Key Items to Watch out for in the WETZEL’S PRETZELS, LLC 2020 FDD

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 California. 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 California than in your own state. 2. COVID-19. The coronavirus disease (“COVID-19”) pandemic may have a material adverse impact on our operations, financial performance, and the bakery and fast-food industries in general. The COVID-19 pandemic has resulted in, and is expected to continue to result in, a substantial curtailment of business activities (including restrictions and prohibitions on bakery and fast-food operations), and weakened economic conditions. This unprecedented situation has created risks and uncertainties for us and we are unable to predict the full extent to which COVID-19 will continue to adversely impact us, our industry, our franchisees and our customers. The volatile economic conditions stemming from COVID-19 could precipitate or aggravate risk factors identified herein and affect our operations and financial performance in a manner that is not presently known to us or that we currently do not consider to present significant risks. The ultimate impact of the pandemic will depend on evolving factors, many of which are not within our control.

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.

Item 5: Initial Fees

Initial Franchise Fee When you sign a franchise agreement for a Bakery, you will pay us the initial franchise fee in cash or other form of payment that will make the funds immediately available to us (such as wire transfer or cashier’s check). The initial franchise fee for a Bakery is $35,000. If you are an existing franchisee, the initial franchise fee for a second or subsequent Bakery is $22,500. This fee is generally uniform to all franchisees, except that Wetzel’s Pretzels may waive or reduce the initial franchise fee for appropriate business reasons, in our sole discretion, including for franchisees who operate their franchises in non-traditional locations such as convenience stores, travel plazas or Walmart locations. For example, Wetzel’s Pretzels is testing the viability of Bakeries operating from colleges, universities and airports, where the franchise fee and agreement terms may vary. We may change or withdraw these programs at any time. In the past, Wetzel’s Pretzels has offered franchises at lower and varying initial fees and may continue to do so in the future. Veteran’s and Active-Duty Military Discount. If you provide acceptable documentation that you have received an honorable discharge from the U.S. Army, U.S. Navy, U.S. Marine Corps., U.S. Air Force or U.S. Coast Guard or if you are currently serving in any of the U.S. armed forces, we offer a discount, if you meet our program requirements, of $10,000 on an initial franchise fee of $35,000 for a single Bakery, or a discount of $5,000 on an initial franchise fee between $15,000 and $20,000 for a single non-traditional location. First Responder’s Discount. If you are currently employed as a police officer, fire fighter or emergency medical technician/paramedic or was employed in that role and honorably discharged within the previous five years, we offer a discount, if you meet our program requirements and provide acceptable documentation, of $10,000 on an initial franchise fee of $35,000 for a single Bakery, or a discount of $5,000 on an initial franchise fee between $15,000 and $20,000 for a single non-traditional location.. Existing Franchisee Discount. If you are a current franchisee of ours, we offer a discount, if you are in good standing with us and meet our program requirements, of $10,000 on an initial franchise fee of $35,000 for a single Bakery, or a discount of $5,000 on an initial franchise fee between $15,000 and $20,000 for a single non-traditional location. The above discounts apply to certain purchases, as described above, and cannot be combined. If a discount applies, only one will applied to the initial franchise fee, even if you qualify for more than one discount (Veteran’s and Active-Duty Military Discount, First Responder’s Discount and/or Existing Franchisee Discount). If you will operate your franchise from a Concession Truck or Trailer, then the initial franchise fee is $5,000 to be paid in cash or other form of payment that will make the funds immediately available to us (such as wire transfer or cashier’s check). Currently, we do not offer discounts for subsequent Concession Trucks or Trailers. The initial franchise fee is generally uniform to all franchisees who will operate their franchises from Concession Trucks or Trailers, except that Wetzel’s Pretzels may waive or reduce the initial franchise fee for appropriate business reasons, in our sole discretion.

Initial Development Fee (Bakeries Only) When you sign our current form of Multi-Unit Development Agreement, you must pay us an initial development fee equal to $15,000 multiplied by the number of WETZEL’S PRETZELS(R) Bakeries which you must open, plus the balance of the initial franchise fee ($20,000) for your first franchise agreement. When we accept the site for each Bakery, you will sign a separate franchise agreement and pay us an initial franchise fee of $35,000 (or $22,500 for a second Bakery in the same mall). However, we will credit the development fee against the initial franchise fees (at the rate of $15,000 for the second and each subsequent franchise agreement until the development fee is exhausted). If you signed a form of Multi-Unit Development Agreement which differs from our current form, your initial franchise fees will be determined in accordance with your Multi-Unit Development Agreement. The development fee is fully earned by us when paid, is uniform for franchises currently being offered in this state and is not refundable under any circumstances. We do not offer any discounts toward the development fee or the initial franchise fee paid in connection with a Multi-Unit Development Agreement. We do not offer Multi-Unit Development Agreements for Concession Trucks or Trailers.

Lease Review Fee (Bakeries Only) When you sign a franchise agreement for a Bakery, you will pay us a fee ranging between $3,000 and $5,000 for the review of your lease; the fee will depend on the complexity of the lease and will be determined in our sole discretion. In the event that your lease is thereafter renewed or materially amended, you will pay us a fee of $5,000 for reviewing the renewal or amendment of your lease. The lease review fees (for an initial lease, renewal or amendment) must be paid to us prior to your execution of the same with the landlord. The review of your lease may be performed by us or a third-party vendor we hire. There is no lease review fee for a Concession Truck or Trailer. The review of your lease is not a guaranty that your Bakery will be successful at that location. The lease review is performed solely for the purpose of ensuring that your lease meets our minimum requirements for a lease for a Bakery.

Pre-Opening Purchases (Bakeries and Concession Trucks or Trailers) Before opening your Franchised Business, you will purchase items such as grand opening banners and balloons, pan liners, name tags and job application forms from us. The total cost of all such items is unlikely to exceed $1,500.

Remote Mobile Unit Fee (Bakeries Only) If you and your landlord agree that you may operate a Remote Mobile Unit within the shopping mall or shopping center where your Bakery is located, we will grant you a license to operate the Remote Mobile Unit under a Remote Mobile Unit Addendum, Attachment 4 to the Franchise Agreement. The Remote Mobile Unit Fee, payable when you sign the Addendum, is $5,000. This fee is not refundable, and is not necessarily uniform in all cases, as we may negotiate the amount of the fee in certain instances in our discretion. You may not operate a Remote Mobile Unit in connection with a Concession Truck or Trailer.

Deposit on Sublease (Bakeries Only) Upon occasion, we must lease real property to secure a desirable location for a Bakery and sublease it to our franchisee because the landlord is reluctant to rent to the franchisee, with which the landlord is not familiar. Our policy is to obtain a fully refundable deposit equal to two months’ rent when a franchisee leases from us. The amount is not uniform and the average amount of two months’ rent is $12,680. In some cases, we may also require you to obtain a letter of credit to secure your sublease, in an amount, on terms, and on a form we prescribe, from a bank acceptable to us. We will not lease real property to secure a location for a Concession Truck or Trailer.

Item 8: Restrictions on Sources of Products and Services

For Bakeries only, competition for tenant space is keen in the malls and shopping centers where our Bakeries are located. You must retain our designated broker to negotiate the lease and you must promptly sign it when it is presented to you. The designated broker will be an experienced commercial real estate broker who specializes in regional enclosed mall leasing and is familiar with our standards. You must obtain our prior written approval of the proposed lease and must use your best efforts to add the lease provisions listed in Attachment 6 to the franchise agreement to the lease. No later than 18 months prior to lease expiration, you must retain our designated broker to represent you in negotiating a renewal lease. If you do not present to us a renewal lease that is acceptable to you, us and your landlord at least 12 months before lease expiration, we have the right, at our sole option, to assume lease negotiations for the site. If this occurs, you must sign the renewal lease that we negotiate for you within 30 days after we present it to you. Failure to observe these requirements is a material event of default. By suggesting a particular site for the premises of a Bakery, we do not guarantee that the Bakery operating at that location will be successful. By negotiating or approving the lease, we do not guarantee that all its provisions will benefit you.

Upon occasion, we lease real property and sublease it to our franchisee if that is the only way to secure a desirable location for a Bakery. We require a refundable deposit from a subleasing franchisee, but ask the franchisee to make rent payments directly to the landlord. A copy of our form of Sublease Agreement for a Bakery is attached to this disclosure document as Exhibit G. In some cases, we may also require you to obtain a letter of credit to secure your sublease, in an amount, on terms, and on a form we prescribe, from a bank acceptable to us. This is not applicable to Concession Trucks or Trailers. For Bakeries only, you must employ a qualified construction manager whom we have approved to oversee the buildout of your business premises. We may require you to employ a construction manager whom we have designated as the only supplier of construction management services.

If you operate a Concession Truck or Trailer, you must obtain the Concession Truck or Trailer from one of our approved suppliers. Your Concession Truck or Trailer must be constructed in accordance with our then-current designs, standards and specifications. We supply to our franchisees miscellaneous items for both Bakeries and Concession Trucks or Trailers that meet our specifications, such as grand opening banners and balloons, pan liners, name tags and job application forms. As a practical matter, you will probably wish to purchase these items from us because they are not readily available elsewhere and the cost is low.

We have designated only one supplier of our proprietary pretzel dough mix which you are required to use exclusively in your Franchised Business. We are an approved supplier, but not the sole approved supplier, of required toppings and condiments. For your Franchised Business, you may purchase proprietary food items, of which a growing number are being developed, from our designated supplier only. At present, we are the sole approved supplier of WETZEL’S PRETZELS hats, shirts, uniforms, cups, paper goods, and other items bearing the WETZEL’S PRETZELS Marks. Although you may seek approval from us of other suppliers for these items, you will probably find that quantity production enables us to offer the best prices for many of these items. You must buy one or two electronic cash registers from our designated supplier. Bakeries generally require two electronic cash registers while Concession Trucks or Trailers generally would need one electronic cash register. You must also buy an electronic receipt printer and a modem that meet our specifications.

We will give you, during the initial training program, a written list of names and addresses of suppliers of goods and services that currently meet our standards and specifications. In advising you of suppliers which meet our standards and specifications, we expressly disclaim any warranties or representations as to the condition of the goods or services, including, but not limited to, expressed or implied warranties as to merchantability or fitness for any intended purpose. You agree to look solely to the manufacturer of goods or the supplier of services for the remedy for any defect in the goods or services. We cannot guarantee that any designated supplier will offer or continue any particular pricing, warranty or other terms of sale. Also, we cannot guarantee a continuing supply from any designated supplier. We are not under any obligation to you with respect to the terms negotiated or the terms of any supplier. We cannot guarantee that designated suppliers will offer or continue to offer you any trade credit terms as that is solely up to the supplier and their credit standards.

We evaluate and approve suppliers upon the basis of their ability to meet quality specifications and to replicate the products and services provided by currently approved suppliers. If you wish to use or sell any product not previously certified by us to meet our specifications or which is sold by a supplier not previously approved by us, you must give written notice to us of this fact and, upon our request, give us product specifications, sample products, and/or information about the supplier. We will communicate to you either our approval or our reasons for withholding our approval within a maximum of 14 days. Silence may not be construed as consent. If we do not approve the supplier within 14 days, the supplier is deemed disapproved. As a condition of approving a supplier or product, we will require you to reimburse us for any expenses we reasonably incur in inspecting the supplier’s premises, checking the supplier’s credentials, or testing the supplier’s product. The cost is unlikely to exceed $500. As a condition of approving a supplier of any product that bears the Trade Name or Marks, we may require that the supplier sign our License Agreement. We may withdraw our approval of a supplier or a product if either or both no longer meet our standards or specifications. If this occurs, we will notify you in writing

We may receive payments, discounts, or other advantages from approved suppliers based on the suppliers’ sales to WETZEL’S PRETZELS franchisees. Aside from our proprietary products which you must buy from us or our designated supplier, you will not be required to purchase from any such suppliers. Instead, you may buy from another approved supplier or mayobtain approval of another supplier whose products meet our specifications. There are no suppliers to our franchisees in which any of our officers own an interest.

In the year ended December 31, 2019, our revenue from purchases by franchisees from approved or designated suppliers or according to specifications was $3,683,410, or 9.1% of our total revenues of $40,658,674. Part of this revenue was obtained from the sale to our franchisees of logoed goods such as menu boards, wall murals, manuals, T-shirts, aprons and various small- wares, which we purchase in bulk, stock, sell and ship to our franchisees in order to allow for their manufacture in quantity. We also received approximately $160,000 in cooperative advertising dollars from our soft drinks supplier during 2019, which we contributed to the advertising fund. We estimate that your payments for purchases from us, from designated or approved suppliers or which must conform to our specifications will represent about 50% of your start-up costs and 95% of your ongoing costs. We negotiate purchase arrangements with suppliers, including price terms, on behalf of franchisees and company-owned Bakeries (as of the date of this disclosure document, we do not have any company-owned Concession Trucks or Trailers). These include commodity forward contracts or system-wide quantity discounts.

There are currently no purchasing or distribution cooperatives. We do not provide benefits based on your use of approved sources. You must maintain one or more insurance policies that we specify. You must maintain the insurance coverages and amounts that we specify. We must be named as an additional insured on all of your policies. The coverage amounts that we specify are the minimum amounts that we require. We do not represent that these amounts are adequate. You should consult with your insurance advisors to determine that you have obtained all required coverages as well as any additional types of coverage or higher limits that they recommend.

Item 10: Financing

We may offer, only to you or your franchisee entity, to finance up to 100% of the cost of the Remote Mobile Unit and equipment delivered to the site of the Remote Mobile Unit. The financing does not cover installation costs but covers the initial cost of the Remote Mobile Unit and major equipment used on the Remote Mobile Unit, in which case you will sign an Equipment Rental Lease attached as Exhibit F to this disclosure document as well as the Remote Mobile Unit Addendum attached as Attachment 4 to the Franchise Agreement. As of December 31, 2019, we charge simple interest at an annual rate of up to 8% per annum, (but we may change the rate to reflect increases in the prevailing prime rate at the time you sign the Addendum to the Franchise Agreement). The term of financing may vary but will typically be 36 months. Annual percentage rates have not been computed in accordance with APR under Regulation Z of the Consumer Protection Act., 15 U.S.C. ??1601 et. seq. You may prepay all or any portion of your indebtedness without penalty.

Wetzel’s Pretzels LLC will retain ownership in the equipment leased until fully paid. If you fail to cure any default in the payment of any installment under the lease, we can at our option: declare the entire amount of the rent for the term immediately due and payable without notice or demand to you; apply any deposits toward any amount owing to us; commence legal proceedings to recover the rent and other obligations accrued before and after the event of default; take possession of the equipment, without demand or notice, wherever same may be located, without any court order or other process of law; and you will waive any and all damage occasioned by such taking of possession; terminate the Lease immediately upon written notice to you; and pursue any other remedy available in law or equity. This would also be a breach of your Franchise Agreement (and Remote Mobile Unit Addendum) and grounds for termination.

Presently, it is not our practice or intent to sell, assign, or discount to a third party all or part of the financing arrangement nor do we receive any consideration for placing financing with third party lenders. We do not offer any financing relating to a Bakery or a Concession Truck or Trailer. Besides as listed above, we do not offer direct or indirect financing. We will not guarantee your note, lease, or obligation.

Item 12: Territory

For Bakeries Only Each WETZEL’S PRETZELS Bakery is granted for a specific location that is described in the Franchise Agreement (the “Approved Location”). You may not engage in or solicit sales except for over-the-counter retail sales at the A pproved Location and, if you have signed a Remote Mobile Unit addendum, from a Remote Mobile Unit within your Protected Area. You are not granted the right to engage in wholesale, computer, or mail-order marketing. We will grant you a Protected Area consisting of the smaller of the area within a one-half mile radius of the Approved Location or the shopping center or mall where the Bakery is operated. We agree not to authorize any other company- or franchisee-owned WETZEL’SP RETZELS Bakery to operate within the Protected Area. The “Protected Area” does not include sites in hotels, motels, airports, railroads, train stations, other modes of mass transportation, sports arenas, casinos, theme parks, movie theaters, college and university campuses, healthcare facilities, regional malls, outlet malls, guest lodging facilities, day care facilities of any type, government facilities, as well as the premises of any third-party retailer (including supermarkets, grocery stores and convenience stores) or any other location or venue to which access to the general public is restricted such as military installations, higher security headquarters or corporations, which are located within its borders. We reserve for ourselves and our affiliates all rights in the Trade Name, Marks and System that are not expressly granted to you in the Franchise Agreement including the right to sell Proprietary Products within the Protected Area through any means of distribution other than over-the-counter retail sales at a WETZEL’S PRETZELS Bakery. (“Proprietary Product” isd efined in the Franchise Agreement as “any product that has been manufactured in accordance with our secret recipes or specifications or that has been packaged or labeled with the WETZEL’S PRETZELS Marks.”) We expressly retain the rights to engage in grocery or clubs tore sales or licensing, wholesale, computer, and mail-order sales within the Protected Area. Further, we and/or affiliates may sell Proprietary Products and enfranchise others to sell Proprietary Products sold under any trade name, trademark or service mark (including the Trade Name and Marks) to retail stores restaurants and concession trucks or trailers located anywhere, including but not limited to the Protected Area. Your Protected Area does not give you any exclusivity with respect to customers located in the Protected Area or elsewhere. We have the right to prescribe all matters relating to delivery of products to customers (“Delivery”), including the boundaries of your delivery area (which may not be the same area as the Protected Area) and the manner and form of distribution of any marketing, promotional or delivery materials. We can revoke your right to provide Delivery at any time, including as a result of your inability to provide Delivery in accordance with our thencurrent standards. Similarly, we can make adjustments to your provision of Delivery services (including the size of your delivery area) for any reason, including changing market conditions, population changes, and other relevant conditions. We and/or our affiliates may develop, implement and participate in a co-branding program regardless of where the co-branded program is located. The co-branded program may include franchised and/or company-owned businesses. The co-branded program may use Trade Name, Marks and System as well as any other trade name, trademark, or service mark. You may relocate the WETZEL’S PRETZELS Bakery within the Protected Area only with our prior written consent, conditioned upon the following: (a) You and your Related Parties are in good standing under the Franchise Agreement, any other agreement between us or our Related Party and you, and the Manual. (b) You and any Related Parties that have signed the Franchise Agreement have signed a new franchise agreement in the currently effective form not less than 180 days before the expiration of the Franchise Agreement or 30 days after you receive the new franchise agreement from us, whichever is later. (c) You have agreed that you will employ a construction manager whom we have approved in writing at least 45 days before the renewal term begins. (d) You have agreed that you will, at your own expense, remodel, modernize and redecorate the Bakery premises and replace and modernize the fixtures, equipment, and signs used in the Bakery to meet the standards of appearance and function applicable to new Bakeries at that time; you will begin remodeling, modernizing and/or redecorating the Bakery within the earlier of three months of date of your renewal franchise agreement or the date such remodeling, modernizing and/or redecorating is required under your lease. (e) You have renewed or have the right to renew the lease for the Approved Location according to section 7.3.1 of the Franchise Agreement. (f) You and any Related Parties that are guarantors to the Franchise Agreement have signed a special release of claims, in the form of Attachment 2 to the Franchise Agreement, with respect to past dealings with us and our Related Parties. (g) You have paid the renewal fee described in Article 6. You may not solicit or accept orders outside your Protected Area, because your franchise is strictly limited to the right to engage in over-the-counter retail sales. You will have no right of first refusal to acquire an additional franchise outside your own Protected Area. However, we may, at our sole discretion, offer you an exclusive one-year option to enter into a franchise for a Bakery in a specific mall or shopping center, if and when, within the option period, a site becomes available. Options may not be available for all locations and to all franchisees and our criteria in offering them may vary at different locations and times. Neither we nor any affiliate competes with WETZEL’S PRETZELS franchisees through a competitive retail business or under another trade name or marks. Neither we nor our affiliates are restricted from establishing other franchises or company-owned outlets or other channels of distribution selling or leasing similar products or services under a different mark either inside or outside your Protected Area. You are not required to meet any quota or conditions to maintain your rights in your Protected Area. There are no circumstances under which we would be permitted to modify your territorial rights under the Franchise Agreement while the agreement remains in effect. We do not compete or intend to compete with you under another trade name or marks. Under the Multi-Unit Development Agreement, we grant you the right to develop and operate a specified number of Bakeries at locations in a specified Development Area, subject to our approval. The Development Area may be one or more cities, counties, states or some other defined area. We will neither directly open and operate nor grant a license or franchise to any other person to open or operate any Bakery at any location within your Development Area without first providing you a right of first refusal (“ROFR”), for a least 30 days, to execute a Franchise Agreement to open and operate a Bakery at that location, provided and on condition that you are not in breach of any of the terms of your Franchise Agreement or Multi-Unit Development Agreement. We need not offer the ROFR to you in any case in which the owner or person or entity controlling that location has established conditions, requirements, or other preconditions that we know or reasonably believe that you do not or cannot satisfy, or for any Bakeries that were already in operation in your Development Area on the date you signed the Multi-Unit Development Agreement. Until the termination or expiration of your Multi-Unit Development Agreement, you retain your right of first refusal as long as you comply with your development schedule and other obligations under the Multi-Unit Development Agreement and your Franchise Agreements. We may operate or license or franchise any other person to operate a Bakery (a) at any location outside your defined Development Area, (b) under names other than “Wetzel’s Pretzels(R)” at any location whatsoever and (c) at any Non- Traditional Venue (defined as located within another primary business or in conjunction with other businesses or at institutional settings, including toll roads, hotels and motels, ships, ports, piers, airports, railroads, train stations, other modes of transportation, casinos, movie theaters, theme parks, stadiums, sports arenas, college and university campuses, healthcare facilities, regional malls, outlet malls, guest lodging facilities, day care facilities of any type, government facilities, as well as the premises of any third-party retailer (including grocery stores, supermarkets and convenience stores) or any other location or venue to which access to the general public is restricted such as military installations, higher security headquarters or corporations, and any site for which the lessor, owner or operator thereof shall have indicated its intent to prefer or limit the operation of its food service facilities to a master concessionaire or contract food service provider, even if located within your Development Area). We also may produce, license, distribute and market “Wetzel’s Pretzels(R)” brand named products, and products bearing other marks, including prepackaged food items and other food and beverage products; books; clothing; souvenirs and novelty items, at or through any location or outlet, including grocery stores and convenience stores (including those which may be located within the Development Area), and through any distribution channel, at wholesale or retail, including by means of mail order catalogs, direct mail advertising, Internet marketing and other distribution methods.You will not receive an exclusive territory. You may face competition from other franchisees, from outlets that we own, or from other channels of distribution or competitive brands that we control. If you fail to meet any of your obligations under the Multi-Unit Development Agreement, including the development obligations, or commit a material breach of any Franchise Agreement that you have signed, or a material breach of any other agreement with us, we may terminate your right to develop, open and operate Bakeries in your Development Area, but the termination of your right to develop your Development Area will not terminate any rights granted under the Franchise Agreements then in effect between you and us, absent a breach of the Franchise Agreement itself. After the early termination or expiration of the term of your Multi-Unit Development Agreement, we may own, operate, or franchise or license others to operate additional bakeries anywhere, without offering you a ROFR and without any restriction, including in your Development Area, subject to the rights granted to you in the Protected Area established under any then-existing Franchise Agreements, provided that, if you determine that further development of your Development Area is desirable after the term of your agreement, you must notify us in writing, including the number of proposed Bakeries and the proposed development schedule, within 180 days before the expiration of your Multi-Unit Development Agreement. If we determine that your proposed additional development is unacceptable in any respect, we will negotiate with you in good faith for 60 days to try to agree upon a mutually acceptable development schedule. If we determine that your proposed additional development is acceptable or if you and we reach an agreement on an alternative additional development obligation, you will have the right to enter into a new Multi-Unit Development Agreement and undertake additional development of your Development Area. Your Multi-Unit Development Agreement is otherwise not renewable.

For Concession Trucks or Trailers Each Concession Truck or Trailer is granted a “Mobile Area.” If you are granted a Concession Truck or Trailer franchise, you will operate your franchise from the Concession Truck or Trailer only. You shall not engage in or solicit sales other than from the Concession Truck or Trailer, which may be parked anywhere within the Mobile Area. You are not granted the right to engage in wholesale, computer, or mail-order marketing. We agree not to authorize any other company- or franchisee-owned WETZEL’S PRETZELS Concession Truck or Trailer to operate within the Mobile Area. We may authorize any other company- or franchisee-owned WETZEL’S PRETZELS Bakery to operate within the Mobile Area. The “Mobile Area” does not include sites in hotels, motels, airports, railroads, train stations, other modes of mass transportation, sports arenas, casinos, theme parks, movie theaters, college and university campuses, healthcare facilities, guest lodging facilities, day care facilities of any type, government facilities, as well as the premises of any third-party retailer (including supermarkets, grocery stores and convenience stores) or any other location or venue to which access to the general public is restricted such as military installations, higher security headquarters or corporations, which are located within its borders.We typically assign franchisees a mobile area with a population of approximately 2,000,000 people. Mobile areas may also be described using geographic boundaries, such as zip codes, a city, county, a portion of a county, specific streets or highways. We will assign you a Mobile Area with a size, location and a population number as we determine appropriate for your Franchised Business, in our sole discretion, and there is no guarantee that your Mobile Area will contain a population of at least 2,000,000 people. We may assign you a Territory with a population that is significantly fewer than 2,000,000 people. Because population figures generally fluctuate throughout time, we do not guaranty that during the entire term of your Franchise Agreement, the Mobile Area will be comprised of a population of at least 2,000,000 people. We reserve for ourselves and our affiliates all rights in the Trade Name, Marks and System that are not expressly granted to you in the Franchise Agreement including the right to sell Proprietary Products within the Mobile Area through any means of distribution other than over-the-counter retail sales at a WETZEL’S PRETZELS Concession Truck or Trailer. We expressly retain the rights to engage in grocery or club store sales or licensing, wholesale, computer, and mail-order sales within the Mobile Area. Further, we and/or affiliates may sell Proprietary Products and enfranchise others to sell Proprietary Products sold under any trade name, trademark or service mark (including the Trade Name and Marks) to retail stores, restaurants, and concession trucks or trailers located anywhere, including but not limited to the Mobile Area. We and/or our affiliates may develop, implement and participate in a co-branding program regardless of where the co-branded program is located. The co-branded program may include franchised and/or company-owned businesses. The co-branded program may use Trade Name, Marks and System as well as any other trade name, trademark, or service mark. You may operate the WETZEL’S PRETZELS Concession Truck or Trailer within the Mobile Area at sites that we approve. You will not be permitted to relocate the WETZEL’S PRETZELS Concession Truck or Trailer outside of the Mobile Area. You may not solicit or accept orders outside your Mobile Area, because your franchise is strictly limited to the right to engage in sales from the Concession Truck or Trailer, which must be operated within the Mobile Area. You will have no right of first refusal to acquire an additional franchise outside your own Mobile Area. Neither we nor any affiliate competes with WETZEL’S PRETZELS franchisees through a competitive retail business, concession trucks or trailers or under another trade name or marks. Neither we nor our affiliates are restricted from establishing other franchises or company-owned outlets or other channels of distribution selling or leasing similar products or services under a different mark either inside or outside your Mobile Area. You are not required to meet any quota or conditions to maintain your rights in your Mobile Area. There are no circumstances under which we would be permitted to modify your territorial rights under the Franchise Agreement while the agreement remains in effect. We do not compete or intend to compete with you under another trade name or marks.

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

You are required to either personally supervise your Franchised Business or employ a Designated Manager to supervise the Franchised Business on a day-to-day basis. The Designated Manager must successfully complete our initial training program and be certified by us as a manager before starting work. There is no requirement that your Designated Manager have an equity interest in the Franchised Business. Your Designated Manager must be fluent in the English language. There are no limitations on whom you may hire as a Designated Manager. Your managers must sign a Nondisclosure and Noncompetition Agreement in the form of Attachment 7 to the Franchise Agreement.

You or the person you have employed as your Designated Manager must devote all his or her productive time and effort to the on-premises management and operation of the WETZEL’S PRETZELS Franchised Business, in the minimum amount of 40 hours per week. The Designated Manager or another employee who has successfully completed our initial training program must be present at the Franchised Business whenever the WETZEL’S PRETZELS Franchised Business is open for business. If we, in our sole discretion, determine that a Designated Manager is not properly performing his duties, we will advise you and you must immediately take steps to correct the situation. You must keep us informed as to the identity of your Designated Manager. Upon the termination of employment of a Designated Manager, you must appoint a successor within 30 days. Any successor Designated Manager must successfully complete our training program before starting work in the Franchised Business.

Item 16: RESTRICTIONS ON WHAT THE FRANCHISEE MAY SELL

You must offer and sell all the products and services and only the products and services that we have authorized you to provide. The Franchise Agreement does not limit our right to change the goods and services you are authorized to offer. If we advise you that a product or service must be obtained from a designated supplier, you must use the supplier we designate. If we advise you that a product or service may be obtained only from an approved supplier, you must obtain our prior written approval of any supplier that we have not already approved in writing. You are not granted the right to engage in wholesale, Internet, or mail-order sales. You may engage only in over-the-counter sales at the Approved Location, unless we permit you to engage in Delivery services.

You may not engage in Delivery and/or off-premises sales of products or services to customers except as expressly permitted by us in writing. If we allow Delivery, we have the right to prescribe rules as we deem appropriate, including the boundaries of your delivery area (which may not be the same area as the Protected Area) and the manner and form of distribution of marketing, promotional or Delivery materials. We can revoke your right to provide Delivery at any time, including as a result of your inability to provide Delivery in accordance with our thencurrent standards. Similarly, we can make adjustments to your provision of Delivery services (including the size of your delivery area) for any reason, including changing market conditions, population changes, and other relevant conditions.

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