comply with Future Laws

The parties agree that if any laws are changed or introduced or any relevant authority publishes or
issues any statement, rules, code or requirement which in the reasonable opinion of Franchisor or
its legal representatives renders or is likely to render all or part of this Agreement
unenforceable, illegal, or void, the parties will immediately amend this Agreement and do all things
(including executing documents) necessary or desirable to ensure that this Agreement is not
unenforceable, illegal, or void.

24 Miscellaneous
24.1 Choice of Law. This Agreement, and any dispute or controversy arising from or relating to this
Agreement, shall be governed and decided by the law of the State of Delaware, without reference to
choice of law rules.

24.2 Taxes

Franchisor will have no liability for any sales, value added, use, service, stamp duty, occupation,
excise, gross receipts, income, property, payroll, or other taxes, whether levied upon this
Agreement, Developer, one or more Outlets, Franchisees or Developer’s property, or upon
Franchisor, in connection with operations conducted by Developer (except any taxes that
Franchisor is required by law to collect from Developer with respect to purchases from Franchisor
or taxes. Payment of all such taxes will be the responsibility of Developer.

24.3 Subcontracting and Agency

(1) Franchisor is entitled to subcontract the performance of any of its obligations to be

performed in the Development Area under this Agreement and exercise any of its rights in
the Development Area under this Agreement to any person nominated by Franchisor, and
any notice required to be given by Franchisor shall be validly given if given by such person.

(2) Developer must not subcontract the performance of any of its obligations to be performed
in the Development Area under this Agreement without the prior consent of Franchisor.

24.4 Exercise of Rights

A party may exercise a right, power, or remedy at its discretion, and separately or concurrently with
another right, power or remedy. A single or partial exercise of a right, power, or remedy by a party
does not prevent a further exercise of that or of any other right, power, or remedy. Failure by a
party to exercise or delay in exercising a right, power, or remedy does not prevent its exercise.

24.5 Approvals and Consents

Franchisor may give conditionally or unconditionally or withhold its approval or consent in its
absolute discretion unless this Agreement expressly provides otherwise. Franchisor may require
Franchisee and its Owners to execute and deliver to Franchisor a general release as a condition
for granting any approval or consent or for agreeing to any amendment of this Agreement.

24.6 Indemnities

Each indemnity in this Agreement is a continuing obligation, separate and independent from the
other obligations of the parties and survives termination of this Agreement. It is not necessary for
a party to incur expense or make payment before enforcing a right of indemnity conferred by this
Agreement. Any indemnities and assumptions of liabilities or obligations under this Agreement
survive termination or expiration of this Agreement.

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24.7 Survival of Obligation After Termination and Expiration

Termination or expiration of this Agreement does not release any party from that party’s obligations
which expressly survive of or are capable of survival of this Agreement and specifically clauses
4.1, 4.2, 6.1, 7.2, 7.8, 8.1, 9.2, 9.6, 13.1(2), 14, 15, 16, and 20.1.
24.8 Costs and Expenses

(1) Developer must pay, or reimburse Franchisor on demand for, all Franchisor’s Costs
(including legal Costs on a solicitor and own client or full indemnity basis, whichever is the
greater) in connection with or incidental to:

(a) Any default by Developer in observing or performing any of its obligations under
this Agreement;

(b) Any termination of this Agreement; and

(c) The contemplated, attempted, or actual enforcement, preservation, or exercise of

24.9 Authority to Complete

By their execution of this Agreement, Developer Parties authorize Franchisor to complete any items
in Schedule 1 that are blank on the date of execution, with the details that Franchisor determines.

24.10 Severability

24.11 Entire Understanding

Subject to the provisions of any written material entered into and approved by Franchisor and to
which Franchisor and Developer are parties, this Agreement:

(1) Is the entire agreement and understanding between the parties on everything connected
with the subject matter of this Agreement; and

(2) Supersedes any prior agreement or understanding on anything connected with that
subject matter.

Notwithstanding the foregoing, nothing in any agreement is intended to disclaim the express
representations made in the Development Business Disclosure Document, its exhibits and
amendments.

24.12 Variation

An amendment or variation to this Agreement is not effective unless it is in writing and signed by
the parties.

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24.13 Waiver

(1) A party’s failure or delay to exercise a power or right does not operate as a waiver of that
power or right.

(2) The exercise of a power or right does not preclude either its exercise in the future or the
exercise of any other power or right.

(3) A waiver is not effective unless it is in writing.

(4) Waiver of a power or right is effective only in respect of the specific instance to which it
relates and for the specific purpose for which it is given.

24.14 Adverse Effect

In exercising, or deciding not to exercise, any right or discretion under this Agreement, a party is
not required to take into account any adverse effect on another party.

24.15 Further Assurance

Each party must promptly at its own Cost do all things (including executing and if necessary
delivering all documents) necessary or desirable to give full effect to this Agreement.

24.16 Governing Law and Jurisdiction

The law of the jurisdiction set out in Item 25 of Schedule 1 governs this Agreement.

24.17 Non-merger

Each obligation which expressly survives or is capable of surviving the end of the Development
Business, continues in force despite the termination of this Agreement and the end of the
Development Business.
24.18 Time of the Essence

(1) Time is of the essence of this Agreement.

(2) If the parties agree to vary a time requirement the time requirement so varied is of the
essence of this Agreement.

(3) An agreement to vary a time requirement must be in writing.

24.19 Execution of Counterparts

(1) This Agreement may be executed in any number of counterparts. Each counterpart is an
original but the counterparts together are one and the same agreement.

(2) This Agreement is binding on the parties on the exchange of executed counterparts. A
copy of an original executed counterpart sent by facsimile machine or by email:

(a) Must be treated as an original counterpart;

(b) Is sufficient evidence of the execution of the original; and

24.20 Special Conditions

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Any conditions set out in Item 29 of Schedule 1 form part of this Agreement. If there is any
inconsistency between a provision of the Special Conditions and a provision of this Agreement, the
provision of the Special Conditions prevails to the extent of the inconsistency.

[Signatures on the following page.]

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EXECUTED and delivered on the date shown on the first page.

FRANCHISOR

Signed, sealed, and delivered for and on

behalf of Chatime Franchise, LLC by its
authorized representative:

Signature of authorized signatory

Name of authorized signatory

(BLOCK LETTERS)

DEVELOPER

Signed, sealed, and delivered for and on

behalf of #insert name of Developer# by its
authorized representative in the presence of:

Signature of witness Signature of authorized representative

Name of witness Name of authorized representative

(BLOCK LETTERS) (BLOCK LETTERS)

Address of witness

GUARANTOR

Signed, sealed, and delivered for and on

behalf of #insert name of Guarantor# by its
authorized representative in the presence of:

Signature of witness Signature of #insert name of Guarantor#

Name of witness (BLOCK LETTERS)

Address of witness

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Schedule 1
Item 1 Developer

Name: #insert#
Company Number: #insert#
Address: #insert#

Item 2 Owner(s)

Name: #insert#
Address: #insert#

Item 3 Guarantor(s)

Name: #insert#
Address: #insert#

Item 4 Initial Term

#insert#

Item 5 New Term

#insert#

Item 6 Development Area

#insert#

Item 7 Development Quota and Development Period

Development Quota
Development Quota (Cumulative number of Outlets in
Development Period (Number of New Outlets opened operation by end of each
(By month) in each Development Period) Development Period)
# #
# #
# #
# #
# #
# #

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Item 8 Restraint Area

Means (a) the Development Area, (b) any area within twenty-five (25) miles from any
Outlet operated by Developer, or Developer Affiliate, and (c) any area within twenty-five
(25) miles of any Chatime Restaurant.

Item 9 Restraint Period

A continuous uninterrupted period of two (2) years commencing on and from the expiration
or termination date of this Agreement.

Item 10 Development Fee

____________________________________________

Item 11 Transfer Fee

$5,000

Item 12 Franchisor’s Bank Account

Name of Bank: #insert#

Address of Bank: #insert#
SWIFT CODE: #insert#
Account name: #insert#
Account Number: #insert#

Item 13 Franchisor’s Address for Service

6000 Sepulveda Blvd.
Culver City, CA 90230
Tel. +61 202840880

Item 14 Developer’s Address for Service

Address: #insert#
Attn: #insert#
Email address: #insert#
Contact no.: #insert#

Item 15 Guarantor’s Address for Service

Address: #insert#
Attn: #insert#
Email address: #insert#
Contact no.: #insert#

Item 16 Insurance Policies

We currently require that you maintain the following insurance coverages

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medical expenses;
(b) franchisee commercial auto insurance with a $1 million combined single limit;
(c) workers compensation insurance with coverage limits of $1 million for bodily
injury by disease per accident, $1 million policy limit, and $1 million per
employee, regardless of state laws and cannot exclude owner-operators;
(d) property/business interruption coverage business personal property, tenant
improvements, equipment, business interruption, and franchisor royalties, for
a minimum of 12 months’ actual loss sustained;
(e) cyber liability insurance with minimum coverage limits of $250,000 per
occurrence and $250,000 aggregate;
(f) employment practices liability insurance with minimum coverage limits of
$500,000 per occurrence and $500,000 aggregate, which includes third party
liability and wage & hour coverage of at least $25,000, with a maximum
deductible that does not exceed $25,000; and
(g) crime insurance with a minimum coverage of $100,000 for each claim.

We reserve the right to update the insurance requirements for franchises in the future,
in order to address changing exposures and evolving risk factors. Franchisees will be
notified of any changes to the insurance requirements and are expected to comply
with the updated coverage standards. Some property owners may require higher
levels of commercial general liability insurance or other insurance coverage under
their leases.

Item 17 Financial Year

A year commencing on January 1 and finishing on December 31.

Item 18 Initial Store Opening Date

#insert#

Item 19 Governing Law

State of Delaware

Item 20 Arbitration Jurisdiction

New York, NY

Item 21 Terms of Trade

Trading condition: FOB Taiwan

Payment term: T/T in advance (without any bank charges)

Item 22 Special Conditions

Chatime Multi-Unit
Development Agreement I Page 49
This document was downloaded from [Link]. All the information on this website is published in good faith and for general information purpose only. [Link] does not make any warranties about the completeness, reliability, and
accuracy of this information. Any action you take upon the information you find on this website ([Link]), is strictly at your own risk. We will not be liable for any losses and/or damages in connection with the use of our website.
______________________________________________________

______________________________________________________

Chatime Multi-Unit
Development Agreement I Page 50
This document was downloaded from [Link]. All the information on this website is published in good faith and for general information purpose only. [Link] does not make any warranties about the completeness, reliability, and
accuracy of this information. Any action you take upon the information you find on this website ([Link]), is strictly at your own risk. We will not be liable for any losses and/or damages in connection with the use of our website.
Schedule 2 – Marks and Websites

La Kaffa International 6817092 United States August 16, 2022

Co., Ltd.

La Kaffa International 6310008 United States March 30, 2021

Co., Ltd.

Marks – Application Lodged, Registration Pending

Application Date of
Trademark Applicant Jurisdiction
Number Application

La Kaffa International United December 10,

88721635
Co., Ltd. States 2019

La Kaffa International 97182620 United States December 21,

Co., Ltd. 2021

Websites

Meta: #insert#

Instagram: #insert#

Twitter: #insert#

Other: #insert#
Chatime Unit FDD (2022)

LIST OF AGENTS FOR SERVICE OF PROCESS AND REGULATORY AUTHORITIES

STATE AGENTS FOR SERVICE OF PROCESS REGULATORY AUTHORITIES

California California Commissioner of Financial Department of Financial Protection
Protection and Innovation: and Innovation
320 West Fourth Street, Suite 750
Los Angeles: Los Angeles, CA 90013-2344
320 West Fourth Street, Suite 750 (213) 576-7505 or (866) 275-2677
Los Angeles, CA 90013-2344
(213) 576-7505 or (866) 275-2677

Sacramento:
2101 Arena Boulevard
Sacramento, CA 95834
(916) 445-7205 or (866) 275-2677

San Diego:
1350 Front Street, Suite 2034
San Diego, CA 92101-3697
(619) 525-4233 or (866) 275-2677

San Francisco:
One Sansome Street, Suite 600
San Francisco, CA 94104
(415) 972 8559 or (866) 275-2677
Hawaii Commissioner of Securities Business Registration Division
Hawaii Department of Commerce Hawaii Department of Commerce
and Consumer Affairs and Consumer Affairs
Business Registration Division 335 Merchant Street, Room 204
335 Merchant Street, Room 204 Honolulu, HI 96813
Honolulu, HI 96813 (808) 586-2722
(808) 586-2722
Illinois Illinois Attorney General Office of the Attorney General
Franchise Division Franchise Division
500 South Second Street 500 South Second Street
Springfield, IL 62706 Springfield, IL 62706
(217) 782-4465 (217) 782-4465
Indiana Indiana Secretary of State Indiana Secretary of State
Room E-111 Securities Division
302 West Washington Street Room E-111
Indianapolis, IN 46204 302 West Washington Street
(317) 232-6681 Indianapolis, IN 46204
(317) 232-6681
Maryland Maryland Securities Commissioner Maryland Office of Attorney General
Office of Attorney General Securities Division
Securities Division 200 St. Paul Place
200 St. Paul Place Baltimore, MD 21202
Baltimore, MD 21202-2020 (410) 576-0368
(410) 576-0368

New York New York Secretary of State New York State Department of Law
New York Department of State Investor Protection Bureau
99 Washington Avenue, Sixth Floor 28 Liberty Street, 21st Floor
Albany, NY 12231 New York, NY 10005
(212) 416-8222
North Dakota Securities Commissioner North Dakota Securities Department
North Dakota Securities Department 600 East Boulevard, Fifth Floor
Fifth Floor Bismarck, ND 58505
600 East Boulevard (701) 328-4712
Bismarck, ND 58505
Rhode Island Director of Rhode Island Department Division of Securities
of Business Regulation 1511 Pontiac Avenue
Division of Securities John O. Pastore Complex, Building 69-1
1511 Pontiac Avenue Cranston, RI 02920
John O. Pastore Complex, Building 69-1 (401) 462-9527
Cranston, RI 02920
(401) 462-9527
South Dakota Director of the Division of Securities Franchise Administrator
Division of Insurance Division of Insurance
Securities Regulation Securities Regulation
124 South Euclid, Suite 104 124 South Euclid, Suite 104
Pierre, SD 57501 Pierre, SD 57501
(605) 773-3563 (605) 773-3563

Texas [Not Applicable] Secretary of State

Statutory Document Section
P.O. Box 12887
Austin, TX 78711
(512) 475-1769
Utah [Not Applicable] Division of Consumer Protection
Utah Department of Commerce
160 East Three Hundred South
P.O. Box 45804
Salt Lake City, UT 84114
(801) 530-6601

CALIFORNIA ADDENDUM TO THE CHATIME FRANCHISE, LLC

FRANCHISE DISCLOSURE DOCUMENT

In recognition of the requirements of the California Franchise Investment Law, Cal. Corporations
Code §31000 et seq. the Chatime Franchise, LLC Franchise Disclosure Document for use in the
State of California will be amended as follows:

1. Neither Chatime Franchise, LLC (“we” or “us”) nor any person identified in Item 2 of the
Disclosure Document is currently subject to any currently effective order of any national securities
association or national securities exchange, as defined in the Securities Exchange Act of 1934, 15
U.S.C. 78a et seq., suspending or expelling such persons from membership in such association or
exchange.

2. Item 5 of the Disclosure Document will be supplemented with the following:

Payment of all initial fees is postponed until after all of Franchisor’s initial obligations are
completed and Franchisee is open for business.

3. Item 17 of the Disclosure Document will be supplemented with the following:

California Business and Professions Code §§20000 through 20043 provide rights to you
concerning termination, transfer, or nonrenewal of a franchise. If the Franchise Agreement
contains a provision that is inconsistent with the law, the law will control.

The Franchise Agreement provides for termination upon bankruptcy. This provision may
not be enforceable under federal bankruptcy law (11 U.S.C.A. §101 et seq.)

The Franchise Agreement requires application of the laws of Taiwan. This provision may
not be enforceable under California law.

The Franchise Agreement contains a covenant not to compete which extends beyond the
termination of the Franchise Agreement. This provision may not be enforceable under
California law.

The Franchise Agreement contains a forum selection clause that requires you to litigate
any dispute with us in Taiwan, and you must pay all expenses, including attorneys’ fees
and costs, incurred by us (a) to remedy any defaults of, or enforce any rights under, the
Franchise Agreement; (b) to effect termination of the Franchise Agreement; and (c) to
collect any amounts due under the Franchise Agreement. Prospective franchisees are
encouraged to consult private legal counsel to determine the applicability of California and
federal laws (such as Business and Professions Code §20040.5 and Code of Civil Procedure
§1281) to any provisions of the Franchise Agreement restricting venue to a forum outside
the State of California.

4. §31125 of the California Corporation Code requires us to give you a disclosure document,
in a form and containing such information as the Commissioner may by rule or order require, prior
to a solicitation of a proposed material modification of an existing franchise.

5. The Franchise Agreement requires that any action that is brought by you against us be
commenced in New York and that you must irrevocably submit to the jurisdiction of such court. This
provision may not be enforceable under California law.

6. Exhibit F to the Franchise Disclosure Document (Acknowledgement Addendum to

Franchise Agreement) is deleted. Franchisee and its principals are not required to complete and
sign the Acknowledgement Addendum.

7. Sections 21.1(1), (2), and (3), and 21.2(3) of the Franchise Agreement are deleted, and
Sections 19.1(1), (2) and (3), and 19.2(3) of the Multi-Unit Development Agreement are deleted.

8. No statement, questionnaire, or acknowledgement signed or agreed to by a franchisee in

connection with the commencement of the franchise relationship shall have the effect of (i)
waiving any claims under any applicable state franchise law, including fraud in the inducement,
or (ii) disclaiming reliance on any statement made by any franchisor, franchise seller, or other
person acting on behalf of the franchisor. This provision supersedes any other term of any
document executed in connection with the franchise.

9. THE CALIFORNIA FRANCHISE INVESTMENT LAW REQUIRES THAT A COPY

OF ALL PROPOSED AGREEMENTS RELATING TO THE SALE OF THE FRANCHISE BE
DELIVERED TOGETHER WITH THE DISCLOSURE DOCUMENT.

10. OUR WEBSITE HAS NOT BEEN REVIEWED OR APPROVED BY THE

CALIFORNIA DEPARTMENT OF FINANCIAL PROTECTION AND INNOVATION. ANY
COMPLAINTS CONCERNING THE CONTENT OF THIS WEBSITE MAY BE DIRECTED
TO THE CALIFORNIA DEPARTMENT OF FINANCIAL PROTECTION AND INNOVATION
AT [Link].

ILLINOIS

ILLINOIS ADDENDUM TO THE

CHATIME FRANCHISE, LLC FRANCHISE DISCLOSURE DOCUMENT

In recognition of the requirements of the Illinois Franchise Disclosure Act of 1987, the Chatime
Franchise, LLC Franchise Disclosure Document for use in the State of Illinois will be amended as
follows:

Items 5 and 7 of the Franchise Disclosure Document will be supplemented with the following:

Illinois law governs the Franchise Agreement.

In conformance with §4 of the Illinois Franchise Disclosure Act, any provision in a

franchise agreement that designates jurisdiction or venue in a forum outside the State of
Illinois is void. However, a franchise agreement may provide for arbitration to take place
outside of Illinois.

Your rights upon Termination and Non-Renewal are set forth in §§19 and 20 of the Illinois
Franchise Disclosure Act.

In conformance with §41 of the Illinois Franchise Disclosure Act, any condition,
stipulation, or provision purporting to bind any person acquiring any franchise to waive
compliance with the Illinois Franchise Disclosure Act or any other law of Illinois is void.

Exhibit F to the Franchise Disclosure Document (Acknowledgement Addendum to Franchise

Agreement) is deleted. Franchisee and its principals are not required to complete and sign the
Acknowledgement Addendum.

No statement, questionnaire, or acknowledgement signed or agreed to by a franchisee in connection

with the commencement of the franchise relationship shall have the effect of (i) waiving any claims
under any applicable state franchise law, including fraud in the inducement, or (ii) disclaiming
reliance on any statement made by any franchisor, franchise seller, or other person acting on behalf
of the franchisor. This provision supersedes any other term of any document executed in
connection with the franchise.

Each provision of this Addendum will be effective only to the extent, with respect to such
provision, that the jurisdictional requirements of the Illinois Franchise Disclosure Act of 1987 are
met independently without reference to this Addendum.

ILLINOIS AMENDMENT TO THE

CHATIME FRANCHISE, LLC FRANCHISE AGREEMENT

In recognition of the requirements of the Illinois Franchise Disclosure Act of 1987, the parties to
the Chatime Franchise, LLC Franchise Agreement (the “Franchise Agreement”) agree as follows:

1. Illinois law governs the Franchise Agreement.

2. In conformance with §4 of the Illinois Franchise Disclosure Act, any provision in a

franchise agreement that designates jurisdiction or venue in a forum outside the State of Illinois is
void. However, a franchise agreement may provide for arbitration to take place outside of Illinois.

3. Your rights upon Termination and Non-Renewal are set forth in §§19 and 20 of the Illinois
Franchise Disclosure Act.

4. In conformance with §41 of the Illinois Franchise Disclosure Act, any condition,
stipulation, or provision purporting to bind any person acquiring any franchise to waive
compliance with the Illinois Franchise Disclosure Act or any other law of Illinois is void.

5. Sections 21.1(1), (2), and (3), and 21.2(3) of the Franchise Agreement are deleted, and if
applicable, Sections 19.1(1), (2) and (3), and 19.2(3) of the Multi-Unit Development Agreement
are deleted.

6. No statement, questionnaire, or acknowledgement signed or agreed to by a franchisee in

Each provision of this Amendment will be effective only to the extent, with respect to such
provision, that the jurisdictional requirements of the Illinois Franchise Disclosure Act of 1987 are
met independently without reference to this Amendment.

IN WITNESS WHEREOF, the parties hereto have duly executed, sealed, and delivered this
Amendment to the Franchise Agreement on the same date as that on which the Franchise
Agreement was executed.

CHATIME FRANCHISE, LLC FRANCHISEE

By: By:

Name: Name:

Title: Title:

MARYLAND

MARYLAND ADDENDUM TO THE

CHATIME FRANCHISE, LLC FRANCHISE DISCLOSURE DOCUMENT

In recognition of the requirements of the Maryland Franchise Registration and Disclosure Law,
Md. Bus. Reg. Code Ann. §14-201 et seq., the Chatime Franchise, LLC Franchise Disclosure
Document for use in the State of Maryland will be amended as follows:

1. Items 17(c) and 17(m), under the headings entitled “Requirements for Franchisee to Renew
or Extend” and “Conditions for Franchisor Approval of Transfer,” will be amended by the addition
of the following language at the end of those sections:

However, a general release required as a condition of approval will not apply to any liability
under the Maryland Franchise Registration and Disclosure Law.

2. Item 17(f), under the heading entitled “Termination by Franchisor With Cause,” will be
amended by the addition of the following language at the end of the section:

The provision in the Franchise Agreement which provides for termination upon bankruptcy
of the franchisee may not be enforceable under federal bankruptcy law (11 U.S.C. §101 et
seq.).

3. Items 17(v) and 17(w), under the headings entitled “Choice of Forum” and “Choice of
Law,” will be amended by the addition of the following language at the end of those sections:

However, you may sue us in Maryland for claims arising under the Maryland Franchise
Registration and Disclosure Law.

4. Exhibit F to the Franchise Disclosure Document (Acknowledgement Addendum to

Franchise Agreement) is deleted. Franchisee and its principals are not required to complete and
sign the Acknowledgement Addendum.

5. No statement, questionnaire, or acknowledgement signed or agreed to by a franchisee in

6. Each provision of this Addendum will be effective only to the extent that the jurisdictional
requirements of the Maryland Franchise Registration and Disclosure Law, with respect to each
such provision, are met independently of this Addendum. The Addendum will have no force or
effect if such jurisdictional requirements are not met.

MARYLAND AMENDMENT TO THE

CHATIME FRANCHISE, LLC FRANCHISE AGREEMENT

In recognition of the requirements of the Maryland Franchise Registration and Disclosure Law,
Md. Bus. Reg. Code Ann. §14-201 et seq., the parties to the attached Chatime Franchise, LLC
Franchise Agreement (the “Franchise Agreement”) agree as follows:

1. Clauses 2.6(3)(h) and 26.2 of the Franchise Agreement, entitled “Options for New Term,”
and “Governing Law and Jurisdiction,” will be amended by the addition of the following at the
end of the clauses:

Provided that all rights enjoyed by Franchisee and any causes of action arising in
Franchisee’s favor from the provisions of the Maryland Franchise Registration and
Disclosure Law will remain in force, it being the intent of this provision that the non-waiver
provisions of the law be satisfied. To that effect, a general release will not apply to any
liability under the Maryland Franchise Registration and Disclosure Law.

2. Clause 26.12 of the Franchise Agreement, entitled “Entire Understanding,” will be

amended by the addition of the following at the end of the clause:

Nothing in this Agreement or any other agreement is intended to disclaim Franchisor’s

representations in Franchisor’s Franchise Disclosure Document.

3. Clause 26.1 of the Franchise Agreement, entitled “Choice of Law,” will be amended by the
addition of the following at the end of the clause:

Notwithstanding the above, Maryland franchisees are permitted to bring a lawsuit in

Maryland for claims arising under the Maryland Franchise Registration and Disclosure
Law.

4. Sections 21.1(1), (2), and (3), and 21.2(3) of the Franchise Agreement are deleted, and if
applicable, Sections 19.1(1), (2) and (3), and 19.2(3) of the Multi-Unit Development Agreement
are deleted.

5. No statement, questionnaire, or acknowledgement signed or agreed to by a franchisee in

6. Each provision of this Amendment will be effective only to the extent that the jurisdictional
requirements of the Maryland Franchise Registration and Disclosure Law, with respect to each
such provision, are met independently of the Amendment. This Amendment will have no force or
effect if such jurisdictional requirements are not met.

[SIGNATURE PAGE FOLLOWS]

IN WITNESS WHEREOF, the parties hereto have duly executed, sealed, and delivered this
Amendment to the Franchise Agreement on the same date as that on which the Franchise
Agreement was executed.

CHATIME FRANCHISE, LLC FRANCHISEE

By: By:

Name: Name:

Title: Title:

MINNESOTA

MINNESOTA ADDENDUM TO THE

CHATIME FRANCHISE, LLC FRANCHISE DISCLOSURE DOCUMENT

In recognition of the requirements of the Minnesota Franchise Act, Minn. Stat. §§80C.01 through
80C.22, and of the Rules and Regulations promulgated thereunder by the Minnesota
Commissioner of Commerce, Minn. Rules §§2860.0100 through 2860.9930, the Chatime
Franchise, LLC Franchise Disclosure Document for use in the State of Minnesota will be amended
to include the following:

1. Items 5 and 7 of the Disclosure Document will be supplemented with the following:

Payment of all initial fees is postponed until after all of Franchisor’s initial obligations are
completed and Franchisee is open for business.

2. In Item 17(m), under the heading entitled “Conditions for Franchisor Approval of
Transfer,” will be amended by adding the following language at the end of the section:

Any general release will not apply to any liability under the Minnesota Franchise Law.

3. In Items 17(b), 17(c), 17(f), and 17(k), under the headings entitled “Renewal or Extension
of the Term,” “Requirements for Franchisee to Renew or Extend,” “Termination by Franchisor
With Cause,” and “‘Transfer’ by Franchisee – Defined,” will be amended by adding the following
language at the end of those sections:

Minnesota law provides you with certain termination, non-renewal, and transfer rights. In
sum, Minn. Stat. §80C.14 (Subd. 3, 4, and 5) currently requires, except in certain specified
cases, that you be given 90 days’ notice of termination (with 60 days to cure) and 180 days’
notice of nonrenewal of the Franchise Agreement, and that consent to the transfer of the
franchise not be unreasonably denied.

4. In Item 17(v), under the heading entitled “Choice of Forum,” will be amended by adding
the following language at the end of the section:

Minn. Stat. §80C.21 and Minn. Rule 2860.4400J prohibit us from requiring litigation to be
conducted outside Minnesota. In addition, nothing in the Disclosure Document or
Franchise Agreement can abrogate or reduce any of your rights as provided for in Minn.
Stat. §80C, or your rights to any procedure, forum, or remedies provided for by the laws of
the State of Minnesota.

5. In Item 17(w), under the heading entitled “Choice of Law,” will be amended by adding the
following language at the end of the section:

This provision may not be enforceable under Minnesota law.

6. The Franchisor will protect the Franchisee’s right to use the trademarks, service marks,
trade names, logotypes, or other commercial symbols or indemnify the Franchisee from any loss,
costs, or expenses arising out of any claim, suit, or demand regarding the use of the name.

7. Minn. Rules §2860.4400(D) prohibits a franchisor from requiring a franchisee to assent to

a general release.

8. Any limitations of claims must comply with Minn. Stat. §80C.17, Subd. 5.

9. Exhibit F to the Franchise Disclosure Document (Acknowledgement Addendum to Franchise

Agreement) is deleted. Franchisee and its principals are not required to complete and sign the
Acknowledgement Addendum.

10. No statement, questionnaire, or acknowledgement signed or agreed to by a franchisee in

connection with the commencement of the franchise relationship shall have the effect of (i) waiving any
claims under any applicable state franchise law, including fraud in the inducement, or (ii) disclaiming
reliance on any statement made by any franchisor, franchise seller, or other person acting on behalf of
the franchisor. This provision supersedes any other term of any document executed in connection with
the franchise.

11. Each provision of this Addendum to the Disclosure Document will be effective only to the
extent, with respect to such provision, that the jurisdictional requirements of the Minnesota
Franchise Act, Minn. Stat. §§80C.01 through 80C.22 and of the Rules and Regulations
promulgated thereunder by the Minnesota Commissioner of Commerce, Minn. Rules §§2860.0100
through 2860.9930 are met independently without reference to this Addendum to the Disclosure
Document.

MINNESOTA AMENDMENT TO THE

CHATIME FRANCHISE, LLC FRANCHISE AGREEMENT

In recognition of the requirements of the Minnesota Franchise Act, Minn. Stat. §§80C.01 through
80C.22, and of the Rules and Regulations promulgated thereunder by the Minnesota Commissioner
of Commerce, Minn. Rules §§2860.0100 through 2860.9930, the parties to the attached Chatime
Franchise, LLC Franchise Agreement (the “Franchise Agreement”) agree as follows:

1. Clauses 2, 13, and 15 of the Franchise Agreement, under the headings “Grant of rights,”
“Transfer and other dealings by the Franchisee,” and “Termination of Agreement,” will be
supplemented by the addition of the following language:

Minnesota law provides franchisees with certain termination, non-renewal, and transfer
rights. In sum, Minn. Stat. §80C.14, Subd. 3, 4, and 5 currently requires, except specified
cases, that a franchisee be given 90 days’ notice of termination (with 60 days to cure) and
180 days’ notice of nonrenewal of the Franchise Agreement, and that consent to the transfer
of the franchise not be unreasonably withheld.

2. Clause 26.1 of the Franchise Agreement, under the heading entitled “Choice of Law,” will
be supplemented by the addition of the following language:

Pursuant to Minn. Stat. §80C.21, this Section 27.16 will not in any way abrogate or reduce
any of Franchisee’s rights as provided for in the Minnesota Franchise Law and the Rules
and Regulations promulgated thereunder by the Minnesota Commissioner of Commerce.

3. The Franchisor will protect the Franchisee’s right to use the trademarks, service marks,
trade names, logotypes, or other commercial symbols or indemnify the Franchisee from any loss,
costs, or expenses arising out of any claim, suit, or demand regarding the use of the name.

4. Minn. Rule §2860.4400(D) prohibits a franchisor from requiring a franchisee to assent to

a general release.

5. Any limitations of claims must comply with Minn. Stat. §80C.17, Subd. 5.

6. Sections 21.1(1), (2), and (3), and 21.2(3) of the Franchise Agreement are deleted, and if
applicable, Sections 19.1(1), (2) and (3), and 19.2(3) of the Multi-Unit Development Agreement
are deleted.

7. No statement, questionnaire, or acknowledgement signed or agreed to by a franchisee in

IN WITNESS WHEREOF, the parties hereto have duly executed, sealed, and delivered this
Amendment to the Franchise Agreement on the same date as that on which the Franchise
Agreement was executed.

CHATIME FRANCHISE, LLC FRANCHISEE

By: By:

Name: Name:

Title: Title:

NEW YORK

NEW YORK ADDENDUM TO THE

CHATIME FRANCHISE, LLC FRANCHISE DISCLOSURE DOCUMENT

In recognition of the requirements of the New York General Business Law, Article 33, §§680
through 695, and of the Codes, Rules, and Regulations of the State of New York, Title 13, Chapter
VII, §§200.1 through 201.16, the Chatime Franchise, LLC Franchise Disclosure Document for use
in the State of New York will be amended as follows:

1. The “Special Risks to Consider About This Franchise” listed on page “iv” of the Franchise
Disclosure Document will be supplemented with the following additional risk(s):

2. The franchisor may, if it chooses, negotiate with you about items covered in the
Franchise Disclosure Document. However, the franchisor cannot use the negotiating
process to prevail upon a prospective franchisee to accept terms which are less favorable
than those set forth in this Franchise Disclosure Document.

2. The following is added at the end of Item 3:

Except as provided above, with regard to the franchisor, its predecessor, a person identified
in Item 2, or an affiliate offering franchises under the franchisor’s principal trademark:

A. No such party has an administrative, criminal, or civil action pending against that
person alleging a felony, a violation of a franchise, antitrust, or securities law, fraud,
embezzlement, fraudulent conversion, misappropriation of property, unfair or deceptive
practices, or comparable civil or misdemeanor allegations.

B. No such party has pending actions, other than routine litigation incidental to the
business, which are significant in the context of the number of franchisees and the size,
nature, or financial condition of the franchise system or its business operations.

C. No such party has been convicted of a felony or pleaded nolo contendere to a felony
charge or, within the ten-year period immediately preceding the application for registration,
has been convicted of or pleaded nolo contendere to a misdemeanor charge or has been the
subject of a civil action alleging violation of a franchise, antifraud, or securities law, fraud;
embezzlement, fraudulent conversion or misappropriation of property, unfair or deceptive
practices, or comparable allegations.

D. No such party is subject to a currently effective injunctive or restrictive order or

decree relating to the franchise, or under a federal, state, or Canadian franchise, securities,
antitrust, trade regulation, or trade practice law, resulting from a concluded or pending
action or proceeding brought by a public agency, is subject to any currently effective order
of any national securities association or national securities exchange, as defined in the
Securities and Exchange Act of 1934, suspending or expelling such person from
membership in such association or exchange, or is subject to a currently effective injunctive
or restrictive order relating to any other business activity as a result of an action brought

by a public agency or department including, without limitation, actions affecting a license

as a real estate broker or sales agent.

3. The following is added to the end of the “Summary” sections of Item 17(c), “Requirements
for franchisee to renew or extend,” and Item 17(m), “Conditions for franchisor approval of
transfer:”

However, to the extent required by applicable law, all rights you enjoy and any causes of
action arising in your favor from the provisions of Article 33 of the General Business Law
of the State of New York and the regulations issued thereunder will remain in force; it
being the intent of this provision that the non-waiver provisions of General Business Law
§§687.4 and 687.5 be satisfied.

4. The following language replaces the “Summary” section of Item 17(d), “Termination by
franchisee:”

You may terminate the Agreement on any grounds available by law.

5. The following is added to the end of the “Summary” sections of Item 17(v), “Choice of
forum,” and Item 17(w), “Choice of law:”

The foregoing choice of law should not be considered a waiver of any right conferred upon
the Franchisor or upon the Franchisee by Article 33 of the General Business Law of the
State of New York.

6. Exhibit F to the Franchise Disclosure Document (Acknowledgement Addendum to

Franchise Agreement) is deleted. Franchisee and its principals are not required to complete and
sign the Acknowledgement Addendum.

7. No statement, questionnaire, or acknowledgement signed or agreed to by a franchisee in

NEW YORK AMENDMENT TO THE

CHATIME FRANCHISE, LLC FRANCHISE AGREEMENT

In recognition of the requirements of the New York General Business Law, Article 33, the parties
to the attached Chatime Franchise, LLC Franchise Agreement (the “Franchise Agreement”) agree
as follows:

1. Section 2.6(3)(h) of the Franchise Agreement, “Option for New Term,” will be amended
by adding the following language at the end of the Section:

2. Clause 26.1 of the Franchise Agreement, “Choice of Law,” will be amended by adding the
following language at the end of the Clause:

However, the foregoing choice of law should not be considered a waiver of any right
conferred upon the Franchisor or upon the Franchisee by Article 33 of the General Business
Law of the State of New York.

3. Sections 21.1(1), (2), and (3), and 21.2(3) of the Franchise Agreement are deleted, and if
applicable, Sections 19.1(1), (2) and (3), and 19.2(3) of the Multi-Unit Development Agreement
are deleted.

4. No statement, questionnaire, or acknowledgement signed or agreed to by a franchisee in

5. Each provision of this Amendment will be effective only to the extent that the jurisdictional
requirements of the New York General Business Law, Article 33, §§680 through 695, and of the
Codes, Rules, and Regulations of the State of New York, Title 13, Chapter VII, §§200.1 through
201.16, with respect to each such provision, are met independent of the Amendment. This
Amendment will have no force or effect if such jurisdictional requirements are not met.

IN WITNESS WHEREOF, the parties hereto have duly executed, sealed, and delivered this
Amendment to the Franchise Agreement on the same date as that on which the Franchise
Agreement was executed.

CHATIME FRANCHISE, LLC FRANCHISEE

Name: Name:

Title: Title:

NORTH DAKOTA

NORTH DAKOTA ADDENDUM TO THE

CHATIME FRANCHISE, LLC FRANCHISE DISCLOSURE DOCUMENT

THE SECURITIES COMMISSIONER HAS HELD THE FOLLOWING TO BE UNFAIR,

UNJUST, OR INEQUITABLE TO NORTH DAKOTA FRANCHISEES (NORTH DAKOTA
CENTURY CODE (“NDCC”) §51-19-09):

A. Restrictive Covenants: Franchise disclosure documents that disclose the existence of

covenants restricting competition contrary to NDCC §9-08-06, without further disclosing
that such covenants will be subject to the statute.

B. Situs of Arbitration Proceedings: Franchise agreements providing that the parties must
agree to the arbitration of disputes at a location that is remote from the site of the
franchisee’s business.

C. Restrictions on Forum: Requiring North Dakota franchisees to consent to the jurisdiction

of courts outside of North Dakota.

D. Liquidated Damages and Termination Penalties: Requiring North Dakota franchisees to

consent to liquidated damages or termination penalties.

E. Applicable Laws: Franchise agreements that specify that they are to be governed by the
laws of a state other than North Dakota.

F. Waiver of Trial by Jury: Requiring North Dakota franchises to consent to the waiver of a
trial by jury.

G. Waiver of Exemplary and Punitive Damages: Requiring North Dakota franchisees to

consent to a waiver of exemplary and punitive damage.

H. General Release: Franchise Agreements that require the franchisee to sign a general release
upon renewal of the franchise agreement.

I. Limitation of Claims: Franchise agreements that require the franchisee to consent to a

limitation of claims. The statute of limitations under North Dakota law applies.

J. Enforcement of Agreement: Franchise agreements that require the franchisee to pay all
costs and expenses incurred by the franchisor in enforcing the agreement. The prevailing
party in any enforcement action is entitled to recover all costs and expenses including
attorney’s fees.

In recognition of the requirements of NDCC §51-19-09, the Franchise Disclosure Document of

Chatime Franchise, LLC for use in the State of North Dakota will be amended to include the
following:

1. Item 17(c) will be supplemented by the addition of the following language:

You will not be required to sign a general release upon renewal of the Franchise Agreement.

2. Item 17(i) will be supplemented by the addition of the following language:

You will not be required to consent to liquidated damages or termination penalties.

3. Item 17(r) will be supplemented by the addition of the following language:

All covenants restricting competition are subject to NDCC §9-08-06. Covenants not to
compete such as those mentioned above are generally considered unenforceable in the State
of North Dakota.

4. The language in Item 17(u) will be deleted and replaced by the following language:

Most disputes and claims relating to the Franchise Agreement will be settled by arbitration
under the Arbitration Rules of the JAMS arbitration service at a location agreeable to all
parties.

5. The language in Item 17(v) will be deleted and replaced by the following language:

All litigation must be brought in North Dakota.

6. The language in Item 17(w) will be deleted and replaced by the following language:

All disputes will be governed by the laws of the State of North Dakota.

7. Exhibit F to the Franchise Disclosure Document (Acknowledgement Addendum to

Franchise Agreement) is deleted. Franchisee and its principals are not required to
complete and sign the Acknowledgement Addendum.

8. No statement, questionnaire, or acknowledgement signed or agreed to by a

franchisee in connection with the commencement of the franchise relationship shall
have the effect of (i) waiving any claims under any applicable state franchise law,
including fraud in the inducement, or (ii) disclaiming reliance on any statement
made by any franchisor, franchise seller, or other person acting on behalf of the
franchisor. This provision supersedes any other term of any document executed in
connection with the franchise.

NORTH DAKOTA AMENDMENT TO THE

CHATIME FRANCHISE, LLC FRANCHISE AGREEMENT

In recognition of the requirements of North Dakota Century Code (“NDCC”) §51-19-09, the parties to
the attached Chatime Franchise, LLC Franchise Agreement (the “Franchise Agreement”) agree as
follows:

1. The following language will be added at the end of Clause 2.6(3)(h) of the Franchise
Agreement:

You will not be required to sign a general release upon renewal of the Franchise Agreement.

2. The following language will be added at the end of Clause 9.2(2) of the Franchise Agreement:

All covenants restricting competition are subject to NDCC §9-08-06. Covenants not to
compete such as those mentioned above are generally considered unenforceable in the State of
North Dakota.

3. The second sentence of Clause 16.3(2) of the Franchise Agreement is hereby deleted in
its entirety, and replaced with the following:

Such arbitration will take place before a single arbitrator at a location agreeable to all parties.
Any action that is not otherwise subject to arbitration under Clause 16 (including all appeals
from or relating to arbitration hereunder), whether or not arising out of, or relating to, this
Agreement, brought by Franchisee (or any principal thereof) against Franchisor will be brought
in federal court in the State of North Dakota, or if such court does not have competent
jurisdiction, in a state court located in North Dakota.

6. The language in Clause 26.9 of the Franchise Agreement, under the heading “Costs and
Expenses,” is hereby deleted in its entirety, and replaced with the following:

The prevailing party must pay or reimburse the non-prevailing party, on demand, for all of its
Costs (including legal Costs on a solicitor and own client or full indemnity basis, whichever is
the greater) in connection with or incidental to:

(a) Any default by the Franchisee in observing or performing any of its obligations under
this Agreement

(b) Any termination of this Agreement; and

(c) The contemplated, attempted or actual enforcement, preservation or exercise of any

right under this Agreement including the obtaining by the Franchisor of any advice or

information as to its rights under this Agreement or otherwise arising from a breach of this
Agreement by the Franchisee.

7. The language in Clause 26.1 of the Franchise Agreement is hereby deleted it its entirety, and
replaced with the following:

This Agreement will be interpreted and construed exclusively under the laws of the State of
North Dakota.

8. Sections 21.1(1), (2), and (3), and 21.2(3) of the Franchise Agreement are deleted, and if
applicable, Sections 19.1(1), (2) and (3), and 19.2(3) of the Multi-Unit Development Agreement are
deleted.

9. No statement, questionnaire, or acknowledgement signed or agreed to by a franchisee in

connection with the commencement of the franchise relationship shall have the effect of (i) waiving
any claims under any applicable state franchise law, including fraud in the inducement, or (ii)
disclaiming reliance on any statement made by any franchisor, franchise seller, or other person acting
on behalf of the franchisor. This provision supersedes any other term of any document executed in
connection with the franchise.

10. Each provision of this Amendment will be effective only to the extent, with respect to such
provision, that the jurisdictional requirements of the North Dakota Franchise Investment Law are met
independently without reference to this Amendment.

IN WITNESS WHEREOF, the parties hereto have duly executed this North Dakota Amendment to the
Franchise Agreement on the same date as that on which the Franchise Agreement was executed.

CHATIME FRANCHISE, LLC FRANCHISEE

By: By:

Name: Name:

Title: Title:

WASHINGTON

WASHINGTON ADDENDUM TO THE

CHATIME FRANCHISE, LLC FRANCHISE DISCLOSURE DOCUMENT

In recognition of the requirements of the Washington Franchise Investment Protection Act, RCW
§§19.100.010 through 19.100.940, the Chatime Franchise, LLC Franchise Disclosure Document for
the offer and sale of franchises in the State of Washington will be amended as follows:

1. The “Special Risks to Consider About This Franchise” listed on page “iv” of the Franchise
Disclosure Document will be supplemented with the following additional risk:

“2. The Franchisor is at an early stage of development and has a limited experience
with franchising. Therefore, this franchise opportunity presents more risk than that of a
company with longer operating history.”

2. In the event of a conflict of laws, the provisions of the Washington Franchise Investment
Protection Act, RCW §19.100 will prevail.

3. RCW §19.100.180 may supersede the Franchise Agreement in your relationship with the
Franchisor including the areas of termination and renewal of your franchise. There may be court
decisions which may supersede the Franchise Agreement in your relationship with the Franchisor
including the areas of termination and renewal of your franchise.

4. In any arbitration or mediation involving a franchise purchased in Washington, the arbitration

or mediation site will be either in the State of Washington, or in a place mutually agreed upon at the
time of the arbitration or mediation, or as determined by the arbitrator or mediator at the time of
arbitration or mediation. In addition, if litigation is not precluded by the franchise agreement, a
franchisee may bring an action or proceeding arising out of or in connection with the sale of franchises,
or a violation of the Washington Franchise Investment Protection Act, in Washington.

5. A release or waiver of rights executed by a franchisee will not include rights under the
Washington Franchise Investment Protection Act or any rule or order thereunder except when executed
pursuant to a negotiated settlement after the agreement is in effect and where the parties are represented
by independent counsel. Provisions such as those which unreasonably restrict or limit the statute of
limitations period for claims under the Act, rights, or remedies under the Act such as a right to a jury
trial may not be enforceable.

6. Transfer fees are collectable to the extent that they reflect the Franchisor’s reasonable estimated
or actual costs in effecting a transfer.

7. Pursuant to RCW §49.62.020, a noncompetition covenant is void and unenforceable against an

employee, including an employee of a franchisee, unless the employee’s earnings from the party
seeking enforcement, when annualized, exceed $100,000 per year (an amount that will be adjusted
annually for inflation). In addition, a noncompetition covenant is void and unenforceable against an

independent contractor of a franchisee under RCW §49.62.030 unless the independent contractor’s
earnings from the party seeking enforcement, when annualized, exceed $250,000 per year (an amount
that will be adjusted annually for inflation). As a result, any provisions contained in the Franchise
Agreement or elsewhere that conflict with these limitations are void and unenforceable in Washington.

8. RCW §49.62.060 prohibits a franchisor from restricting, restraining, or prohibiting a franchisee

from (i) soliciting or hiring any employee of a franchisee of the same franchisor, or (ii) soliciting or
hiring any employee of the franchisor. As a result, any such provisions contained in the Franchise
Agreement or elsewhere are void and unenforceable in Washington.

9. Exhibit F to the Franchise Disclosure Document (Acknowledgement Addendum to Franchise

Agreement) is deleted. Franchisee and its principals are not required to complete and sign the
Acknowledgement Addendum.

10. No statement, questionnaire, or acknowledgement signed or agreed to by a franchisee in

connection with the commencement of the franchise relationship shall have the effect of (i) waiving
any claims under any applicable state franchise law, including fraud in the inducement, or (ii)
disclaiming reliance on any statement made by any franchisor, franchise seller, or other person acting
on behalf of the franchisor. This provision supersedes any other term of any document executed in
connection with the franchise

Each provision of this Addendum to the Franchise Disclosure Document will be effective only to the
extent, with respect to such provision, that the jurisdictional requirements of the Washington Franchise
Investment Protection Act, RCW §§19.100.010 through 19.100.940, are met independently without
reference to this Addendum.

WASHINGTON AMENDMENT TO THE

CHATIME FRANCHISE, LLC FRANCHISE AGREEMENT

In recognition of the requirements of the Washington Franchise Investment Protection Act, RCW
§§19.100.010 through 19.100.940, the parties to the attached Chatime Franchise, LLC Franchise
Agreement (the “Franchise Agreement”) agree as follows:

1. Clause 2.1(3) of the Franchise Agreement, under the heading “Grant of rights for the Initial
Term,” will be supplemented by the addition of the following language:

We agree not to compete unfairly with you within your Territory.

2. In the event of a conflict of laws, the provisions of the Washington Franchise Investment
Protection Act, RCW §19.100 will prevail.

4. In any arbitration or mediation involving a franchise purchased in Washington, the arbitration

5. A release or waiver of rights executed by a franchisee will not include rights under the
Washington Franchise Investment Protection Act or any rule or order thereunder except when executed
pursuant to a negotiated settlement after the agreement is in effect and where the parties are represented
by independent counsel. Provisions such as those which unreasonably restrict or limit the statute of
limitations period for claims under the Act, rights or remedies under the Act such as a right to a jury
trial may not be enforceable.

6. Transfer fees are collectable to the extent that they reflect the Franchisor’s reasonable estimated
or actual costs in effecting a transfer.

7. Pursuant to RCW §49.62.020, a noncompetition covenant is void and unenforceable against an

employee, including an employee of a franchisee, unless the employee’s earnings from the party
seeking enforcement, when annualized, exceed $100,000 per year (an amount that will be adjusted

annually for inflation). In addition, a noncompetition covenant is void and unenforceable against an
independent contractor of a franchisee under RCW §49.62.030 unless the independent contractor’s
earnings from the party seeking enforcement, when annualized, exceed $250,000 per year (an amount
that will be adjusted annually for inflation). As a result, any provisions contained in the Franchise
Agreement or elsewhere that conflict with these limitations are void and unenforceable in Washington.

8. RCW §49.62.060 prohibits a franchisor from restricting, restraining, or prohibiting a franchisee

9. Sections 21.1(1), (2), and (3), and 21.2(3) of the Franchise Agreement are deleted, and if
applicable, Sections 19.1(1), (2) and (3), and 19.2(3) of the Multi-Unit Development Agreement are
deleted.

10. No statement, questionnaire, or acknowledgement signed or agreed to by a franchisee in

connection with the commencement of the franchise relationship shall have the effect of (i) waiving
any claims under any applicable state franchise law, including fraud in the inducement, or (ii)
disclaiming reliance on any statement made by any franchisor, franchise seller, or other person acting
on behalf of the franchisor. This provision supersedes any other term of any document executed in
connection with the franchise

Each provision of this Amendment will be effective only to the extent, with respect to such provision,
that the jurisdictional requirements of the Washington Franchise Investment Protection Act, RCW
§§19.100.010 through 19.100.940, are met independently without reference to this Amendment.

IN WITNESS WHEREOF, the parties hereto have duly executed, sealed, and delivered this
Amendment to the Franchise Agreement on the same date as that on which the Franchise Agreement
was executed.

CHATIME FRANCHISE, LLC FRANCHISEE

By: By:

Name: Name:

Title: Title:

ACKNOWLEDGMENT ADDENDUM TO
CHATIME FRANCHISE, LLC
FRANCHISE AGREEMENT

As you know, you and we are entering into a Franchise Agreement for the operation of a Chatime
franchise. The purpose of this Acknowledgment Addendum is to determine whether any
statements or promises were made to you that we have not authorized or that may be untrue,
inaccurate or misleading, and to be certain that you understand the limitations on claims that may
be made by you by reason of the offer and sale of the franchise and operation of your business.
Please review each of the following questions carefully and provide honest responses to each
question.

Acknowledgments and Representations

1. Did you receive a copy of our Franchise Disclosure Document (and all exhibits and
attachments) at least 14 calendar days prior to signing the Franchise Agreement? Check
one: ( ) Yes ( ) No. If no, please comment:

2. Have you studied and reviewed carefully our Franchise Disclosure Document and
Franchise Agreement? Check one: ( ) Yes ( ) No. If no, please comment:

3. Did you understand all the information contained in both the Franchise Disclosure
Document and the Franchise Agreement? Check one ( ) Yes ( ) No. If no, please comment:

F-1

5. Except as stated in Item 19 of the Franchise Disclosure Document, did any employee or
other person speaking on behalf of Chatime Franchise, LLC make any oral, written, or
visual claim, statement, promise, or representation to you that stated, suggested, predicted,
or projected sales, revenues, expenses, earnings, income, or profit levels at any Chatime
location or business, or the likelihood of success at your franchised business? Check one:
( ) Yes ( ) No. If yes, please state in detail the oral, written or visual claim or representation:

6. Did any employee or other person speaking on behalf of Chatime Franchise, LLC make
any statement or promise regarding the costs involved in operating a franchise that is not
contained in the Franchise Disclosure Document or that is contrary to, or different from,
the information contained in the Franchise Disclosure Document?
Check one: ( ) Yes ( ) No. If yes, please comment:

7. Do you understand that that we and our affiliates have the right to issue franchises or
operate competing businesses for or at locations, as we determine, as described in the
Franchise Agreement? Check one: ( ) Yes ( ) No. If no, please comment:

8. Do you understand that the Franchise Agreement and Franchise Disclosure Document
contain the entire agreement between you and us concerning the franchise for the System,
meaning that any prior oral or written statements not set out in the Franchise Agreement or
Franchise Disclosure Document will not be binding? Check one: ( ) Yes ( ) No. If no,
please comment:

F-2

10. Do you understand that you are bound by the non-compete covenants (both in-term and
post-term) listed in the Franchise Agreement and that an injunction is an appropriate
remedy to protect the interest of the System if you violate the covenant? Further, do you
understand that the term “you” for purposes of the non-compete covenants is defined
broadly in the Franchise Agreement, such that any actions in violation of the covenants by
those holding any interest in the franchisee entity may result in an injunction, default and
termination of the Franchise Agreement?
Check one ( ) Yes ( ) No. If no, please comment:

11. On the receipt pages of your Franchise Disclosure Document you identified

as the franchise sellers involved in this franchise sales process. Are the franchise sellers
identified above the only franchise sellers involved with this transaction?
Check one ( ) Yes ( ) No. If no, please identify any additional franchise sellers involved
with this transaction:

[SIGNATURE PAGE FOLLOWS]

F-3

NOTE: IF THE RECIPIENT IS A BUSINESS ENTITY, EACH OF ITS PRINCIPAL

OWNERS MUST EXECUTE THIS ACKNOWLEDGMENT.

FRANCHISEE:

By:

Name:

Title:

By:
individually

Name:

By:
Individually

Name:

F-4

State Name Add Telephone No. Contact Person

ress
California JK Chatime Corp.* 168 Las Tunas Drive, #103, (619) 399-6096 Xuxin Zhang
Arcadia, CA 91007 (Bella)

Georgia Mai Bakery Inc.* 7804 Abercorn Steet FD-9, (917) 346-5056 Xian Zi Wu
Savannah, GA 31406

Kansas Chatime KC LLC** 0150-A West 119th Street, Overland (816)509-6373 Jainarine
Park, KS 66213 Ramkumar

Maryland Lucky Leaf, LLC** 8137 Honeygo Blvd Nottingham, MD (215) 796-1128 Chi Kin Lau
21236
Maryland Lucky Leaf, LLC** 1114 Light Street (215) 796-1128 Chi Kin Lau
Baltimore, MD 21230
Maryland Lucky Leaf, LLC** 512 Baltimore Pike Bel Air, MD 21014 (215 796-1128 Chi Kin Lau

Maryland Lucky Leaf, LLC** 40 W. Chesapeake Ave, Suite TN1, (215 796-1128 Chi Kin Lau
Towson, MD 21204
Maryland Lucky Leaf, LLC** 5219 Buckeystown Pike, (215 796-1128 Chi Kin Lau
Fredrick, MD 21704
Maryland Lucky Leaf, LLC** 10902 Boulevarde Circle, Suite 2, (215 796-1128 Chi Kin Lau
Owings Mills, MD 21117
New York Wowlol Inc. ** 858 Lexington Avenue, NY, NY (631) 565-1691 Steven Cui Yue

North Boba Time Inc. ** 551A S. 7th Street, Bismarck, ND (626) 278-6779 Windra Hiu
Dakota 58504
Washington Diana Lee, Ngoc- 6014 Martin Luther King Jr. Way (206) 466-2791 Diana Lee, Ngoc-
Uyen Tran ** South, Seattle, Washington Uyen Tran

Former Franchisees

The chart below includes all franchisees, subfranchisees or licensees that had an outlet transferred,
terminated, canceled, not renewed, or otherwise voluntarily or involuntarily ceased doing business in our
last fiscal year, or that had not communicated with us or our affiliates within ten weeks of the date of this
Disclosure Document.

State City Telephone No. Name Basis for Inclusion

California Irvine (866-934-4812 Luxury Goods USA, Voluntarily ceased operation

Inc./Wei-Ching
Chang **

G-1

Notes to both tables:

“*” means outlets issued franchise or license agreements by our affiliate La Kaffa.

**” means outlets issued franchise or license agreements by our affiliate Chatime USA.

All of the current and former franchisees listed in this Exhibit are or were operated by franchisees,
licensees, subfranchisors, or subfranchisees pursuant to franchise agreements issued by our affiliates
Chatime USA LLC or La Kaffa or the subfranchisees of Chatime USA LLC’s subfranchisors. The
franchisees, licensees, and subfranchisees of our affiliates Chatime USA LLC and La Kaffa are
included in these tables because they are outlets of a type substantially similar to that offered to you.
Because we have just started issuing franchises, we have never had any franchised outlets.

G-1

OPERATIONS MANUAL TABLE OF CONTENTS

STATE EFFECTIVE DATES

The following states have franchise laws that require that the Franchise Disclosure
Document be registered or filed with the states, or be exempt from registration: California, Hawaii,
Illinois, Indiana, Maryland, Michigan, Minnesota, New York, North Dakota, Rhode Island, South
Dakota, Virginia, Washington, and Wisconsin.

This document is effective and may be used in the following states, where the document is
filed, registered, or exempt from registration, as of the Effective Date stated below:

State Effective Date

California
Hawaii
Illinois
Indiana
Maryland
Michigan
Minnesota
New York
North Dakota
Rhode Island
South Dakota
Virginia
Washington
Wisconsin

Other states may require registration, filing, or exemption of a franchise under other laws, such as
those that regulate the offer and sale of business opportunities or seller- assisted marketing plans.

RECEIPT

This Franchise Disclosure Document summarizes certain provisions of the franchise agreement and other information
in plain language. Read this Franchise Disclosure Document and all agreements carefully.

If Chatime Franchise, LLC offers you a franchise, it must provide this Franchise Disclosure Document to you: (a) 14
calendar days before you sign a binding agreement with, or make a payment to, the franchisor or an affiliate in
connection with the proposed franchise sale or at your reasonable request, or (b) under New York and Rhode Island
law, if applicable, at the earlier of (i) your first personal meeting to discuss the franchise, or (ii) ten business days
before you sign a binding agreement with, or make payment to the franchisor or an affiliate in connection with the
proposed franchise sale, or (c) under Michigan and Washington law, if applicable, at least ten business days before
you sign any binding franchise or other agreement or pay any consideration to the franchisor or an affiliate, whichever
occurs first.

If Chatime Franchise, LLC does not deliver this Franchise Disclosure Document on time or if it contains a false or
misleading statement, or a material omission, a violation of federal law and state law may have occurred and should
be reported to the Federal Trade Commission, Washington, D.C. 20580 and the state agency listed in Exhibit C to this
Franchise Disclosure Document.

The name, address and telephone number of the franchise seller offering the franchise are listed below:

___________________________________________________________________________________________

This Franchise Disclosure Document was issued: April 18, 2023 (see Exhibit I for state effective dates).

Chatime Franchise, LLC, authorizes the respective state agencies identified in Exhibit D to receive service of process
for it in the particular state. For all other states, the franchisor’s agent for service of process is A Registered Agent,
Inc., 8 The Green, Suite A, Dover, Delaware 19901.

I received a Franchise Disclosure Document issued April 18, 2023. Included are the following :

Exhibit A – Financial Statements

Exhibit B –Franchise Agreement
Exhibit C – Multi-Unit Development Agreement
Exhibit D – List of Agents for Service of Process and Regulatory Authorities
Exhibit E – Addenda Required by State(s)
Exhibit F – Acknowledgment Addendum to Chatime Franchise, LLC Franchise Agreement
Exhibit G – List of Franchisees
Exhibit H – Operations Manual Table of Contents
Exhibit I – State Effective Dates
Exhibit J – Receipt

Date: By:

Name:

Please remove this page, sign and date this page, and keep if for your records.

The name, address and telephone number of the franchise seller offering the franchise are listed below:

___________________________________________________________________________________________

This Franchise Disclosure Document was issued: April 18, 2023 (see Exhibit I for state effective dates).

I received a Franchise Disclosure Document issued April 18, 2023. Included are the following:

Exhibit A – Financial Statements

Date: By:

Name:

Please remove this page, sign and date this page and return this page to Chatime Franchise, LLC, 6000
Sepulveda Blvd., Culver City, CA 90230 or [Link]@[Link]

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