Franchise Agreement

The original documents were scanned as an image. The original file can be downloaded at the link above.


Sample Franchise Agreement

FRANCHISE AGREEMENT

BIG BOY FRANCHISE MANAGEMENT LLC

One Big Boy Drive

Warren, Michigan 48091

Telephone: (586) 759-6000

Franchisee

Franchised Location

Name

Name

Street

City

State

Zip Code

Area Code

Telephone

E-Mail Address

City

L

1

L

1

Area Code

Street

State         Zip Code

Area Code Telephone

Fax

Restaurant No.

Date of Franchise Agreement

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BIG BOY FRANCHISE MANAGEMENT LLC FRANCHISE AGREEMENT INDEX

Article                                                                                                                                       Page

ARTICLE 1 DEFINITIONS........................................................................................................................1

1.1         Abandon......................................................................................................................................1

1.2         Approved Suppliers.....................................................................................................................2

1.3         Assistant Manager.......................................................................................................................2

1.4

Business Assets.........................................................................................................................................2

1.5         Claims and Damages...................................................................................................................2

1.6         Computer Equipment..................................................................................................................2

1.7         Computer

Software....................................................................................................................................................2

1.8         Competitive Restaurant...............................................................................................................2

1.9         Costs and Expenses.....................................................................................................................3

1.10       Designated Supplier....................................................................................................................3

1.11       Dollars.........................................................................................................................................3

1.12       Entity............................................................................................................................................3

1.13       FF&E...........................................................................................................................................3

1.14       Financial Records........................................................................................................................3

1.15       Financial

Statements.................................................................................................................................................3

1.16       Franchise.....................................................................................................................................3

1.17       Franchised Location.....................................................................................................................3

1.18       General Manager.........................................................................................................................3

1.19       Gross Revenues...........................................................................................................................3

1.20       Home Page..................................................................................................................................4

1.21       Lease...........................................................................................................................................4

1.22       Major Brand Name Restaurant....................................................................................................4

1.23       Management Team......................................................................................................................4

1.24       Marks...........................................................................................................................................4

1.25

Opening Team..........................................................................................................................................4

1.26       Operations Manual......................................................................................................................4

1.27       Owner..........................................................................................................................................5

1.28

Ownership Interest....................................................................................................................................5

1.29       Personal Guarantors....................................................................................................................5

1.30       Products and Services.................................................................................................................5

1.31       Restaurant System.......................................................................................................................5

1.32       Salary or Salaries.........................................................................................................................5

1.33       Signs............................................................................................................................................5

1.34       Transfer or Transferred...............................................................................................................5

1.35       Travel Expenses...........................................................................................................................5

1.36       Week...........................................................................................................................................5

1.37       Weekly Report............................................................................................................................6

ARTICLE 2 GRANT OF LICENSE............................................................................................................6

2.1         Franchised Location....................................................................................................................6

2.2         Undetermined Franchised Location............................................................................................6

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2.3         Exclusive Area............................................................................................................................6

2.4         Lease or Purchase of Franchised Location..................................................................................6

2.5         Relocation...................................................................................................................................6

2.6         Conditions...................................................................................................................................7

2.7         Personal License..........................................................................................................................7

ARTICLE 3 TERM OF AGREEMENT.......................................................................................................7

ARTICLE 4 INITIAL FEE...........................................................................................................................7

ARTICLE 5 ROYALTY FEES; ADVERTISING FEES.............................................................................7

5.1         Amount of Royalty Fees.............................................................................................................7

5.2         Advertising Fees..........................................................................................................................7

5.3         Advertising Expenditures............................................................................................................8

5.4         Weekly Report............................................................................................................................8

5.5         Franchisee's Obligation to Pay...................................................................................................8

5.6         Pre-Authorized Bank Debits....................................................................:..................................9

ARTICLE 6 FINANCIAL STATEMENTS.................................................................................................9

6.1         Financial Statements...................................................................................................................9

6.2         Substantiation of Weekly Report and Financial Statements.......................................................9

6.3         Sales and Income Tax Returns....................................................................................................9

6.4         Audit Rights................................................................................................................................9

6.5         Payment of Audit Costs.............................................................................................................10

6.6         Refusal to Submit Records or Permit Audit..............................................................................10

6.7         Confidentiality of Financial Records.................................:......................................................10

ARTICLE 7 QUALITY CONTROL, UNIFORMITY AND STANDARDS REQUIRED OF FRANCHISEE............................................................................................................................................10

7.1         Quality and Service Standards..................................................................................................10

7.2         Big Boy Sandwich®; Super Big Boy Sandwich®....................................................................10

7.3         Compliance with Standards.......................................................................................................11

7.4         Identification of Restaurant.......................................................................................................11

7.5         Other Business..........................................................................................................................11

7.6         Franchisee's Name....................................................................................................................11

7.7         Approved Advertising...............................................................................................................11

7.8         Telephone Directory Listings....................................................................................................12

7.9         Television; Vending and Gaming Machines; Tickets...............................................................12

7.10       Standard Attire or Uniforms......................................................................................................12

7.11       Business Hours; Personnel........................................................................................................12

7.12       Reservations..............................................................................................................................12

7.13       Credit Cards..............................................................................................................................12

7.14       Gift Certificates and Coupons...................................................................................................12

7.15       Music and Music Selection.......................................................................................................13

7.16       Standards of Service...............:..................................................................................................13

7.17       Security and Safety...................................................................................................................13

7.18       Equipment and Supplies............................................................................................................13

7.19       Maintenance..............................................................................................................................13

7.20       Remodeling of Business Premises............................................................................................13

7.21       Alterations to Restaurant...........................................................................................................13

7.22       Inspection Rights.......................................................................................................................13

7.23       Management and Operation of Big Boy Restaurant.................................................................14

7.24       Operating Entity........................................................................................................................14

7.25       Compliance with Applicable Law.............................................................................................14

7.26       Payment of Taxes......................................................................................................................14

7.27       "Franchise" and Other Taxes....................................................................................................15

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7.28       Payments to Creditors...............................................................................................................15

7.29       Security Interest in Franchise Agreement.................................................................................15

7.30       Default Notices and Significant Correspondence.....................................................................15

7.31       Catastrophes..............................................................................................................................15

7.32       Health Classification and Maintenance of Standards................................................................15

7.33       Periodic Inspections..................................................................................................................16

7.34       Hiring Restrictions....................................................................................................................16

ARTICLE 8 PRODUCTS AND SERVICES.............................................................................................16

8.1         Products and Services...............................................................................................................16

8.2         Approved Suppliers...................................................................................................................16

8.3         Designated Suppliers.................................................................................................................17

8.4         Delivery and Catering...............................................................................................................17

8.5         Alcoholic Beverages.................................................................................................................17

8.6         Payments to Franchisor.............................................................................................................17

8.7         Branding of Products.................................................................................................................18

8.8         Independent Shopping Services................................................................................................18

ARTICLE 9 CONFIDENTIAL OPERATIONS MANUAL AND OTHER CONFIDENTIAL INFORMATION........................................................................................................................................18

9.1         Compliance with Operations Manual........................................................................................18

9.2         Revisions to Operations Manual...............................................................................................19

9.3         Confidentiality of Operations Manual.......................................................................................19

9.4         Confidentiality of Other Information........................................................................................19

ARTICLE 10 SITE SELECTION; CONSTRUCTION COSTS; BUSINESS PREMISES SPECIFICATIONS....................................................................................................................................19

10.1       Site Selection.............................................................................................................................19

10.2       Site Selection Criteria................................................................................................................19

10.3       Site Release...............................................................................................................................20

10.4       Floor Plans and Layout; Construction Plans.............................................................................20

10.5       Construction and Remodeling Costs......................................................................................... 20

10.6       Compliance with Specifications................................................................................................20

10.7       Inspection during Construction or Renovation..........................................................................21

ARTICLE 11 SIGNS..................................................................................................................................21

11.1       Approved Signs.........................................................................................................................21

11.2       Payment of Costs and Expenses.................................................................................................21

11.3       Modifications; Inspection...........................................................................................................21

11.4       Interior Signs.............................................................................................................................21

ARTICLE 12 OFFICE EQUIPMENT; COMPUTER HARDWARE AND SOFTWARE........................22

12.1       Office and Telecommunication Equipment; Telephone Lines..................................................22

12.2       Computer Equipment and Software..........................................................................................22

12.3       Other Equipment.......................................................................................................................22

12.4       Internet Provider.........................................................................................................................22

12.5       E-Mail Address.........................................................................................................................22

12.6       Internet Website........................................................................................................................22

ARTICLE 13 INSURANCE......................................................................................................................23

13.1       General Liability Insurance.......................................................................................................23

13.2       Liquor Liability Insurance.........................................................................................................23

13.3       Vehicle Insurance......................................................................................................................23

13.4       Business Property Insurance.....................................................................................................23

13.5       Business Interruption Insurance................................................................................................23

13.6       Building Insurance.....................................................................................................................24

13.7       Umbrella Liability.....................................................................................................................24

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13.8       Other Insurance.........................................................................................................................24

13.9       Insurance Companies; Evidence of Coverage...........................................................................24

13.10     Defense of Claims.....................................................................................................................24

13.11     Rights of Franchisor..................................................................................................................24

ARTICLE 14 LICENSING OF MARKS AND RESTAURANT SYSTEM.............................................25

14.1       Right to License Marks.............................................................................................................25

14.2       Conditions to License of Marks................................................................................................25

14.3       Franchisee's Authorized Use....................................................................................................25

14.4       Adverse Claims to Marks..........................................................................................................25

14.5       Defense or Enforcement of Rights to Marks.............................................................................26

14.6       Tender of Defense.....................................................................................................................26

14.7       Franchisee's Right to Participate in Litigation..........................................................................26

ARTICLE 15 TRAINING PROGRAM; OPENING ASSISTANCE.........................................................26

15.1       Training Program......................................................................................................................26

15.2       Training Schedule.....................................................................................................................27

15.3       Changes in Personnel................................................................................................................27

15.4      Training of New Personnel.......................................................................................................27

15.5       Payment of Salaries and Expenses............................................................................................27

15.6       New Store Opening Assistance.................................................................................................27

15.7       Hiring and Training of Employees by Franchisee.....................................................................28

15.8       Conventions...............................................................................................................................28

ARTICLE 16 OTHER OBLIGATIONS OF BIG BOY.............................................................................28

ARTICLE 17 ASSIGNMENT....................................................................................................................29

17.1       Assignment by Franchisor.........................................................................................................29

17.2      Assignment by Franchisee to Owned or Controlled Entity.......................................................29

17.3       Transfer by Individual Franchisee in Event of Death or Permanent Disability........................29

17.4       Sale of Ownership Interest to Public.........................................................................................29

17.5       Assignment by Franchisee........................................................................................................30

17.6       Documentation..........................................................................................................................31

17.7       Acknowledgment of Restrictions..............................................................................................31

17.8       Transfer Fee..............................................................................................................................31

17.9       Transfer to Competitor Prohibited............................................................................................31

ARTICLE 18 OPTION OF BIG BOY TO PURCHASE...........................................................................31

18.1       Notice of Proposed Sale............................................................................................................31

18.2       Compliance with Agreement.....................................................................................................32

18.3       Transfer of Ownership Interest.................................................................................................32

18.4       Acknowledgment of Restrictions..............................................................................................32

18.5       Owners Subject to Covenant Not to Compete...........................................................................33

18.6       Right to Purchase Business Assets............................................................................................33

18.7       Determination of Fair Market Value.........................................................................................33

ARTICLE 19 LEASE AS SECURITY; TERMINATION OF LEASE.....................................................34

19.1       Review of Lease........................................................................................................................34

19.2       Franchisee's Assignment of Lease............................................................................................34

19.3       Perfected Assignment; Notice...................................................................................................34

19.4       No Prior Assignments...............................................................................................................34

19.5       Enforcement of Franchisee's Rights.........................................................................................35

19.6       Rights and Remedies of Franchisor..........................................................................................35

19.7       Proration of Rents and Expenses...............................................................................................35

19.8       Possession; Obligations of Franchisor and Franchisee.............................................................35

19.9       Landlord's Consent...................................................................................................................35

19.10     Transfer by the Franchisor,.......................................................................................................35

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19.11 Effective Date.....................................................................................................:......................36

ARTICLE 20 TERMINATION RIGHTS OF FRANCHISOR..................................................................36

20.1       Termination within 120 Days.....................................................................................................36

20.2       Termination; Conditions of Breach...........................................................................................36

20.3       Notice of Breach.......................................................................................................................37

20.4       Arbitration.................................................................................................................................37

20.5       Notice of Termination...............................................................................................................37

20.6       Immediate Termination Rights of Franchisor...........................................................................38

20.7      Notice of Immediate Termination.............................................................................................38

20.8       Other Remedies.........................................................................................................................38

ARTICLE 21 FRANCHISEE'S TERMINATION RIGHTS.....................................................................38

21.1       Conditions of Breach.................................................................................................................38

21.2      Notice of Breach.......................................................................................................................39

21.3       Arbitration.................................................................................................................................39

21.4       Waiver.......................................................................................................................................39

ARTICLE 22 FRANCHISEE'S OBLIGATIONS UPON TERMINATION OR EXPIRATION.............40

22.1       Termination of Use of Marks; Other Obligations.....................................................................40

22.2       Alteration of Franchised Location.............................................................................................40

22.3       Cancellation of Telephone Directory Listings..........................................................................40

22.4       Continuation of Obligations......................................................................................................41

ARTICLE 23 FRANCHISEE'S COVENANTS NOT TO COMPETE.....................................................41

23.1       Consideration............................................................................................................................41

23.2       In-Term Covenant Not to Compete...........................................................................................41

23.3       Post-Term Covenant Not to Compete.......................................................................................41

23.4       Injunctive Relief........................................................................................................................41

23.5       Severability...............................................................................................................................42

ARTICLE 24 INDEPENDENT CONTRACTORS...................................................................................42

ARTICLE 25 INDEMNIFICATION.........................................................................................................42

25.1       Indemnification.........................................................................................................................42

25.2       Payment of Costs and Expenses................................................................................................43

25.3       Interest on Unpaid Fees; Administrative Fee............................................................................43

25.4       Continuation of Obligations......................................................................................................43

ARTICLE 26 ARBITRATION..................................................................................................................43

26.1       Disputes Subject to Arbitration.................................................................................................43

26.2      Notice of Dispute......................................................................................................................43

26.3       Demand for Arbitration.............................................................................................................44

26.4       Venue and Jurisdiction..............................................................................................................44

26.5       Powers of Arbitrators)..............................................................................................................44

26.6       Disputes Not Subject to Arbitration..........................................................................................44

26.7       No Collateral Estoppel or Class Actions...................................................................................44

26.8       Confidentiality...........................................................................................................................45

26.9       Performance During Arbitration of Disputes............................................................................45

26.10     Federal Arbitration Act..............................................................................................................45

ARTICLE 27 ENFORCEMENT................................................................................................................45

27.1       Injunctive Relief........................................................................................................................45

27.2       Severability...............................................................................................................................45

27.3       Waiver.......................................................................................................................................46

27.4       Payments to Franchisor.............................................................................................................46

27.5       Effect of Wrongful Termination...............................................................................................46

27.6       Cumulative Rights.....................................................................................................................46

27.7       Binding Agreement...................................................................................................................46

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27.8       Joint and Several Liability.........................................................................................................47

27.9      No Oral Modification................................................................................................................47

27.10     Entire Agreement......................................................................................................................47

27.11     Headings; Terms.......................................................................................................................47

27.12     Venue and Jurisdiction..............................................................................................................47

27.13     Contractual Statute of Limitations............................................................................................47

ARTICLE 28 ACKNOWLEDGMENTS; DISCLAIMER.........................................................................48

28.1       Disclaimer.................................................................................................................................48

28.2       Acknowledgments by Franchisee..............................................................................................48

28.3       Representations of Entity Franchisee........................................................................................48

28.4       Other Franchisees......................................................................................................................48

28.5       Receipt of Agreement and Uniform Franchise Offering Circular.............................................49

ARTICLE 29 FRANCHISEE'S LEGAL COUNSEL................................................................................49

ARTICLE 30 NOTICES............................................................................................................................49

ARTICLE 31 GOVERNING LAW; STATE MODIFICATIONS.............................................................49

31.1       Governing Law..........................................................................................................................49

31.2       State Modifications...................................................................................................................50

31.3       Severability...............................................................................................................................51

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The following information will have to be completed by Big Boy and the Franchisee prior to the time that this Agreement is signed by the parties:

Person Completing Completed          Information

Article

Paee

Information Required

N/A

F-l

Date of Franchise Agreement

N/A

F-l

Name of Franchisee

N/A

F-l ■

Business Structure of Franchisee

1.1

F-6

Franchised Location

32

F-49

Name and Telephone Number of Franchisee's Attorney or Advisoi

N/A

F-49

Signature of Big Boy

N/A

F^9

Signature(s) of Franchisee

N/A

F-49

Signature(s) of Owners and Percentage of Ownership (if applicable)

N/A

F-51

Signature(s) of Personal Guarantors

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BIG BOY FRANCHISE MANAGEMENT LLC FRANCHISE AGREEMENT

This Franchise Agreement (this "Agreement) is made and entered into this________________day of

______________, 200__by and between Big Boy Franchise Management LLC, a Michigan limited

liability company (the "Franchisor"), and ____________________________________, a

________________________________________(the "Franchisee").

RECITALS

Big Boy Restaurant System. The Franchisor has developed a unique business system for operating and franchising unique family restaurants with table service that serve breakfast, lunch and dinner and feature sandwiches, including the Big Boy® Sandwich, the Super Big Boy® Sandwich, beverages and other food products (the "Big Boy System" or the "Restaurant System").

Licensing of Marks. The Franchisor has extensively publicized the name "Big Boy®" to the public as an organization of restaurant businesses operating under the Restaurant System. The Franchisor has the right and authority to license the use of the name "Big Boy®" and the other Marks for use in connection with the Restaurant System to selected persons, businesses or entities who will comply with the uniformity requirements and quality standards of the Franchisor. The Franchisor will continue to develop, use, and control the use of the name "Big Boy®" and the other Marks, in order to identify for the public the source of foods, foods items, food products, beverages and services marketed under the Restaurant System, and to represent to the public the Restaurant System's high standards of quality, appearance, cleanliness and service.

Operation of Big Boy Restaurant. The Franchisee desires to develop, own and operate a Big Boy Restaurant (the "Big Boy Restaurant" or the "Restaurant") at the Franchised Location in conformity with the Restaurant System and the Franchisor's uniformity requirements and quality standards as established and promulgated from time to time by the Franchisor. The Franchisee understands and acknowledges the importance of complying with the high standards of quality, appearance, procedures, controls, cleanliness and service established by the Franchisor, and the necessity of operating the Restaurant in strict conformity with the standards and specifications established by the Franchisor.

Right to Use Marks and Restaurant System. The Franchisee acknowledges that it would take substantial capital and human resources to develop a restaurant concept that is similar to a Big Boy Restaurant and, for those reasons, the Franchisee desires to acquire the right to use the Marks and the Restaurant System and to own and operate a Big Boy Restaurant pursuant to the terms and conditions of this Agreement.

Pursuant to the above Recitals and in consideration of the mutual promises and covenants set forth in this Agreement, the Franchisor and the Franchisee agree and contract as follows:

ARTICLE 1 DEFINITIONS

For purposes of this Agreement, the following words will have the following definitions:

1.1          Abandon.

"Abandon" will mean the conduct of the Franchisee indicating the willingness, desire or intent of the Franchisee to discontinue operating the Franchisee's Big Boy Restaurant m accordance with the quality standards, uniformity requirements and the Restaurant System as described in this Agreement, the

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Operations Manual or otherwise in writing including, but not limited to, the failure of the Franchisee to operate the Big Boy Restaurant for five or more consecutive days without the prior written approval of the Franchisor, or the failure of the Franchisee to remain open for business during the business hours designated by the Franchisor.

1.2          Approved Suppliers.

"Approved Suppliers" will mean the suppliers and distributors that have been approved in writing by the Franchisor to offer and sell the Products and Services specified in the Operations Manual or otherwise in writing by the Franchisor.

1.3          Assistant Manager.

"Assistant Manager" will mean an individual responsible for supervising an operational shift during the daily operation of the Franchisee's Big Boy Restaurant.

1.4      Business Assets.

"Business Assets" will mean: (a) the FF&E, Signs, supplies, food and liquor inventory, trucks, automobiles, Computer Equipment, equipment leases, contracts, and all other assets owned by the Franchisee and used in connection with Franchisee's Big Boy Restaurant, (b) ail assets listed on the Franchisee's Financial Statements and tax returns relating to or used in connection with Franchisee's Big Boy Restaurant; (c) the Lease for the Franchised Location; (d) the land and building for the Franchisee's Big Boy Restaurant, if the building and land are owned by the Franchisee or any affiliate of the Franchisee or entity under common control with the Franchisee; (e) this Agreement; (f) any Ownership Interest in the Franchisee; and (g) all other interests in the Franchisee or the Franchisee's Big Boy Restaurant.

1.5     Claims and Damages.

"Claims and Damages" will mean all losses, damages, judgments, liabilities, fines, penalties, assessments, and all related expenses, and will include, without limitation: (a) damages to real and personal property and damages for loss of use of real and personal property, (b) damages for lost profits, (c) special, consequential, exemplary and punitive damages, (d) personal injury damages, (e) damages resulting from the death of a person or persons, including wrongful death damages, (f) Costs and Expenses and all other expenses incurred in defending any claims or litigation, (g) Salaries and Travel Expenses and all related expenses incurred in defending any claims or litigation, (h) amounts paid in settlement of any disputed claims or litigation, (i) product liability damages, (i) amounts paid pursuant to any court judgment or court decree, resulting from any civil or criminal claims, demands, allegations, lawsuits, litigation, arbitration proceedings, administrative actions or other legal proceedings, and (k) damages assessed under any federal, state or local statutes, rules, regulations or ordinances.

1.6      Computer Equipment.

"Computer Equipment" will mean the computer hardware and peripherals used in the operation of the Restaurant, including printers, monitors, modems, and networking equipment, and other computer systems and electronic devices, specified in the Operations Manual or otherwise in writing by the Franchisor.

1.7      Computer Software.

"Computer Software" will include the computer software and operating system approved and specified in this Agreement, the Operations Manual, or otherwise in writing by the Franchisor for use in the operation of the Franchisee's Big Boy Restaurant.

1.8      Competitive Restaurant.

2

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"Competitive Restaurant" will mean any family-style restaurant with table service offering breakfast, lunch and dinner (including by way of illustration only Denny's, Bob Evans, Perkins, Shoney's, Eat-N-Park, CoCos, Carrows, Ram's Horn, Bill Knapps, and IHOP restaurants), any restaurant that sells double-deck hamburgers or deep fried French toast, or any restaurant that sells any food products under the name "Bob's," "Boy" or "Buddy Boy."

1.9      Costs and Expenses.

"Costs and Expenses" will mean all attorney's fees, deposition costs, expert witness fees, court costs, investigation costs, accounting fees, filing fees and Travel Expenses.

1.10    Designated Supplier.

"Designated Supplier" will mean the only and exclusive supplier or distributor that is authorized by the Franchisor to sell the Products and Services specified in the Operations Manual or otherwise in writing by the Franchisor.

1.11    Dollars.

"Dollars" will mean United States of America dollars.

1.12    Entity.

"Entity" will mean any corporation, limited liability company, general partnership, limited partnership limited liability partnership, or other legal entity formed in compliance with applicable law.

1.13    FF&E.

"FF&E" will mean the furniture, fixtures and equipment specified in the Operations Manual or otherwise in writing by the Franchisor used in the operations of the Franchisee's Big Boy Restaurant.

1.14    Financial Records.

"Financial Records" will mean the computerized and hand prepared records and ledgers, sales ledgers, work papers, books, bank statements, federal and state income tax returns, federal and state sales tax returns, daily cash register tapes, accounts, and other financial information relating to the Gross Revenues, food and beverage costs, and labor costs for the Franchisee's Restaurant.

1.15    Financial Statements.

"Financial Statements" will mean: (a) monthly and year-to-date balance sheet and profit and loss statement; and (b) annual balance sheet, profit and loss statement, statement of cash flows and explanatory footnotes for the Franchisee's Restaurant.

1.16    Franchise.

"Franchise" will mean the license rights granted by the Franchisor to the Franchisee authorizing the Franchisee to develop and operate a Big Boy Restaurant at the Franchised Location in conformity with the Restaurant System using the name "Big Boy®" and the other Marks.

1.17    Franchised Location.

"Franchised Location" will mean the single address set forth in Article 2.1 of this Agreement.

1.18    General Manager.

"General Manager" will mean the individual responsible for supervising the overall management and operation of the Franchisee's Big Boy Restaurant including, but not limited to, administration, basic operations, marketing, customer and community relations, record keeping, employee staffing and training, inventory control, hiring and firing, food preparation and maintenance of the Franchised Location.

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1.19    Gross Revenues.

"Gross Revenues" will mean the total dollar sales from all customers of the Franchisee's Big Boy Restaurant, and will include all cash and credit sales made by the Franchisee of every kind and nature made at, from, by or in connection with the Franchisee's Big Boy Restaurant including, but not limited to, all dollars and income received from: (a) the sale of all foods, food products, food items, and services, whether prepared in the Restaurant or pre-packaged; (b) the sale of all alcoholic and non-alcoholic beverages and drinks; (c) the sale of all goods, products or items sold by or at the Franchisee's Restaurant; (d) admission fees or cover charges; (e) vending machines, telephones, electronic or other games, and other amusement games; (f) slot machines and gaming machines; (g) the sale of lottery tickets and pull tabs; (h) the sale of hats, sweatshirts, T-shirts, jackets, clothing, music records, tapes and compact discs; (i) the sale of cigars, cigarettes, tobacco products, newspapers, magazines, candies and gum; (j) the sale of foods, food products, food items, and services at any banquet; (k) the sale of any catered foods, food products, food items, and services; (1) the sale of any foods, food products or food items that are carried out of the Restaurant; (m) the sale of any foods, food products, and food items that are delivered by the Franchisee or other delivery service; (n) the sales of foods, food products food items, and all other products and services offered in connection with the Franchisee's Big Boy Restaurant; (o) all sales, use or gross receipts tax rebates; and (p) all business interruption insurance payments made to the Franchisee under any insurance policy carried by the Franchisee, "Gross Revenues" will not include any coupons, discounts on employee meals or sales, use or gross receipts tax imposed by any federal, state, municipal or governmental authority directly upon sales, if the amount of the tax is added to the selling price and is charged to the customer, a specific record is made at the time of each sale of the amount of such tax, and the amount of such tax is paid to the appropriate taxing authority by the Franchisee.

1.20    Home Page.

"Home Page" will mean the website or home page on the Internet used to advertise, market or promote the Franchisee's Restaurant, to communicate with its customers, and/or to post employment opportunities at the Restaurant.

1.21    Lease.

"Lease" will mean the written or oral agreement between the Franchisee and the Landlord that grants the Franchisee the right to rent and occupy the Franchised Location, and will include any oral or written rental agreement between the Franchisee and the Franchisee's Owners.

1.22    Major Brand Name Restaurant.

"Major Brand Name Restaurant" will mean any restaurant which has at least 50 restaurant locations within the contiguous United States which operate under the same name.

1.23    Management Team.

"Management Team" will mean the Franchisee's General Manager and Assistant Managers.

1.24    Marks.

"Marks" will include the name "Big Boy®" and the specific trademarks, trade names, seivice marks, logos and commercial symbols, phrases, slogans, and tag lines created and developed by the Franchisor for use in connection with the operation of Big Boy® Restaurants that are specified in this Agreement, the Operations Manual, or otherwise in writing by the Franchisor.

1.25    Opening Team.

"Opening Team" will mean the District Leader and operations personnel specified in the Operations Manual, in this Agreement or otherwise in writing by the Franchisor who will, during the times specified in the Operations Manual, provide opening assistance to the Franchisee at the Franchised Location when the Franchisee's Restaurant is scheduled to open for business.

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1.26    Operations Manual.

"Operations Manual" will mean the confidential operations manuals, recipe manuals, and all other manuals and written materials developed by the Franchisor for the operation of a Big Boy Restaurant.

1.27    Owner.

"Owner" will mean any person or Entity that owns any Ownership Interest in the Franchisee.

1.28    Ownership Interest.

"Ownership Interest" will mean (a) capital stock if the Franchisee is a corporation, (b) membership interest if the Franchisee is a limited liability company, (c) partnership interest if the Franchisee is a partnership, (d) limited or general partnership interests if the Franchisee is a limited partnership, and (e) all other types and means of any ownership or interest in the Franchisee or in the land and building for the Franchisee's restaurant or in any entity which owns such land or building, if such entity is owned by Franchisee, or by an affiliate of Franchisee or any entity under common control with the Franchisee (an "Affiliated Owner").

1.29    Personal Guarantors.

"Personal Guarantors" will mean the owners and their spouses required to sign the Personal Guaranty attached to this Agreement, which will include the owners and their spouses, if applicable, and any Affiliated Owner that owns the land and/or building used for the Franchisee's restaurant.

1.30    Products and Services.

"Products and Services" will mean all of the foods, food products, food items, seasonings, gravies, sauces, salad dressings, alcoholic and non-alcoholic beverages and drinks, products, sundries, goods, supplies, merchandise and/or services specified in the Operations Manual or otherwise in writing by the Franchisor that have been approved by the Franchisor for use or sale under the Marks and the Restaurant System.

131 Restaurant System.

"Restaurant System" will mean the distinctive Products and Services associated with (a) the Big Boy Restaurant Business System, (b) the Franchisor's trademarks, trade names, service marks, and copyrights, (c) the Franchisor's distinctive interior and exterior building designs, decor, furnishings, menus, uniforms, slogans, Signs, logos, commercial symbols and color combinations, and (d) the uniformity requirements, standards of consistency and quality, procedures, cleanliness, sanitation, controls, specifications, training, advertising, and instructions promulgated by the Franchisor in connection with the operation of a Big Boy Restaurant.

1.32         Salary or Salaries.

"Salary" or "Salaries" will mean wages or hourly rate of pay, fringe benefits, federal and state withholding taxes and Social Security taxes.

1.33         Signs.

"Signs" will mean the interior and exterior signs used to advertise the Restaurant at the Franchised Location.

1.34        Transfer or Transferred.

"Transfer" or "Transferred" will mean to sell, assign, trade, transfer, lease, sublease or otherwise dispose of.

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135        Travel Expenses.

"Travel Expenses" will include all transportation, lodging, food, entertainment, automobile rental, and related travel expenses.

136        Week.

"Week" will mean a period of seven consecutive days from Monday through Sunday.

1.37 Weekly Report.

"Weekly Report" will mean the written record in the form and format set forth in the Operations Manual of (a) the daily Gross Revenues, (b) the food costs and labor costs, and (c) such other information as may be required by the Franchisor, and submitted to the Franchisor for the Franchisee's Restaurant which will be provided to the Franchisor each Week during the Term of this Agreement.

ARTICLE 2 GRANT OF LICENSE

2.1           Franchised Location.

The Franchisor hereby grants the Franchisee the personal right to operate one Big Boy Restaurant in conformity with the Restaurant System using the name "Big Boy®" and the other Marks specified by the

Franchisor in writing at the following single location:_________________________________________

(the "Franchised Location).

2.2          Undetermined Franchised Location.

If the Franchised Location has not been determined as of the date of this Agreemenl, then the geographic area in which the Franchisee's Restaurant is to be located will be described or otherwise defined in an exhibit signed by the parties and attached to this Agreement. At such time as the address of the Franchised Location is determined, then the address will be inserted into this Agreement and initialed by the parties or will be described in an exhibit attached to this Agreement and signed by both parties.

2.3          Exclusive Area.

Except as provided to the contrary in this Article, the Franchisee will receive an "Exclusive Area" consisting of the area within a two mile radius from the Franchised Location. The Franchisee's Exclusive Area is exclusive only to the extent that the Franchisor will not have the right to franchise, license, develop, own or operate ("Develop") a Big Boy Restaurant in the Franchisee's Exclusive Area. Notwithstanding the foregoing, the Franchisor will have the absolute right to: (a) Develop other restaurant concepts under other brand names even if the locations for those restaurant concqrts are located within the Exclusive Area; (b) Develop Big Boy Restaurants in the Exclusive Area if they are located at or within international airports, major theme or entertainment parks, casinos, hospitals, mass merchandising outlets, government facilities or professional sports stadiums; (c) market, distribute and sell foods and other products on a wholesale or retail basis, under any of the Marks, by direct sale, the Internet, mail order, infomercials, telemarketing or by any and all other marketing and distribulion methods, even if such sales are made to customers or by distributors or retailers who are located in the Exclusive Area and (d) advertise, promote and participate in special promotions in the Exclusive Area, including, without limitation, cooking, recipe or restaurant competitions, sporting events, and fund-iaising and charitable events.

2.4          Lease or Purchase of Franchised Location.

The Franchisee will not sign any lease or purchase agreement or obtain any related rights to possession, occupancy or ownership of the Franchised Location prior to the effective date of tliis Agreement. If the Franchisee leases the Franchised Location, then the Franchisee will use its best efforts to negotiate a lease term that coincides with the Term of this Agreement.

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2.5          Relocation.

The Franchisee may, with the prior written approval of the Franchisor, relocate the Franchised Location if: (a) the proposed new location does not compete with any Big Boy Restaurant operated by the Franchisor or any other Big Boy franchisee or licensee; (b) the proposed new location is within the Franchisee's Exclusive Area; and (c) the proposed new location does not infringe upon and is not located within the exclusive area of another Big Boy franchisee, an area developer, a master franchisee or a subfranchisor. The new location of the Restaurant, including the real estate and the building, must comply with all applicable provisions of this Agreement and with the Franchisor's then-current image, decor and specifications. Within 10 days after receipt by the Franchisee of the Franchisor's written approval to relocate the Franchised Location, the Franchisee will pay to the Franchisor a Relocation Fee of $10,000.

2.6          Conditions.

The Franchisee hereby undertakes the obligation to operate a Big Boy Restaurant using the Restaurant System at the Franchised Location in strict compliance with the terms and conditions of this Agreement for the entire Term. The rights and privileges granted to the Franchisee by the Franchisor under this Agreement are applicable only to the single location designated as the Franchised Location, are personal in nature, and may not be used by the Franchisee at any other location, or in any other channel of distribution, other than the Franchised Location.

2.7          Personal License.

The Franchisee will not have the right to franchise, subfranchise, license or sublicense its rights under this Agreement. Neither the Franchisee or any of the owners have the right to transfer this Agreement or any rights under this Agreement, except as specifically provided for in this Agreement.

ARTICLE 3 TERM OF AGREEMENT

Unless terminated in accordance with the terms and conditions of this Agreement, the term of this Agreement will be for 20 years (the "Term") and the Term of this Agreement will commence on the date of this Agreement. This Agreement will not be enforceable until it has been signed by both the Franchisee and the Franchisor and a signed copy has been delivered to the Franchisee.

ARTICLE 4 INITIAL FEE

The Franchisee will pay the Franchisor an Initial Fee of $40,000, which is payable in full to the Franchisor on the date the Franchisee signs this Agreement. The Franchisee acknowledges that (a) the Initial Fee is consideration for the Franchise granted to the Franchisee under this Agreement, (b) the Initial Fee has been fully earned by the Franchisor, and (c) the Initial Fee will not be refundable to the Franchisee for any reason or under any circumstances,

ARTICLE 5 ROYALTY FEES: ADVERTISING FEES

5.1          Amount of Royalty Fees.

In addition to the Initial Fee, the Franchisee will, for the entire Term of this Agreement, pay the Franchisor royalty fees equal to four percent (4%) of the Franchisee's weekly Gross Revenues for the preceding Week ("Royalty Fees"). The weekly Royalty Fees payable to the Franchisor under this Article

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will be due and payable by the Franchisee on or before the eighth day after the end of each Week during the entire Term of this Agreement.

5.2          Advertising Fees.

The Franchisee will pay the Franchisor weekly advertising fees equal to two percent (2%) of the Franchisee's weekly Gross Revenues for the preceding Week ("Advertising Fees") and, in addition, the Franchisee will spend one percent (1%) of weekly Gross Revenues for local niiirket advertising. The Franchisor will have the right to increase the weekly Advertising Fees from two percent (2%) to three percent (3%) of the Franchisee's weekly Gross Revenues by giving the Franchisee six months written notice of the increase. In that event, beginning on the later of (i) the first day of the seventh month after the date the written notice is received by the Franchisee or (ii) the date specified in the written notice from the Franchisor, the Franchisee will, for the remaining Term of this Agreement, pay the Franchisor Advertising Fees equal to three percent (3%) of the Franchisee's weekly Gross Revenues and the Franchisee will no longer be required to spend one percent (1%) of its Gross Revenues for local marketing advertising. The weekly Advertising Fees payable to the Franchisor under this Article will be due and payable by the Franchisee on or before the eighth day after the end of each Week during the entire Term of this Agreement. The Advertising Fees will not be deposited in a separate account, will be under the exclusive control of the Franchisor and will be spent as provided for in Article 5.3.

5.3          Advertising Expenditures.

The Franchisor will have the absolute and unilateral right to determine when, how and where the Advertising Fees will be spent or committed including, but not limited to, the right of the Franchisor to purchase and pay for (a) product research and development, development of logotypes and slogans, production materials and costs, point of sales promotional materials, ad slicks, banners, signs, brochures, radio, television, cable, newspaper, magazine and other print advertising, services provided by advertising agencies, market research, customer retention and incentive programs, direct mail advertising, telemarketing, media time and space advertising, Internet advertising, promotions, marketing, public relations, national, regional and local advertising, and all other forms and methods of advertising, promotion, marketing, and public relations that the Franchisor deems, in its sole judgment, appropriate and in the best interests of all Big Boy franchisees and the Restaurant System, and (b) all long distance telephone charges, office rental, computers and computer software, furniture, fixtures and equipment, leasehold improvements, personnel salaries and benefits, travel costs, office supplies, collection costs (including attorneys' fees) paid in attempting to collect past due Advertising Fees from franchisees and all other costs and expenses associated with and incurred in connection with administering the Advertising Fees and the Advertising expenditures. The Franchisor will not be required to spend the Advertising Fees in any particular market and will not be required to spend the Advertising Fees in ihe Franchisee's market area in proportion to the Advertising Fees paid by the Franchisee. The Franchisor will have the right, but not the obligation, to spend all or part of the Advertising Fees paid by any franchisee in that franchisee's market area. The Franchisor will not be required to pay any Advertising Fees. A summary showing the amount of the Advertising Fees received and the amount of the advertising expenditures for the calendar year will be prepared by the Franchisor on or before March 31 of each year for the preceding year and will, upon written request, be provided to the Franchisee.

5.4          Weekly Report.

On or before 12:00 noon on the eighth day after the end of each Week, the Franchisee will e-mail, electronically submit, or fax the Weekly Report for the Franchisee's Big Boy Restaurant to the Franchisor for that Week.

5.5          Franchisee's Obligation to Pay.

The Royalty Fees and Advertising Fees payable to the Franchisor under this Article will be calculated and paid to the Franchisor by the Franchisee each Week during the entire Term of this Agreement. The

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Franchisee's obligation to pay the Franchisor the Royalty Fees and Advertising Fees pursuant to the terms of this Agreement will be absolute and unconditional, and will remain in full force and effect until the Term of this Agreement has expired or until this Agreement has been terminated in accordance with the terms and conditions set forth in this Agreement and applicable law. The Franchisee will not have the "right of offset" for any payments due to the Franchisor and, as a consequence, the Franchisee will timely pay all Royalty Fees and Advertising Fees due and payable to the Franchisor under this Agreement regardless of any claims or allegations the Franchisee may allege against the Franchisor. The Franchisor's acceptance of any payments of Royalty Fees and Advertising Fees will be without prejudice and will not constitute a waiver of the Franchisor's rights to claim a payment deficiency or to audit the Franchisee's Financial Records.

5.6         Pre-Authorized Bank Debits.

The Franchisee will, from time to time during the Term of this Agreement, execute such documents as the Franchisor may request to provide the Franchisee's unconditional and irrevocable authority authorizing and directing the Franchisee's bank to pay and deposit directly to the account of the Franchisor, and to charge to the account of the Franchisee, the amount of the Royalty Fees and the Advertising Fees payable by the Franchisee pursuant to this Agreement. The authorization will be in the form attached to this Agreement and will permit the Franchisor to designate the amount to be debited or drafted from the Franchisee's account and to adjust the payments to the amount of the Royalty Fees and Advertising Fees payable to the Franchisor by the Franchisee. If the Franchisee fails at any time to provide the required Weekly Reports, then the Franchisor will have the absolute right to debit the Franchisee's bank account for the same amount of the Royalty Fees and Advertising Fees that were payable by the Franchisee according to the last Weekly Report received from the Franchisee. The Franchisee will, at all times during the Term of this Agreement, maintain a balance in its bank account sufficient to allow the appropriate amount to be debited from the Franchisee's bank account for the Royalty Fees and Advertising Fees payable by the Franchisee.

ARTICLE 6 FINANCIAL STATEMENTS

6.1          Financial Statements.

The Franchisee will, at its expense, prepare Financial Statements for the Franchisee's Restaurant. All Financial Statements will be in the form prescribed by the Franchisor in writing, will conform to the standard chart of accounts prescribed by the Franchisor and will be prepared in accordance with generally accepted accounting principles applied on a consistent basis. The monthly Financial Statements for the Franchisee's Restaurant will be due within 15 days after the end of each month and the yearly Financial Statements will be due within 90 days after the Franchisee's fiscal year end. The Franchisee's Financial Statements must be verified by the Franchisee's Chief Financial Officer.

6.2          Substantiation of Weekly Report and Financial Statements.

Within three business days after receiving a written request from the Franchisor, the Franchisee will provide the Franchisor with originals or exact copies of the Financial Records requested by the Franchisor to substantiate the information provided in the Weekly Report and Financial Statements submitted by the Franchisee pursuant to this Article.

6.3          Sales and Income Tax Returns.

Within 90 days after the Franchisee's fiscal year end, the Franchisee will furnish the Franchisor with copies of the Franchisee's yearly federal income tax returns filed by the Franchisee's Restaurant. Within three business days after receipt of a written request from the Franchisor, the Franchisee will furnish the Franchisor with copies of all state sales tax returns filed by the Franchisee's Restaurant for each month of the current calendar year.

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6.4          Audit Rights.

Within three business days after receiving written notice from the Franchisor, the Franchisee and the Franchisee's accountants will make all of the Franchisee's computer and hand prepared Financial Records available to the Franchisor during business hours for review and audit by the Franchisor or its designee. If the Financial Records are computerized, then the Franchisee will grant the Franchisor or its designees the absolute right to access the Franchisee's computer and software programs containing the Financial Records and the absolute right to copy the Financial Records to a computer disk or to any portable or other computer owned or controlled by the Franchisor. The Financial Records for each fiscal year will be kept in a secure place by the Franchisee and will be available for audit by the Franchisor for at least five years from the date they are created. The Franchisee will provide the Franchisor with adequate facilities to conduct the audit.

6.5          Payment of Audit Costs.

If an audit of the Franchisee's Financial Records reveals any deficiencies in the Royalty Fees, Advertising Fees or other amounts payable to the Franchisor under this Agreement, then the Franchisee will, within five days after receipt of an invoice from the Franchisor indicating the amounts owed, pay the deficiency owed to the Franchisor, together with interest as provided for herein. If an audit by the Franchisor results in a determination that the Franchisee's Gross Revenues were understated by more than two percent (2%) or more in any month, quarter or year, then the Franchisee will, within five days after receipt of an invoice from the Franchisor, reimburse the Franchisor for all costs and expenses (including employee Salaries, Travel Expenses and audit fees) incurred by the Franchisor for the audit.

6.6          Refusal to Submit Records or Permit Audit.

The Franchisee's failure or refusal to provide the Financial Records requested by the Franchisor to substantiate the Weekly Report and Financial Statements in accordance with Article 6.2 or to produce the Financial Records in accordance with Article 6.4 will be grounds for the immediate termination of this Agreement by the Franchisor.

6.7          Confidentiality of Financial Records.

The Franchisor will maintain the confidentiality of all Financial Statements and Financial Records submitted by the Franchisee to the Franchisor pursuant to this Article. However, any Financial Statements or Financial Records that are relevant to any issue in any arbitration or court proceeding between the Franchisor and the Franchisee may be disclosed or introduced into evidence in any such proceedings.

ARTICLE 7

QUALITY CONTROL, UNIFORMITY AND

STANDARDS REQUIRED OF FRANCHISEE

7.1          Quality and Service Standards.

The Franchisor will develop, from time to time, uniform standards of quality, cleanliness and service regarding the business operations of the Franchisee's Big Boy Restaurant to protect and maintain (for the benefit of the Franchisor and all of its franchisees) the distinction, valuable goodwill and uniformity represented and symbolized by the Marks and the Restaurant System. Accordingly, to ensure that all Big Boy franchisees maintain and adhere to the uniformity requirements and quality standards for the Products and Services associated with the Marks and the Restaurant System, the Franchisee agrees to maintain the uniformity and quality standards required by the Franchisor for all Products and Services associated with the Marks and the Restaurant System and agrees to the terms and conditions contained in

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this Article to assure the public that all Big Boy Restaurants will be uniform in nature and will sell and dispense quality Products and Services.

7.2          Big Boy Sandwich®; Super Big Boy Sandwich®

The Franchisor has developed, advertised and marketed the "Big Boy Sandwich®" and the "Super Big Boy Sandwich®" as the signature products associated with the Restaurant System and the Marks. As a consequence, the Franchisee will offer the Big Boy Sandwich and Super Big Boy Sandwich for sale at all times at the Franchisee's Big Boy Restaurant. The menus for the Franchisee's Big Boy Restaurant will prominently feature and describe the Big Boy® Sandwich and Super Big Boy® Sandwich in the manner approved by the Franchisor. The Franchisee's employees will be trained to emphasize to customers that the Big Boy® Sandwich and the Super Big Boy® Sandwich are the signature products of the Restaurant and the Franchisee will not refer to any other sandwiches, hamburgers or other food items as a "Big Boy Sandwich®" or a "Super Big Boy Sandwich®."

7.3           Compliance with Standards.

The Franchisee will use the Marks and the Restaurant System in strict compliance with the moral and ethical standards, quality standards, health standards, operating procedures, specifications, requirements and instructions required by the Franchisor, which may be amended and supplemented by the Franchisor from time to time.

7.4           Identification of Restaurant.

The Franchisee will operate the Restaurant so that it is clearly identified and advertised as a Big Boy Restaurant. The style and form of the words "Big Boy®" and the other Marks used in any advertising, marketing, public relations or promotional program must have the prior written approval of the Franchisor. The Franchisee will use the name "Big Boy®," the approved logos and all graphics commonly associated with the Restaurant System and the Marks which now or hereafter may form a part of the Restaurant System, on all paper supplies, furnishings, advertising, public relations and promotional materials, Signs, stationery, business cards, linens, towels, napkins, aprons, menus, menu boards, food and beverage containers, placemats, uniforms, clothing and other materials in the identical combination and manner as may be prescribed by the Franchisor in writing. The Franchisee will, at its expense, comply with all legal notices of registration required by the Franchisor or its attorneys and will, at its expense, comply with all trademark, trade name, service mark, copyright, patent or other notice markings that are required by the Franchisor or by applicable law.

7.5          Other Business.

The Franchisee will use the Franchised Location solely for the operation of a Big Boy Restaurant and will not directly or indirectly operate or engage in any other business or activity from the Franchised Location without the prior written consent of the Franchisor. The Franchisee will not participate in any dual branding program, or in any other program, promotion or business pursuant to which a trademark, service mark, trade name, logo, slogan, or commercial symbol owned by any person or Entity other than the Franchisor is displayed, featured or used in connection with the Franchisee's Big Boy Restaurant without the prior written consent of the Franchisor.

7.6          Franchisee's Name.

The Franchisee will not use the name "Big Boy®" or any derivative thereof as the legal name of its Entity or sole proprietorship name. The Franchisee will hold itself out to the public as an independent contractor that is operating its Restaurant as a franchised Big Boy Restaurant. The Franchisee will file for a certificate of assumed name in the manner required by applicable state law to notify the public that the Franchisee is operating its Restaurant as an independent contractor pursuant to this Agreement.

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7.7          Approved Advertising.

The Franchisee will not conduct any advertising or promotion for its Restaurant unless and until the Franchisor has given the Franchisee prior written approval for all concepts, content, materials and media proposed for any such advertising and/or promotion. The Franchisee will not permit any triird party to advertise its business, services or products on the premises of or in connection with the Franchisee's Big Boy Restaurant. The Franchisor will at all times have the right to remove any unauthorized advertising or promotional materials from the Franchisee's Restaurant at the Franchisee's expense. All advertising and other materials provided to the Franchisee by the Franchisor or contained in ihe current Operations Manual will be deemed to be approved.

7.8          Telephone Directory Listings.

The Franchisee will, at its expense, continually list and advertise in the "Yellow Pages" in the Franchisee's market area under the heading of "Restaurants" and under other headings or listings designated by the Franchisor in writing. The format, size and content of the listings and advertising copy will conform in all respects to the standards established by the Franchisor in the Operations Manual. The Franchisee will, at its cost, also list in the "White Pages" of the Franchisee's market area under the name "Big Boy®".

7.9          Television; Vending and Gaming Machines: Tickets.

Except with the prior written approval of the Franchisor, which may be withheld at the sole and absolute discretion of the Franchisor, the Franchisee will not (a) permit any television, jukebox, video and electronic games, vending machines (including cigarette, gum and candy machines), newspaper racks, rides or other mechanical or electronic entertainment devices, coin or token operated machines (including pinball), or gambling machines or other gambling devices to be used on the premises of the Franchised Location, or (b) offer for sale or allow employees to offer for sale at or near the Franchised location any tickets, subscriptions, pools, chances, raffles, lottery tickets or pull tabs.

7.10        Standard Attire or Uniforms.

The Franchisee will require its employees to wear the standard attire or uniforms described in the Operations Manual. All employees of the Franchisee will wear clean and neat attire or uniforms and will practice good personal hygiene.

7.11         Business Hours; Personnel.

The Franchisee's Big Boy Restaurant will be open during the times and hours specified by the Franchisor in the Operations Manual, unless the Franchisor has agreed to different hours and times in writing. The Franchisee will at all times during business hours have management personnel on duty who are responsible for supervising the employees and the business operations of the Franchisee's Restaurant. The Franchisee will have a sufficient number of adequately trained and competent service, kitchen and other personnel on duty to guarantee efficient service to the Franchisee's customers. The Franchisee will take such steps as are necessary to ensure that its employees develop and pjeserve good customer relations, render competent, prompt, courteous and knowledgeable service and meet the quality and service standards established by the Franchisor.

7.12        Reservations.

The Franchisee's Big Boy Restaurant will not take dining reservations or permit leserved seating, except as may be authorized in the Operations Manual.

7-13 Credit Cards.

The Franchisee will honor all credit, charge, courtesy or cash cards or other credit devices required or approved by the Franchisor in writing. The Franchisee must obtain the written approval of the Franchisor prior to honoring any unapproved credit, charge, courtesy or cash cards, or other credit devices.

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7.14        Gift Certificates and Coupons.

The Franchisee will not create, sell or issue gift certificates and will not issue coupons or discounts of any type except as may be approved in advance in writing by the Franchisor. The Franchisee will participate in all electronic and written gift certificate, gift card, coupon and customer loyalty programs approved by the Franchisor and will purchase or acquire all equipment necessary to accept electronic and written gift certificates, gift cards, coupons, and customer loyalty rewards and cards in the manner prescribed in the Operations Manual.

7.15        Music and Music Selection.

In order to maintain the image and ambiance associated with the Restaurant System, the Franchisee will only play the music and music selections that have been approved by the Franchisor in the Operations Manual or otherwise in writing.

7.16        Standards of Service.

The Franchisee will at all times give prompt, courteous and efficient service to its customers. The Franchisee will, in all dealings with its customers, suppliers and the public, adhere to the highest standards of honesty, integrity, fair dealing and ethical conduct.

7.17        Security and Safety.

The Franchisee will be responsible for implementing, obtaining, installing and maintaining the security and safety procedures, measures, devices and systems necessary to adequately protect the employees, public, guests and customers of the Franchisee's Big Boy Restaurant during and after business hours.

7.18         Equipment and Supplies.

The Franchisee will, at its sole expense, obtain and maintain at all times during the Term of this Agreement, the FF&E, inventory and supplies required by the Franchisor for use in the operation of the Franchisee's Big Boy Restaurant which must meet the then-current standards and specifications established by the Franchisor.

7.19        Maintenance.

The Franchisee will, at its expense, repair, paint and keep in a clean and sanitary condition the interior, the exterior, the parking lot, signage, exterior lighting, and the grounds of the Franchised Location and the Franchisee's Restaurant, and will replace all floor coverings, wall coverings, light fixtures, curtains, blinds, shades, furniture, room furnishings, wall hangings, Signs, fixtures and other decor items as they become worn-out, soiled or in disrepair. All mechanical equipment, including ventilation, heating and air conditioning, must be kept in good working order by the Franchisee at all times. All replacement FF&E, Signs, decor items, supplies and other items used in the Restaurant by the Franchisee must comply with the Franchisor's then-current standards and specifications.

7.20        Remodeling of Business Premises.

The Franchisee will make the reasonable capital expenditures necessary to extensively remodel, modernize, redecorate and renovate ("remodel" or "remodeling") the Franchisee's Restaurant and to replace and modernize the supplies and FF&E so that the Franchisee's Restaurant and the premises will reflect the then-current image of Big Boy Restaurants. All remodeling and all replacements for the FF&E must conform to the Franchisor's then-current plans and specifications. The Franchisee will commence remodeling the Franchised Location within four months after the date the Franchisee receives written notice from the Franchisor specifying the required remodeling, and will diligently complete such remodeling within six months after its commencement. Except as provided for in Article 7.19 of this Agreement, the Franchisee will not be required to remodel the Restaurant, or to replace and modernize its FF&E more than once every five years during the Term of this Agreement.

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7.21         Alterations to Restaurant.

The Franchisee will not install or permit to be installed on or above the Restauiant, without the prior written consent of the Franchisor, any FF&E, Signs, decor or other items not previously approved by the Franchisor.

7.22        Inspection Rights.

The Franchisee will permit the Franchisor or its representatives to enter, remain on, and inspect the Franchised Location whenever the Franchisor reasonably deems it appropriate and without prior notice to interview the Franchisee's employees and customers, to take photographs and videotapes of and examine the interior and exterior of the Franchised Location, to examine or review representative samples of the Products and Services sold or used at the Franchisee's Restaurant, and to evaluate the quality of the Products and Services provided by the Franchisee to its customers. The Franchisor will also have the right to send a representative of the Franchisor to dine at the Franchisee's Big Boy Restaurant to evaluate the operations of the Franchisee's Big Boy Restaurant and the quality of the Products and Services provided by the Franchisee to its customers. The Franchisor will have the righl to use all interviews, photographs and videotapes of the Franchisee's Big Boy Restaurant for such purposes as the Franchisor deems appropriate including, but not limited to, use in advertising, marketing and promotional materials. The Franchisee will not be entitled to, and hereby expressly waives, any right that it may have to be compensated by the Franchisor, its advertising agencies, and other franchisees of Big Boy Restaurants for the use of such photographs or videotapes for advertising, marketing and promotional purposes. The Franchisor will not use any photographs of the Franchisee's employees or customers unless written releases have been obtained by the Franchisor.

7.23         Management and Operation of Big Boy Restaurant.

The Franchisor strongly recommends that the Franchisee (if an individual) actively participate in the operation of the Franchisee's Big Boy Restaurant, either as the General Manager oi in another capacity. The Franchisee will be totally and solely responsible for the operation of its Big Boy Restaurant, and will control, supervise and manage all the employees, agents and independent contractors who work for or with the Franchisee. The Franchisee will be responsible for the acts of its employees, agents and independent contractors, and will take all reasonable business actions necessary to ensure that its employees, agents and independent contractors comply with all applicable federal, state, city, local and municipal laws, statutes, ordinances, rules and regulations. The Franchisor will not have any right, obligation or responsibility to control, supervise or manage the Franchisee's employees, agents or independent contractors.

7.24         Operating Entity.

The Entity that becomes the Franchisee under this Agreement must be responsible for operating and managing the Restaurant and will not hold or have any Ownership Interest in, operate, or manage any other business of any kind without the prior written approval of the Franchisor.

7.25         Compliance with Applicable Law.

The Franchisee will, at its expense, comply with all applicable federal, state, city, local and municipal laws, statutes, ordinances, rules and regulations pertaining to the construction or remodeling of the Franchised Location and the operation of the Franchisee's Big Boy Restaurant including, but not limited to, all health, food service and liquor licensing laws, all health and safety regulations, all environmental laws, all laws relating to employees, including all wage and hour laws, employment laws, workers' compensation laws, discrimination laws, sexual harassment laws, and disability discrimination laws. The Franchisee will, at its expense, be solely and exclusively responsible for determining the licenses and permits required by law for the Franchisee's Big Boy Restaurant, for obtaining and qualifying for all such licenses and permits, and for complying with all applicable laws.

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7.26        Payment of Taxes.

The Franchisee will be absolutely and exclusively responsible and liable for filing all required tax returns and for the prompt payment of all federal, state, city and local taxes including, but not limited to, individual and corporate income taxes, sales and use taxes, franchise taxes, gross receipts taxes, employee withholding taxes, F.I.C.A. taxes, inventory taxes, liquor taxes, personal property taxes and real estate taxes ("Taxes") payable in connection with the Franchisee's Big Boy Restaurant. The Franchisor will have no liability for any Taxes which arise or result from the Franchisee's Restaurant and the Franchisee will indemnify the Franchisor for all Taxes that may be assessed or levied against the Franchisor which arise out of or result from the Franchisee's Restaurant.

7.27        "Franchise" and Other Taxes.

If any "franchise" or other tax which is based upon the Gross Revenues, receipts, sales, business activities or operation of the Franchisee's Big Boy Restaurant is imposed upon the Franchisor by any taxing authority, then the Franchisee will reimburse the Franchisor in an amount equal to the amount of such taxes and related costs imposed upon and paid by the Franchisor. The Franchisee will be notified in writing when the Franchisor is entitled to reimbursement for the payment of such taxes and, in that event, the Franchisee will pay the Franchisor the amount specified in the written notice within 10 days after receipt of the written notice.

7.28        Payments to Creditors.

The Franchisee will timely pay all of its obligations and liabilities due and payable to all suppliers, landlords, lessors, vendors, creditors and the Franchisor for all services, products and goods purchased by the Franchisee.

7.29        Security Interest in Franchise Agreement.

This Agreement and the Franchise granted to the Franchisee hereunder may not be pledged as collateral or be the subject of a security interest, lien, levy, attachment or execution by the Franchisee's creditors or any financial institution, except with the prior written approval of the Franchisor.

730 Default Notices and Significant Correspondence.

The Franchisee will deliver to the Franchisor, immediately upon receipt by the Franchisee or delivery at the Franchised Location, copies of all: (a) notices of default received from the landlord of the Franchised Location or any mortgagee, trustee under any deed of trust, contract for deed holder, lessor, or any other party with respect to the Franchised Location; (b) legal proceeding or lawsuit claiming damages in excess of $5,000 relating in any way to the Franchisee's Restaurant or to the Franchised Location; (c) consumer complaints/claims made in writing ; (d) written employee complaints or claims, including any matters relating to employment laws; and (e) written inspection reports or any other notices, claims, reports, warnings or citations from or by any governmental authority, including any health or safety authority. Upon written request, the Franchisee will provide such additional information as may be required by the Franchisor regarding the disclosed matter.

7.31 Catastrophes.

If the Restaurant or the Franchised Location is damaged or destroyed by fire or other casualty, then the Franchisee will, within 90 days thereafter, initiate the repairs and reconstruction necessary to restore the Franchised Location and the Restaurant to its original condition prior to such casualty. If in the reasonable judgment of the Franchisor, the damage or destruction is of such a nature or extent that it is feasible for the Franchisee to repair or reconstruct the premises of the Restaurant in conformance with the then-current standard Big Boy Restaurant decor specifications without incurring substantial additional costs, then the Franchisor may require the Franchisee to do so by giving written notice to the Franchisee. A Restaurant closed due to fire or other casualty will not be considered abandoned.

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7.32 Health Classification and Maintenance of Standards.

The Franchisee will at all times operate and maintain the Franchisee's Big Boy Restaurant in a manner that will insure that the Franchisee's Big Boy Restaurant will obtain the highest health classification possible for restaurants of like kind from the governmental authorities that inspect restaurants in the area in which the Restaurant is operated. If the Franchisee is not able to obtain this health classification, or if the Franchisee fails to operate in accordance with the general standards of quality, maintenance, repairs and sanitation required the by Franchisor, then the Franchisor may, at its option, place such trained personnel in the Franchisee's Big Boy Restaurant as the Franchisor deems necessary to train the Franchisee's operating personnel until the Restaurant can obtain the highest health classification or meet the general standards. The Franchisee will pay the Franchisor's Travel Expenses, employee compensation costs and other costs of providing personnel to the Franchise's Restaurant. The Franchisor may modify its procedures and policies with regard to health classification requirements, and may require that the Franchisee post its health classification report in a conspicuous place in the Franchisee's Big Boy Restaurant to insure the public's access to such information.

733 Periodic Inspections.

The Franchisor will have the absolute right to inspect, evaluate, videotape and photograph the Franchisee's Big Boy Restaurant at any time during normal business hours to determine whether the Franchisee is complying with the standards set forth in the Operations Manual, the standards of quality and service associated with the Business System and the terms and conditions of this Agreement ("Inspection.") The results of each Inspection will be provided to the Franchisee in writing. If the Franchisee fails to attain a passing score as specified in the Operations Manual on any Inspection conducted by the Franchisor, then the Franchisee will have 30 days from the date the Franchisee receives the written Inspection report from the Franchisor to correct the operational deficiencies specified in the Inspection report. If the operational deficiencies are not corrected within 30 days, then the Franchisor will have the right to terminate this Agreement as provided herein.

7.34 Hiring Restrictions.

The Franchisee will not employ nor seek to employ any General Manager or Assistant Manager who is, or has been during the previous three months, employed by the Franchisor or any other Big Boy franchisee without first obtaining the consent of that person's employer or former employer and will not, directly or indirectly, induce any General Manager or Assistant Manager to leave his or her employment with any Big Boy Restaurant.

ARTICLE 8 PRODUCTS AND SERVICES

8.1          Products and Services.

The Franchisee will offer and sell only the Products and Services specified in the Operations Manual or that have been approved in writing by the Franchisor. The Franchisee will not, under any circumstances, have the right to offer or sell any other foods, beverages, merchandise or services that are not specified in the Operations Manual or otherwise approved by the Franchisor in writing. The Franchisee will offer and sell all of the Products and Services specified in the Operations Manual or otherwise approved by the Franchisor in writing and will maintain sufficient inventories to realize the full economic potential of the Restaurant. The Franchisee will offer for sale and sell the Products and Services only on a retail basis (to the end user) from the Franchised Location and will not sell any Products and Services or other foods, beverages, merchandise or services under any of the Marks or the Business System (a) on a wholesale basis (for resale to another retailer or wholesaler), (b) on a retail basis at or from any other location other than the Franchised Location (except as approved by the Franchisor in writing), (c) by means of the Internet, catalogue sales, mail order sales, infomercials or telemarketing, or (d) by any other means or

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methods of sales or distribution. The Franchisee will have the absolute right to sell all Products and Services to its customers and guests at whatever prices and on whatever terms it deems appropriate.

8.2           Approved Suppliers.

The Franchisee will purchase all Products and Services specified in the Operations Manual or otherwise in writing by the Franchisor only from Approved Suppliers. The Franchisee will have the right and option to purchase all Products and Services specified by the Franchisor pursuant to this Article from other suppliers and distributors provided their comparable foods, beverages, merchandise and services conform in quality to the Franchisor's standards and specifications and provided that the Franchisor determines that the supplier's or distributor's business reputation, quality standards, delivery performance, credit rating, and other factors specified by the Franchisor are satisfactory. If the Franchisee desires to purchase any foods, beverages, merchandise and services from other suppliers and distributors, then the Franchisee must, at its expense, submit to the Franchisor samples and specifications, and other business and product information as requested by the Franchisor, for review and/or testing to determine whether the supplier or distributor and its foods, beverages, merchandise and services meet the Franchisor's standards and specifications. The Franchisor will have the right to inspect the facilities of the proposed supplier or distributor. Within 10 days after being invoiced, the Franchisee will reimburse the Franchisor for the costs and expenses incurred by the Franchisor to (a) analyze, review and test the foods, beverages, merchandise and services and the samples, and (b) conduct an inspection of the facilities of the proposed supplier or distributor. The Franchisor will complete testing of all foods, beverages, merchandise and services within 30 days after receipt of the required information, and will notify the Franchisee of its determination within 45 days thereafter. The written approval of the Franchisor must be obtained by the Franchisee before any unapproved foods, beverages, merchandise and services are sold or used by the Franchisee or purchased from any unapproved supplier or distributor. The Franchisor will have the right to require any new or existing Approved Supplier to sign a contract containing terms and conditions acceptable to the Franchisor, including those relating to pricing, delivery, terms, product availability, economic viability, service and quality.

8.3           Designated Suppliers.

The Franchisee will purchase the Products and Services specified in the Operations Manual or otherwise in writing by the Franchisor only from Designated Suppliers. The Franchisor may be a Designated Supplier for certain Products and Services. The Franchisee will not have the right to substitute any new supplier or distributor for any Designated Supplier or to request or require the Franchisor to appoint or approve any new supplier or distributor as a Designated Supplier. The Franchisor will have the right to require any Designated Supplier to sign a contract containing terms and conditions acceptable to the Franchisor, including those relating to pricing, delivery, terms, product availability, economic viability, service and quality.

8.4          Delivery and Catering.

The Franchisee will not, without the prior written consent of the Franchisor, offer or provide delivery or catering services for any of the Products and Services.

8.5          Alcoholic Beverages.

The Franchisee will not serve beer, wine, liquor or other alcoholic beverages at or from its Big Boy Restaurant, except with the prior written approval of the Franchisor, which approval may be withheld at the sole and absolute discretion of the Franchisor.

8.6          Payments to Franchisor.

The Franchisee acknowledges that the Franchisor may receive commissions, volume discounts, purchase discounts, performance payments, signing bonuses, rebates, marketing and advertising allowances, co-op advertising, administrative fees, enhancements, price discounts, economic benefits and other payments

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("Payments") based upon purchases of Products and Services from Designated Suppliers, Approved Suppliers, the Franchisor, and/or other suppliers, vendors and distributors ("Suppliers" or "Supplier"). Any Payments received by the Franchisor from any Suppliers as a result of or based on the Franchisee's purchases from those Suppliers will be the exclusive property of the Franchisor and the Franchisee will not have any right to any Payments received by the Franchisor from any Suppliers. If the Franchisor is a Supplier for any Products and Services and if the Franchisee purchases Products and from the Franchisor, then any Payments made to the Franchisor by any Supplier that is based on the Franchisee's purchases of any Products and Services from the Franchisor will be the exclusive property of the Franchisor and the Payment will be deemed to be a reduction of the price paid by the Franchisor for the Products and Services sold to the Franchisee by the Franchisor. The Franchisee will not, under any circumstances, have the right to receive or claim the right to any portion of any Payments received by the Franchisor from any Supplier for the sale of any Products and Services purchased by the Fninchisor and thereafter sold to the Franchisee by the Franchisor.

8.7          Branding of Products.

The Franchisee will not under any circumstances have the right to: (a) use or display the Marks on or in connection with any product or service other than the Products and Services; (1)) acquire, develop or manufacture any product under the name "Big Boy®" or any of the Marks, or direct any other person or Entity to do so; (c) acquire, develop or manufacture any product that has been developed or manufactured by or for the Franchisor for use in conjunction with the Restaurant System and which is sold under any of the Marks, or direct any other person or Entity to do so; and (d) use, have access to, or have any rights to any proprietary formulas, ingredients, or recipes for any of the Franchisor's proprietary products or other Products and Services.

8.8          Independent Shopping Services.

The Franchisor will have the right to hire an independent shopping service to visit, dine at and/or evaluate the Franchisee's Big Boy Restaurant and the quality of the foods, beverages and services provided to customers by the Franchisee's Big Boy Restaurant. The Franchisor will determine the number and frequency of the visits the shopping service will make to the Franchisee's Big Boy Restaurant and the form of the reports the shopping service will provide to the Franchisor. The fees charged by the shopping service for visiting and evaluating the Franchisee's Big Boy Restaurant will be paid by the Franchisor. The Franchisor will provide the Franchisee with copies of all reports prepared by the shopping service evaluating the Franchisee's Big Boy Restaurant.

ARTICLE 9

CONFIDENTIAL OPERATIONS MANUAL

AND OTHER CONFIDENTIAL INFORMATION

9.1          Compliance with Operations Manual.

The Franchisor will loan the Franchisee one copy of its Operations Manual. The Franchisee will conform to the common image and identity created by the foods, food items, beverages, products, music, food portions, recipes, ingredients, cooking techniques and processes, cleanliness, sanitation and services associated with its Big Boy Restaurant which are portrayed and described by the Operations Manual. The Franchisee will modify the operations of the Restaurant to implement all changes, additions and supplements made by the Franchisor to the Restaurant System which are reflected in the Operations Manual as promptly as reasonably possible. The Franchisee will implement all operational changes to the Restaurant System deemed necessary by the Franchisor to: (a) improve the standards of service or the food, food items, beverages, and products offered for sale under the Restaurant System; (b) protect the goodwill associated with the Marks; (c) improve the operation of the Franchisee's Restaurant; and (d) protect the health and safety of the Franchisee's employees, customers or guests. The Franchisor reserves

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the right to revise the Operations Manual at any time during the Term of this Agreement. The Operations Manual and all supplements, changes and additions to the Operations Manual are and will be deemed confidential in all respects and will be deemed to be trade secrets of the Franchisor. Hie Franchisee will not use the Operations Manual or any information contained therein in connection with the operation of any other restaurant or other business or for any purpose other than in conjunction with the operation of the Franchisee's Big Boy Restaurant. If the Franchisee loses its copy of the Operations Manual, it will pay the Franchisor the current charge for a replacement copy.

9.2         Revisions to Operations Manual.

The Franchisor may from time to time revise the Operations Manual, and the Franchisee expressly agrees to operate its Big Boy Restaurant in accordance with all such revisions. The Franchisee will at all times keep its copy of the Operations Manual current and up-to-date, and in the event of any dispute regarding the Operations Manual, the terms of the most recent version of the master copy of the Operations Manual maintained by the Franchisor will be controlling in all respects.

93         Confidentiality of Operations Manual.

The Operations Manual will, at all times during the Term of this Agreement and thereafter, remain the sole and exclusive property of the Franchisor. The Franchisee will treat the Operations Manual and any other manuals created for or approved for use in the operation of the Franchisee's Big Boy Restaurant as secret and confidential and the Franchisee will use all reasonable means to keep such information secret and confidential. Neither the Franchisee nor any employees of the Franchisee will make any copy, duplication, record or reproduction of the Operations Manual, or any portion thereof, available to any unauthorized person.

9.4         Confidentiality of Other Information.

The Franchisor and the Franchisee expressly understand and agree that the Franchisor will be disclosing and providing to the Franchisee certain confidential and proprietary information concerning the Restaurant System and the procedures, operations, technology and data used in connection with the Restaurant System. The Franchisee will not, during the Term of this Agreement or thereafter, communicate, divulge or use for the benefit of any other person or Entity any such confidential and proprietary information, knowledge or know-how concerning the methods of operation of the Restaurant which may be communicated to the Franchisee, or of which the Franchisee may be apprised by virtue of this Agreement. The Franchisee will divulge such confidential and proprietary information only to its employees who must have access to it in order to operate the Franchisee's Big Boy Restaurant. Any and all information, knowledge and know-how including, without limitation, drawings, memos, letters, writings, e-mails, reports, client lists, materials, equipment, technology, methods, procedures, techniques, recipes, specifications, computer programs, systems and other data which the Franchisor copyrights or designates as confidential or proprietary will be deemed confidential and proprietary for the purposes of this Agreement.

ARTICLE 10

SITE SELECTION: CONSTRUCTION COSTS;

BUSINESS PREMISES SPECIFICATIONS

10.1 Site Selection.

The Franchisee will be solely responsible for selecting the site of the Franchised Location for the Franchisee's Big Boy Restaurant, regardless of whether the Franchised Location is owned or leased by the Franchisee. The Franchisee will retain an experienced commercial real estate broker or salesperson that has a minimum of five years experience in locating restaurant sites to advise the Franchisee and to locate, acquire, purchase or lease the site for the Franchisee's Big Boy Restaurant. Accordingly, no provision in this Agreement will be construed or interpreted to impose any obligation upon the Franchisor

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to locate a site for the Franchised Location, to assist the Franchisee in the selection of a suitable site for the Franchised Location, or to provide any assistance to the Franchisee in the purchase or lease of the Franchised Location.

10.2         Site Selection Criteria.

The Franchisee will not lease, purchase or otherwise acquire a site for the Franchised Location until such information as the Franchisor may require regarding the proposed site has been provided to the Franchisor by the Franchisee, and either the Franchisor has issued a notice of no objection for the proposed site or the Franchisee has executed the site release as required by Article 10.3 of this Agreement. The Franchisor may require the Franchisee to provide site information relating to, among other things, accessibility, visibility, potential and actual traffic flows, population trends, household income and financial statistics, lease terms and other demographic information. The review of the site conducted by the Franchisor will not be deemed to be a warranty, representation or guaranty by the Franchisor that if the Franchisee's Big Boy Restaurant is opened and operated at that site, it will be a financial success. The Franchisor will have the right to require that the Franchisee obtain, at the Franchisee's expense, an economic feasibility and demographics study for the proposed site of the Franchised Location. Any feasibility and demographics study required by the Franchisor will be completed by a real estate or marketing expert mutually agreed upon in writing by the Franchisor and the Franchisee.

10.3         Site Release.

Within 30 days after completing its review of a proposed site for the Franchised Location, the Franchisor will provide written notice to the Franchisee stating that the Franchisor has no objections to the proposed site, or listing the objections which the Franchisor has to the proposed site. The division to locate the Franchised Location at the proposed site is solely that of the Franchisee. However, if the Franchisee chooses to locate the Franchised Location at a proposed site that the Franchisor has objected to, then the Franchisee must execute a release, in the form prescribed by the Franchisor, releasing the Franchisor and its officers, directors, shareholders, agents and employees, in their corporate and individual capacities, from any and all claims arising from, in connection with, or as a result of developing the Franchised Location at the site proposed by the Franchisee, or relating in any way to the Franchisor's review of the proposed site. The Franchisee will not sign any lease, purchase agreement or obtain ;any related rights to possession, occupancy or ownership to any site, or premises located on any site, to which the Franchisor has objected unless and until the Franchisee has executed the release required pursuant to this provision.

10.4         Floor Plans and Layout: Construction Plans.

The Franchisor will, at its expense, provide the Franchisee with its prototypical floor plan and a layout for a free standing Big Boy Restaurant, including the layout for the kitchen, customer siting, refrigeration, ovens, burners, preparation lines, bussing stations, dry storage, point-of-sale system, and individual cash registers. The Franchisee will, at its cost, retain a licensed architect and will be responsible for the preparation of working drawings, construction plans and architectural plans and specifications for the construction, renovation or remodeling of the Franchisee's Big Boy Restaurant. The Franchisee will not have the right to use any working drawing, construction plans, or architectural plans and specifications for the construction of the Franchisee's Restaurant until they have been approved by the Franchisor in writing. The Franchisee will be responsible for the accuracy of all drawings, plans and specifications used for the construction, renovation or remodeling of the Franchisee's Restaurant.

10.5        Construction and Remodeling Costs.

The Franchisee will, at its expense, be solely responsible for all costs and expenses incurred for the construction, renovation or remodeling of the Franchisee's Big Boy Restaurant at the Franchised Location including, but not limited to, all costs for architectural plans and specifications, all modifications to the floor plans and layouts necessitated by the structure, construction or layout of the Franchised Location, building permits, site preparation, demolition, construction of the parking lot, landscaping, heating,

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ventilation and air conditioning, interior decorations, FF&E, leasehold improvements, labor, architectural and engineering fees, electricians, plumbers, general contractors and subcontractors.

10.6        Compliance with Specifications.

The Franchised Location and the Franchisee's Restaurant will conform to all specifications for decor, FF&E, exterior and interior decorating designs and color schemes established by the Franchisor. The Franchisee will obtain and pay for the FF&E, inventory and supplies specified by the Operations Manual or otherwise in writing by the Franchisor used by the Franchisee for the operation of its Big Boy Restaurant.. The FF&E used in the Franchisee's Big Boy Restaurant must be installed and located in accordance with the floor plans approved by the Franchisor and must conform to the quality standards and uniformity requirements established by the Franchisor.

10.7        Inspection during Construction or Renovation.

The Franchisee will be solely responsible for inspecting the Franchised Location during construction or renovation to confirm that the Franchised Location is being constructed or renovated in a workmanlike manner and according to the specifications established by the Franchisor. The Franchisee will be solely responsible for complying with all applicable local, state and federal laws, ordinances, statutes and building codes, and for acquiring all licenses and building and other permits required by all federal, state, city, municipal and local laws in connection with the construction or renovation of the Franchisee's business premises at the Franchised Location. The Franchisor will have no responsibility to the Franchisee or any other party if the Franchised Location is not constructed or renovated by the Franchisee or its architect or contractor: (a) according to the standard specifications established by the Franchisor; (b) in compliance with all applicable federal, state or local laws or ordinances; or (c) in a workmanlike manner. The Franchisee will not open the Restaurant for business without the Franchisor's prior written approval.

ARTICLE 11 SIGNS

11.1        Approved Signs.

The Franchisee will purchase or lease all of the Signs specified by the Franchisor for the Franchisee's Restaurant and the Franchised Location. All Signs at the Franchised Location must comply with the standard sign plans and specifications established by the Franchisor. The Franchisor will provide the Franchisee with a copy of the standard sign plans and specifications and the Franchisee will, at its expense, prepare or cause the preparation of complete and detailed plans and specifications for the Signs and will submit such plans and specifications to the Franchisor for its written approval. The Franchisor will have the absolute right to inspect, examine, videotape and photograph the Signs for any reason at any time during the Term of this Agreement.

11.2        Payment of Costs and Expenses.

The Franchisee will, at its expense, be responsible for any and all installation costs, sign costs, architectural fees, engineering costs, construction costs, permits, licenses, repairs, maintenance, utilities, insurance, taxes, assessments and levies in connection with the construction, erection, maintenance or use of the Signs including, if applicable, all electrical work, construction of the base and foundation, relocation of power lines and all required soil preparation work. The Franchisee will comply with all federal, state and local laws, regulations, building codes and ordinances relating to the construction, erection, maintenance and use of the Signs.

11.3        Modifications; Inspection,

The Franchisee may not alter, remove, change, modify, or redesign the Signs unless approved by the Franchisor in writing. The Franchisor will have the unequivocal and unilateral right to redesign the plans

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and specifications for the Signs during the Term of this Agreement without the appjoval or consent of the Franchisee. Within 30 days after receipt of written notice from the Franchisor, the Franchisee must, at its expense, either modify or replace the Signs so that the Signs displayed at the Franchised Location will comply with the redesigned plans and specifications as issued by the Franchisor. The Franchisee will not be required to modify or replace the Signs more than once every five years.

11.4 Interior Signs.

The Franchisee will purchase and install in accordance with the Franchisor's written specifications all interior signs specified in writing from time to time by the Franchisor for use in the Franchisee's Big Boy Restaurant. The Franchisee will not, without the prior written consent of the Franchisor, install or display any sign, menu board, poster, display or advertisement, whether functional or decorative, other than those items specified in writing by the Franchisor.

ARTICLE 12 OFFICE EQUIPMENT: COMPUTER HARDWARE AND SOFTWARE

12.1         Office and Telecommunications Equipment; Telephone Lines.

The Franchisee will, at its sole expense, obtain and maintain at all times during the Term of this Agreement, electronic telephone facsimile ("fax") equipment, and other telecommunications equipment for use in the operation of the Franchisee's Big Boy Restaurant as specified in the Operations Manual, and, all telecommunications and fax equipment must be in operation to send and receive information 24 hours a day.

12.2         Computer Equipment and Software.

The Franchisee will, at its sole expense, purchase, lease, or acquire all of the Computer Equipment and Computer Software required for the operation of the Franchisee's Restaurant specified in the Operations Manual including, but not limited to, the Computer Equipment and Computer Software for: (a) the point-of-sale cash register system (the "POS System"), (b) the accounting system, (c) the processing of credit cards and bank debit cards, (d) the processing of Big Boy gift cards, and (e) the on-line inventory ordering system. The Franchisee will, upon written notice from the Franchisor, update and "upgrade the Computer Equipment and Computer Software as deemed necessary by the Franchisor from time to time for the efficient operation of the Restaurant. The POS System must provide the infoimation and functions (including payroll and employee timekeeping) described in the Operations Manual. The Franchisor will have the right to directly access and download all Financial Records, Financial Statements and other information contained in the POS System according to the protocol set forth in the Operations Manual.

123 Other Equipment.

The Franchisee will purchase and pay for all other electronic and other equipment, including Computer Equipment and Computer Software, described in the Operations Manual or otherwise in writing by the Franchisee, to electronically process credit cards, bank debit cards, gift certificates, gift cards, coupons and customer loyalty cards as specified in the Operations Manual.

12.4         Internet Provider.

The Franchisee will, at all times during the Term of this Agreement, at the Franchisee's expense, have access to the Internet through the Microsoft Network, America On-Line, Prodigy, CompuServe or other Internet access provider approved by the Franchisor.

12.5         E-Mail Address.

The Franchisee will, at all times during the Term of this Agreement, maintain an e-mail address on the Internet. The Franchisee's e-mail address will be provided to the Franchisor and will be used as a method for the Franchisee and the Franchisor to communicate with each other and to tmnsmit documents and

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other information. The Franchisee will not use the words "Big Boy," "Big" and "Boy" as any part of its e-mail address or its domain name if a Home Page is maintained by the Franchisee on the Internet. The Franchisee will review its e-mail at least once a day and will respond to all e-mails from the Franchisor and others within 24 hours, except for weekend e-mails, which may be answered every Monday.

12.6 Internet Website.

The Franchisee will not establish a website or Home Page on the Internet to advertise or promote its Big Boy Restaurant without the prior written consent of the Franchisor. All features of any proposed Home Page, including the domain name, content, format, and links to other websites, must be approved by the Franchisor prior to the activation of the Home Page by the Franchisee. The Franchisee's Home Page must advertise only the Franchisee's Big Boy Restaurant, and all content and information maintained by the Franchisee on the Home Page will at all times be subject to the Operations Manual and this Agreement including, without limitation, the provisions of this Agreement relating to trademark usage, the Franchisee's business, advertising approval, confidentiality, and product and service limitations. Trie Franchisee will not link its Home Page to any Internet site or to the Franchisor's Internet home page without the Franchisor prior written approval.

ARTICLE 13 INSURANCE

13.1         General Liability Insurance.

The Franchisee will purchase and maintain, at its sole cost and expense, a general liability insurance policy with coverage of at least $1,000,000 per occurrence and $2,000,000 aggregate coverage insuring the Franchisee and the Franchisor, and their respective officers, directors, agents and employees from and against any and all loss, liability, claim, damage or expense of any kind whatsoever, including bodily injury, personal injury, food poisoning or other sickness, death, property damage, products liability and all other occurrences, resulting from the condition, operation, use, business or occupancy of the Franchisee's Restaurant and the Franchised Location, including the surrounding area, the parking area and the sidewalks.

13.2        Liquor Liability Insurance.

If the Franchisee serves alcoholic beverages of any type at its Big Boy Restaurant, then the Franchisee will purchase and maintain, at its sole cost and expense, liquor liability insurance with minimum coverage of $1,000,000 per occurrence insuring the Franchisee and the Franchisor, and their respective officers, directors, agents and employees from any and all loss, liability, claim, damage, or expense of any kind whatsoever, including bodily injury, personal injury, death, and property damage, resulting from the sale or service of liquor by the Franchisee or any of the Franchisee's employees at or from the Franchisee's Restaurant.

13.3         Vehicle Insurance.

The Franchisee will purchase and maintain, at its sole cost and expense, vehicle liability insurance with minimum coverage of $500,000 per occurrence insuring the Franchisee and the Franchisor, and their respective officers, directors, agents and employees from any and all loss, liability, claim, damage, or expense of any kind whatsoever, including bodily injury, personal injury, death, and property damage, resulting from the use, operation or maintenance of any automobiles, trucks or vehicles owned by the Franchisee or used by the Franchisee or any of the Franchisee's employees (including automobiles, trucks and other vehicles used in the Franchisee's Restaurant that are owned or leased by any employee or agent of the Franchisee).

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13.4        Business Property Insurance.

The Franchisee will purchase and maintain, at its sole cost and expense, special peril property insurance coverage, which will include fire and extended coverage, for the inventory, machinery, equipment, furniture, fixtures and furnishings owned or leased by the Franchisee and used by the Franchisee at the Franchised Location. The Franchisee's property insurance policy (including fire and extended coverage) must have minimum coverage limits equal to at least actual "replacement" cost.

13.5        Business Interruption Insurance.

The Franchisee will purchase and.maintain, at its sole cost and expense, business interruption insurance with coverage of at least $300,000 per occurrence insuring the Franchisee for and against all losses and damages resulting from an interruption in the operation of the Franchisee's Big Boy Restaurant.

13.6        Building Insurance,

If the Franchisee, or any of the Franchisee's Owners, owns, either directly or indirectly, the building or the business premises at the Franchised Location, then the Franchisee will insure the building or the business premises for and against all risk, loss and damages in an amount equal to at least actual "replacement" cost. If the Franchised Location is either partially or completely destroyed by fire or any other catastrophe, then the Franchisee will use the insurance proceeds to repair or reconstruct the Franchised Location and recommence business as soon as reasonably possible.

13.7        Umbrella Liability.

The Franchisee will, at its sole cost and expense, purchase and maintain umbrella liability insurance in the minimum amount of $ 1,000,000 that will provide liability insurance coverage for any liability incurred by the Franchisee and the Franchisor in excess of the primary liability insurance coverage carried by the Franchisee under this Article.

13.8        Other Insurance.

The Franchisee will, at its sole cost and expense, purchase and maintain all other insurance required by applicable state and federal laws including if applicable, workers' compensation insurance for its employees. The Franchisee will also purchase such other insurance that may be reasonably requested by the Franchisor. The insurance required by this Article is the minimum coverage for the Franchisee's Restaurant. The Franchisee will be responsible for determining and purchasing all other insurance for its Restaurant utilizing good business practices, and for determining whether the insurance required under this Article is sufficient in coverage and amount.

13.9        Insurance Companies: Evidence of Coverage.

All insurance companies providing coverage to the Franchisee must be acceptable to and approved by the Franchisor, and must be licensed in the state where coverage is provided. The Franchisee will provide the Franchisor with certificates of insurance evidencing the insurance coverage required of the Franchisee pursuant to this Article no later than the date the Franchisee opens for business, and the Franchisee will immediately provide, upon expiration, change or cancellation, a new certificate of insurance to the Franchisor.

13.10      Defense of Claims.

All liability and other insurance policies purchased and maintained by the Franchisee in connection with the Franchisee's Restaurant will provide and pay for attorneys to defend any legal actions, lawsuits or claims brought against the Franchisee and the Franchisor, and their respective officers, directors, agents and employees.

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13.11 RJ2hts of Franchisor.

All insurance policies purchased and maintained by the Franchisee pursuant to this Article will name the Franchisor, its sole member and affiliates ("Additional Insureds") as an additional named insured, will contain endorsements by the insurance companies waiving all rights of subrogation against the Additional Insureds, and will stipulate that the Franchisor will receive copies of all notices of cancellation, nonrenewal, or coverage reduction or elimination at least 30 days prior to the effective date.

ARTICLE 14 LICENSING OF MARKS AND RESTAURANT SYSTEM

14.1         Right to License Marks.

The Franchisor warrants that, except as otherwise provided for herein, it has the right to grant the Franchise and to license the Marks and the Restaurant System to the Franchisee. Any and all improvements made by the Franchisee to the Marks or the Restaurant System will be the sole and absolute property of the Franchisor, which will have the exclusive right to register and protect all such improvements in its name in accordance with applicable law. The Franchisee's right to use and identify with the Marks and the Restaurant System will exist concurrently with the Term of this Agreement and such use by the Franchisee will inure exclusively to the benefit of the Franchisor.

14.2        Conditions to License of Marks.

The Franchisor hereby grants to the Franchisee the nonexclusive personal right to use the Marks and the Restaurant System in accordance with the provisions of this Agreement. The Franchisee's nonexclusive personal right to use "Big Boy®" as the name of the Franchisee's Restaurant and its right to use the Marks and the Restaurant System applies only to the Franchisee's Restaurant at the Franchised Location and such rights will exist only so long as the Franchisee fully performs and complies with all of the conditions, terms and covenants of this Agreement. The Franchisee will only have the right to use the Marks in connection with the operation of the Restaurant and will not use the Marks in any way or in any other manner except as approved in writing by the Franchisor. "Nonexclusive," for the purposes of this Article, will mean that the Franchisor has or will grant franchises to other franchisees authorizing such franchisees to operate Big Boy Restaurants in conformity with the Restaurant System using the name "Big Boy®" and the other Marks, and that the Franchisor, its affiliates and/or subsidiaries will own, manage and operate Big Boy Restaurants.

143 Franchisee's Authorized Use.

The Franchisee will only use the Marks designated by the Franchisor and only in the manner authorized and permitted by the Franchisor. The Franchisee's right to use the Marks is limited to the uses set forth in this Agreement and any unauthorized use will constitute an infringement of the rights of the Franchisor under this Agreement and under the Lanham Act (15 U.S.C. §1051, et seq.). The Franchisee will not have or acquire any rights in any of the Marks or the Restaurant System other than the right of use as provided herein. The Franchisee will have the right to use the Marks and the Restaurant System only in the manner prescribed, directed and approved by the Franchisor in writing and will not have the right to use the Marks in connection with the sale of any products or services other than the Big Boy Products and Services. If in the judgment of the Franchisor, any acts of the Franchisee demean the goodwill, uniformity, quality or business standing associated with the Marks or the Restaurant System, then the Franchisee will, upon written notice from the Franchisor, immediately modify its use of the Marks or the Restaurant System in the manner prescribed by the Franchisor in writing.

14.4 Adverse Claims to Marks.

If there are any claims by any third party that its rights to any or ali of the Marks are superior to those of the Franchisor and if the attorneys for the Franchisor are of the opinion that such claim by a third party is legally meritorious, or if there is an adjudication by a court of competent jurisdiction that any party's

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rights to the Marks are superior to those of the Franchisor, then upon receiving written notice from the Franchisor, the Franchisee will, at its sole expense, immediately adopt, implement and use the changes and amendments to the Marks that are specified by the Franchisor. If required, the Franchisee will immediately cease using the Marks specified by the Franchisor, and will, as soon as reasonably possible, commence using the new trademarks, trade names, service marks, logos, designs and commercial symbols designated by the Franchisor in writing at the Franchised Location in connection with the operations, advertising, marketing and promotion of the Franchisee's Restaurant. The Franchisee will not make any changes or amendments whatsoever to the Marks or the Restaurant System unless specified or approved in advance by the Franchisor in writing.

14.5        Defense or Enforcement of Rights to Marks.

The Franchisee will have no right to and will not defend or enforce any rights associated with the Marks or the Restaurant System in any court or other proceedings for or against imitation, infringement, prior use or for any other claim or allegation. The Franchisee will give the Franchisor immediate written notice of any and all claims or complaints made against or associated with the Marks and ihe Restaurant System and will, without compensation for its time and at its expense, cooperate in all respects with the Franchisor in any lawsuits or other proceedings involving the Marks and the Restaurant System. The Franchisor will have the sole and absolute right to determine whether it will commence or defend any litigation involving the Marks and/or the Restaurant System, and the cost and expense of all litigation incurred by the Franchisor, including attorneys' fees, specifically relating to the Marks or the Restaurant System will be paid by the Franchisor.

14.6        Tender of Defense.

If the Franchisee is named as a defendant or party in any action involving the Marks or the Restaurant System solely because the plaintiff or claimant is alleging that the Franchisee does not have the right to use the Marks or the Restaurant System licensed by the Franchisor to the Franchisee at the Franchised Location pursuant to this Agreement, then the Franchisee may tender the defense of the action to the Franchisor and the Franchisor will, at its expense, defend the Franchisee in the action provided that the Franchisee has tendered defense of the action to the Franchisor within seven days after receiving service of the pleadings or the Summons and Complaint relating to the action. The Franchisor will indemnify and hold the Franchisee harmless from any damages assessed against the Franchisee in any actions resulting solely from the Franchisee's proper and authorized use of the Marks and the Restaurant System at the Franchised Location if the Franchisee has timely tendered defense of the action to the Franchisor.

14.7         Franchisee's RJ2ht to Participate in Litigation.

The Franchisee may, at its expense, retain an attorney to represent it individually in all litigation and court proceedings involving the Marks or the Restaurant System, and may do so with respect to matters involving only the Franchisee (i.e., not involving the Franchisor or its interests); however, the Franchisor and its attorneys will control and conduct all litigation involving the Marks or the Restaurant System and the rights of the Franchisor. Except as expressly provided for herein, the Franchisor will have no liability to the Franchisee for any costs that the Franchisee may incur in any litigation involving the Marks or the Restaurant System, and the Franchisee will pay for all costs, including attorneys' fees, that it may incur in any litigation or proceeding arising as a result of matters referred to under this Article, unless it tenders the defense to the Franchisor in a timely manner pursuant to and in accordance with Article 14.6.

ARTICLE 15 TRAINING PROGRAM; OPENING ASSISTANCE

15.1 Training Program.

The Franchisor will provide a training program for the Franchisee, the Franchisee's General Manager and two Assistant Managers (the "Management Team") in Warren, Michigan, or at another approved training

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site designated by the Franchisor, to educate, familiarize and acquaint them with the Restaurant System and the operations of the Big Boy Restaurant. The training program will include classroom and on-the-job training and instruction on hiring and training of employees, scheduling, financial reporting, computer operations, marketing, advertising, promotion, purchasing procedures, food preparation, food safety, food presentation, food quality, food portions, liquor service, food and beverage inventory and cost control, customer service, customer relations, equipment operation and maintenance, general maintenance and other topics selected by the Franchisor. The Franchisee and its Management Team must attend and successfully complete the training program and be certified in writing by the Franchisor prior to commencing the business operations of the Franchisee's Restaurant, except as provided otherwise in this Agreement.

15.2        Training Schedule.

The training program will be scheduled by the Franchisor in its sole discretion and will be for a minimum of eight Weeks. The Franchisee and the Franchisee's General Manager and Assistant Managers must begin training at a date that will result in their completion of training at least one month prior to the scheduled opening of the Restaurant. If the Franchisee and the Franchisee's General Manager and Assistant Managers do not attend each required training session at the training site designated by the Franchisor, then the Franchisor will have the right to conduct the uncompleted training at the Franchised Location in accordance with a schedule to be determined by the Franchisor. In that event, the Franchisee will pay the Franchisor the then-current per day on-site Training Fee for each trainer conducting the training and will reimburse the Franchisor for each trainer's Travel Expenses. If the Franchisee and the Franchisee's Management Team do not successfully complete the required training program prior to the scheduled opening date of the Franchisee's Restaurant, then such person(s) will not be permitted or authorized to participate in the operations of the Franchisee's Restaurant.

15.3        Changes in Personnel.

The Franchisee must at all times employ a General Manager and at least two Assistant Managers who have successfully completed the prescribed training program and have been certified in writing by the Franchisor. The Franchisee will immediately notify the Franchisor in writing of any personnel changes in the positions of General Manager or Assistant Manager at the Franchisee's Restaurant. If the Franchisee hires a new General Manager or Assistant Manager who has not successfully completed the Franchisor's required training program, then that person must begin the training program within 30 days after the date of hire by the Franchisee, and must attend and successfully complete the required training program. If, in the judgment of the Franchisor, the new General Manager or Assistant Manager does not successfully complete the required training program, then the Franchisee will not permit that person to continue to participate in the operation of the Franchisee's Restaurant.

15.4        Training of New Personnel.

The training program for a new General Manager or Assistant Manager required by Article 15.3 of this Agreement will be conducted by the Franchisor at the Franchised Location, at the Franchisor's training site in Warren, Michigan, or at another approved training site designated by the Franchisor, at the sole discretion of the Franchisor. If the Franchisor provides the training program at the Franchised Location, then the Franchisee will pay the Franchisor the then-current per day on-site Training Fee for each trainer conducting the training and will reimburse the Franchisor for each trainer's Travel Expenses. If the training program is provided at the Franchisor's headquarters, then the Franchisee will pay the Franchisor the then-current per day Training Fee.

15.5        Payment of Salaries and Expenses.

The Franchisee will pay the Salaries, unemployment compensation, workers' compensation insurance, Travel Expenses and all other expenses for all persons who attend the Franchisor's training program on behalf of the Franchisee. The persons attending the Franchisor's training program will not be employees

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of the Franchisor, and the Franchisor will not have any obligation to pay the persons attending training for the time they spend for on the job training at an existing Big Boy Restaurant or the time spend in classroom training.

15.6        New Store Opening Assistance.

After the Franchisee and the Management Team have successfully completed the Franchisor's training program and the Franchisee has scheduled an opening date for its Restaurant, the Franchisor will provide an Opening Team who will work at the Franchised Location for a minimum of two Weeks before the opening of the Franchisee's Restaurant and two Weeks after the opening (a total of four Weeks) to provide opening assistance to the Franchisee. During the first Week and the last Week, a rninimum of three people from the Opening Team will work at the Franchisee's Restaurant, and during the second and third Weeks, a minimum of six people from the Opening Team will work at the Franchisee's Restaurant. Franchisor reserves the right, in its sole discretion, to increase the number of people in the Opening Team. The opening assistance provided by the Opening Team will include implementing internal controls, assistance with training employees, purchasing food, beverages, and supplies, implementing accounting procedures, implementing the Restaurant System and evaluating the Franchisee's initial business operations. The Franchisee will, upon receiving an invoice, reimburse the Franchisor for the Travel Expenses incurred by each member of the Opening Team.

15.7        Hiring and Training of Employees by Franchisee.

The Franchisee will hire all employees of the Restaurant, will determine the terms of their employment and compensation, and will implement a training program for employees of the Restaurant in compliance with the Operations Manual. The Franchisee will at all times maintain a staff of trained employees sufficient to efficiently operate the Restaurant in compliance with the standards of quality and service established by the Franchisor.

15.8         Conventions.

The Franchisee and, upon the written request of the Franchisor, the Franchisee's General Manager will attend each convention held by the Franchisor for the franchisees of Big Boy Restaurants. ITie date and location of all conventions will be at the sole discretion of the Franchisor. The Franchisee will pay, when registering for the convention, the then-current fee charged by the Franchisor to attend the convention. The Franchisee will pay the Salaries, unemployment compensation taxes, workers' compensation insurance, Travel Expenses and alt other expenses related to the attendance of the Franchisee and all other employees and individuals attending the convention on the Franchisee's behalf.

ARTICLE 16 OTHER OBLIGATIONS OF BIG BOY

Consistent with the Franchisor's uniformity requirements and quality standards, the Franchisor or its authorized representative will: (a) provide the Franchisee with a written schedule of all Products and Services for sale or use by Big Boy Restaurants, and the FF&E, Signs, supplies and inventory necessary and required for the operation of the Franchisee's Restaurant; (b) provide the Franchisee with a list of the Designated Suppliers, Approved Suppliers and other suppliers for the Products and Services necessary and required for the Franchisee's Restaurant; (c) make available to the Franchisee financial reporting formats for use by the Franchisee in its Restaurant; (d) make advertising and marketing recommendations to the Franchisee; (e) visit and review the Franchisee's Restaurant as often as the Franchisor deems necessary and render written reports to the Franchisee as deemed appropriate by the Franchisor; (f) protect, police and, when appropriate, enforce the Marks for the benefit of all Big Boy franchisees in the manner deemed appropriate by the Franchisor; (g) develop and, if applicable, register additional trademarks, trade names, service marks, tag lines, logos or commercial symbols for use in connection with the Restaurant System as deemed appropriate by the Franchisor; (h) upon the reasonable written

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request of the Franchisee, render reasonable advisory services and answer questions by telephone, electronic media or in writing pertaining to the operations of the Franchisee's Restaurant; (i) provide the Franchisee with a sample of the standard Big Boy menu, and all updates and modifications to the menu; and (j) loan the Franchisee one copy of the Operations Manual, and all supplements to the Operations Manual that may be published by the Franchisor, from time to time. If the Franchisee requests that the Franchisor provide management or operations assistance to the Franchisee at the Franchised Location or at any other location, then the Franchisee will pay the then current daily fee charged by the Franchisor for the management or operations personnel together with all Travel Expenses incurred by each of them.

ARTICLE 17 ASSIGNMENT

17.1         Assignment by Franchisor.

This Agreement may be unilaterally Transferred by the Franchisor to a person or Entity without the approval of and without prior notice to the Franchisee and will inure to the benefit of the successors and assigns of the Franchisor. The Franchisor will provide the Franchisee with written notice of any assignment within 90 days after the assignment has been completed, and the assignee will be required to fully perform all obligations of the Franchisor under this Agreement.

17.2        Assignment by Franchisee to Owned or Controlled Entity.

If the Franchisee is an individual or a partnership, this Agreement may be Transferred by the Franchisee to an Entity that is owned or controlled by the Franchisee without paying any Transfer Fee, provided that: (a) the Franchisee and the Owners of the new Entity sign or have signed a personal guaranty in the form attached to this Agreement; (b) the Franchisee furnishes prior written proof to the Franchisor substantiating that the assignee Entity will be financially able to perform all of the terms and conditions of this Agreement; and (c) none of the Owners operate, franchise, develop, manage or control any Competitive Restaurant. The Franchisee will give the Franchisor 15 days prior written notice of the Transfer of this Agreement to an Entity owned or controlled by the Franchisee; however, the Transfer of this Agreement will not be valid or effective until the Franchisor has received the documents which its attorneys deem reasonably necessary to properly and legally document the Transfer of this Agreement as provided herein.

17.3        Transfer by Individual Franchisee in Event of Death or Permanent Disability,

If the Franchisee is an individual, then in the event of the death or permanent disability of the Franchisee, the provisions of Article 18 will be inapplicable and this Agreement may be Transferred (or bequeathed) by the Franchisee to any designated person or beneficiary without the payment of any Transfer Fee. However, the Transfer of this Agreement to the transferee or beneficiary of the Franchisee will be subject to the applicable provisions of Article 17.5, and will not be valid or effective until the Franchisor has received the properly executed legal documents which its attorneys deem necessary to properly and legally document the Transfer or bequest of this Agreement. The transferee or beneficiary must agree to be unconditionally bound by the terms and conditions of this Agreement and to personally guarantee the performance of the Franchisee's obligations under this Agreement. Furthermore, the transferee or beneficiary must complete the initial training program as set forth in Article 15.1 of this Agreement. There will be no charge to the transferee or beneficiary for the initial training program, but the Salary and Travel Expenses of the transferee or beneficiary will be paid in accordance with Article 15.5 of this Agreement.

17.4        Sale of Ownership Interest to Public.

The Franchisee will not have the right to sell its Ownership Interests to the public or to more than 15 persons or Entities without the written approval of the Franchisor, which may be denied in the sole discretion of the Franchisor. If the Franchisee has received the required written approval from the

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Franchisor and intends to sell any part of its Ownership Interests to the public or to more than 15 persons or entities under any foreign, federal or state securities laws, then the Franchisee will provide the Franchisor with written notice of the proposed offering and with a copy of the proposed prospectus for its review at least 20 days prior to the time that any such document is filed with any foreign or state securities commission or the Securities and Exchange Commission. The Owners of the Franchisee prior to the public offering will, at all times, retain a majority of the voting Ownership Interests of the Franchisee and will personally guarantee all obligations of the Franchisee under this Agreement. The Franchisor will have the absolute right to attend all "due diligence" meetings held in preparation for the offer to sell the Ownership Interests to the public, and the Franchisee will give the Franchisor at least five business days prior written notice of such meetings. The Franchisee will pay the Franchisor for the actual costs incurred by the Franchisor for the legal, accounting and related due diligence costs incuired by the Franchisor in connection with any public offering and will be payable to the Franchisor on a monthly basis and will be payable even if the Franchisee is unable to complete the public offering. The Franchisee will not have the right to sell any of its Ownership Interests to the public or to any other person or Entity until the Franchisee has complied in all respects with the applicable provisions of this Agreement.

17.5 Assignment by Franchisee.

Subject to the provisions of Article 18 of this Agreement, the rights granted to the Franchisee pursuant to this Agreement may be Transferred by the Franchisee only with the prior written approval of the Franchisor. The Franchisor will not unreasonably withhold its written consent to any Transfer of this Agreement if the Transfer does not violate Article 17.9 of this Agreement and if the Franchisee and/or the transferee franchisee complies with the following conditions: (a) the Franchisee has provided written notice to the Franchisor of the proposed Transfer of this Agreement at least 90 days prior to the transfer date; (b) all of the Franchisee's monetary obligations due to the Franchisor under this Agreement and under any other contract have been paid in full, and the Franchisee is not otherwise in default under this Agreement; (c) the Franchisee has executed a written agreement, in a form satisfactory to the Franchisor, in which the Franchisee agrees to observe all applicable obligations, covenants, and provisions of this Agreement that continue beyond the expiration or termination of this Agreement, including the covenants not to compete contained in Article 23 of this Agreement; (d) the Franchisor and the Franchisee have executed a joint and mutual release, in a form satisfactory to the Franchisor, of any and all claims against the Franchisor or the Franchisee and their respective officers, directors, shareholder.*, Owners, agents and employees, in their corporate and individual capacities arising from, in connection with, or as a result of this Agreement, any obligations of the Franchisor under this Agreement, or the Franchisee's initial purchase of the Franchise including, without limitation, all past and future claims arising under any federal or state franchising laws, unfair or deceptive trade practices laws, anti-trust laws, or any other federal, state or local law, rule or ordinance; provided, however, that the terms of the release between the Franchisor and the Franchisee will exclude (i) any claims or actions based on any unpaid Royalty Fees, Advertising Fees, or other amounts payable by the Franchisee on or before the date of this Agreement, (ii) any claims or actions brought by any third party against the Franchisor based on any event that occurred prior to the date of this Agreement, and (iii) any obligations of the Franchisor and the Franchisee arising out of or in connection with any other agreements or contracts executed by them that will remain in force and effect; (e) the transferee franchisee has demonstrated to the satisfaction of the Franchisor that he, she or it meets the managerial, financial and business standards required by the Franchisor for new franchisees, possesses a good business reputation and credit rating, and has the management team with the aptitude and ability to operate the Big Boy Restaurant in an economic and businesslike manner (as may be evidenced by prior related business experience or otherwise); (f) the transferee franchisee and all Owners of the transferee franchisee and the Personal Guarantors, execute the assignment agreement between the Franchisor, the Franchisee and the transferee franchisee and such other ancillary agreements as the Franchisor or its legal counsel may require for the Transfer of this Agreement for the Franchisee's Big Boy Restaurant to the transferee franchisee; provided, however, that the Franchisor, at its option, may require that the transferee franchisee and all Owners of the transferee franchisee and the Personal

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Guarantors execute Franchisor's current form of Franchise Agreement and, in such event, this Agreement shall be terminated pursuant to a termination agreement between Franchisor and Franchisee; (g) the transferee franchisee has purchased the Franchised Location, acquired the Lease for the Franchisee! Location or otherwise acquired possession of and access to the Franchised Location for a term consistent with the remaining term of this Agreement or the new Franchise Agreement, as the case may be; (h) the transferee franchisee has, if the Restaurant has been approved by the Franchisor to sell liquor, purchased or otherwise acquired a valid liquor license and a valid food service license for the Big Boy Restaurant at the Franchised Location; (i) the Franchisee and the Franchisee's Personal Guarantors agree to guarantee the obligations of the transferee franchisee under the terms of this Agreement for a period of 12 months after the transfer and to extend the guarantee for an additional 12 months if any default occurs within such 12 month period, and (j) the transferee franchisee and the transferee's Management Team have successfully completed the initial training program as set forth in Article 15 of this Agreement.

17.6        Documentation.

Copies of the following documents will be delivered to the Franchisor at least 10 days before the effective date of the Transfer: (a) a Certificate of Good Standing for the transferee franchisee ; (b) a photocopy of a sample certificate of Ownership containing the legend required pursuant to Article 18.3; and (c) a copy of the resolution of the transferee franchisee's board of directors, board of governors, or other governing body authorizing the assumption of the Franchise and this Agreement or the new Franchise Agreement, as the case may be, and of the Lease if the Franchisee's Big Boy Restaurant is leased from Franchisor or its subsidiary, which copy shall be certified as correct by an officer or manager of the transferee franchisee.

17.7        Acknowledgment of Restrictions.

The Franchisee acknowledges and agrees that the restrictions on Transfer imposed herein are reasonable and necessary to-protect the Restaurant System and the Marks, as well as the reputation and image of the Franchisor, and are for the protection of the Franchisor, the Franchisee and all other franchisees that own and operate Big Boy Restaurants. Any Transfer permitted by this Article will not be effective until the Franchisor receives a completely executed copy of all Transfer documents and the Franchisor consents to the Transfer in writing. Any attempted Transfer made without complying with the requirements of this Article will be void.

17.8        Transfer Fee.

If this Agreement is Transferred to another person or Entity, or if the Owners Transfer in the aggregate controlling interest in the Franchisee to a third party, then except as provided for in Article 17.2 or Article 17.3, the Franchisee will pay the Franchisor, on or before the date of Transfer, a Transfer Fee of $ 10,000. The Transfer Fee is to reimburse the Franchisor for the costs incurred in connection with the Transfer, Including attorneys' fees, accountants' fees, out-of-pocket expenses, long distance telephone calls, administrative costs, the time and related cost of its employees and officers, and the Franchisor's costs to provide the initial training program to the transferee franchisee and the transferee franchisee's General Manager at the Franchisor's headquarters or another approved training site designated by the Franchisor pursuant to Article 15. The Salaries and Travel Expenses incurred by the transferee franchisee's employees to attend the initial training program will be paid by the transferee franchisee in accordance with Article 15.5 of this Agreement.

17.9        Transfer to Competitor Prohibited.

The Franchisee and the Owners will not Transfer this Agreement or their Ownership Interests in the Franchisee or the Franchise to any person, partnership, corporation or Entity that owns, operates, franchises, develops, consults with, manages, is involved in, or controls any Competitive Restaurant. If the Franchisor refuses to permit a Transfer of this Agreement under this provision, then the Franchisee's and the Owners' only remedy will be to have the Arbitrators) determine whether the proposed transferee's business is a Competitive Restaurant.

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ARTICLE 18 OPTION OF BIG BOY TO PURCHASE

18.1        Notice of Proposed Sale.

Neither the Franchisee nor any Affiliated Owner will Transfer any interest in or any part of the Business Assets to any party without first offering them to the Franchisor in a written offer that contains all of the material terms and conditions of the proposed Transfer, including price and payment terms. Within 10 business days after receipt by the Franchisor of the written offer specifying the proposed price and terms of the proposed sale, the Franchisor will give the Franchisee, or the Affiliated Owner, as the case may be, written notice which will either waive its option to purchase, or will state an interest in negotiating to purchase according to the proposed terms. If the Franchisor commences negotialions to purchase the Business Assets as set forth herein, then neither the Franchisee nor any Affiliated Owner may sell the Business Assets to a third party for at least 60 days or until the Franchisor and the Franchisee or the Affiliated Owner, as the case may be, agree in writing that the negotiations have terminated, whichever comes earlier. If the Franchisor waives its right to purchase the Business Assets, then the Franchisee and the Affiliated Owners will have the right to complete the Transfer according to the terms set forth in the written notice to the Franchisor; however, any Transfer to a third party will be expressly subject to the terms and conditions of this Agreement. This provision will not apply to the assignment or pledge of any of Business Assets (with the exception of this Agreement) by the Franchisee or any Affiliated Owner to a bank, financial institution or other lender in connection with the Franchisee's financing of the leasehold improvements, FF&E, supplies and inventory or operating funds for the Franchisee's Big Boy Restaurant.

18.2        Compliance with Agreement.

The Franchisee's obligations under this Agreement including, but not limited to, its obligations to pay the Royalty Fees and Advertising Fees and to operate the business as a Big Boy Restaurant, will in no way be affected or changed because of non-acceptance by the Franchisor of the Franchisee's written offer to purchase the Business Assets, and as a consequence, the terms and conditions of this Agreement will remain in full force and effect. The decision by the Franchisor not to exercise the rights granted to it pursuant to this Article will not, in any way, be deemed to grant the Franchisee the right to terminate this Agreement and will not affect the Term of this Agreement. Moreover, if the Franchisor does not exercise the rights granted to it pursuant to this Article and if the Franchisee sells or otherwise disposes of its Business Assets to a third party, then both the Franchisee and the third party purchaser will be required to comply in all respects with the terms and conditions of this Agreement. Any Transfer of the Business Assets of the Franchisee's Big Boy Restaurant that does not include an assignment of this Agreement to the transferee will constitute a wrongful termination of this Agreement.

18.3        Transfer of Ownership Interest.

The Ownership Interests owned by the Franchisee or by the Owners may not be Transferred by the Franchisee or the Owners until the Ownership Interests have first been offered to the Franchisor in writing under the same terms and conditions offered to any third party. If the Franchisee or the Owners desire to Transfer their Ownership Interests or any portion thereof, then they will first offer them to the Franchisor in writing under the same terms and conditions as being offered to any third party. The Franchisor will have 30 business days to accept any offer to acquire any Ownership Interest. Notwithstanding the terms of this Article, the Franchisee or the Owners may bequeath or Transfer their Owner Interests to any of the other Owners without first offering them to the Franchisor, provided that each proposed transferee Owner who will be involved in the management of the Restaurant has: (a) successfully completed the training program required by the Franchisor, and (b) been certified by the Franchisor as being qualified to operate the Restaurant. The Franchisee and the Owners must provide the Franchisor with written notice of all proposed Transfers of Ownership Interests, and the proposed transferee Owners must: (a) be approved by Big Boy; (b) agree to be personally liable under this Agreement; and (c) enter into a written agreement

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pursuant to which they agree to perform all of the terms and conditions contained in this Agreement, including the covenants not to compete. All Ownership Interests issued by the Franchisee must bear the following legend:

The ownership interest represented by this document is subject to a written Franchise Agreement which grants Big Boy Franchise Management LLC the option to purchase the ownership interest represented by this document. Any person or entity acquiring the ownership interest represented by this document will be subject to the terms and conditions of the Franchise Agreement between the entity specified on the face of this document and Big Boy Franchise Management LLC, which includes provisions containing covenants not to compete that apply to all owners of the entity specified on the face of this document.

18.4        Acknowledgment of Restrictions.

The Franchisee and the Owners acknowledges and agree that the restrictions on Transfer imposed herein are reasonable and are necessary to protect the Restaurant System and the Marks, as well as the reputation and image of the Franchisor, and are for the protection of the Franchisor, the Franchisee and all other franchisees who own and operate Big Boy Restaurants. Any Transfer permitted by this Agreement will not be effective until the Franchisor receives a completely executed copy of all Transfer documents and the Franchisor consents to the Transfer in writing.

18.5        Owners Subject to Covenant Not to Compete.

Any Owner that sells or purchases its Ownership Interest will be subject to the covenants not to compete and the other provisions of Article 23 of this Agreement and all other provisions of this Agreement that apply to a selling or purchasing Owner.

18.6        Right to Purchase Business Assets.

If this Agreement expires or is terminated by either the Franchisor or the Franchisee for any reason whatsoever, or if the Franchisee wrongfully terminates this Agreement by failing to comply with Article 21 or otherwise, or if the Franchisee at any time ceases to do business at the Franchised Location as a Big Boy Restaurant, then the Franchisor will have the right, but not the obligation, to purchase all or any portion of the then-usable Business Assets from the Franchisee and/or Affiliated Owners. The Franchisor will not purchase any Business Assets from the Franchisee or an Affiliated Owner that have not been approved by the Franchisor for use in the operation of a Big Boy Restaurant. The Franchisee and the Affiliated Owners of the Business Assets must give the Franchisor written notice listing the cost of each one of the Business Assets in detail and the asking price for the Business Assets within 24 hours after the Franchisee ceases to do business as a Big Boy Restaurant, or after this Agreement expires or is terminated by either party, or is wrongfully terminated by the Franchisee.

18.7        Determination of Fair Market Value.

If the Franchisee or any Affiliated Owner of the Business Assets fails to give the Franchisor written notice of the asking price of the Business Assets within the 24 hour period provided for in Article 18.6, or if the Franchisor and the Franchisee or Affiliated Owner cannot agree on the price of the Business Assets, then either party will have the right to demand that the price of the Business Assets be determined by arbitration in accordance with the Code of Procedure of the National Arbitration Forum. The arbitration hearing will be held as soon as possible, but in no event later than 15 business days after the date arbitration is demanded by either party and the appointed Arbitrator(s) will determine the fair market value of the Business Assets. The Arbitrators) will not consider any value for goodwill associated with the Marks or for going concern value in determining the fair market value of the Business Assets since the right of purchase granted to the Franchisor pursuant to this provision applies only after this Agreement expires or has been terminated, or the Franchisee has ceased doing business. Furthermore, the

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Arbitrators) will not consider any value for the Lease for the Franchised Location if the Franchisor agrees to assume the Lease and pay the rental and operating costs for the remaining term of the Lease. If the Arbitrators) is unable to determine the fair market value of any of the Business Assets, then those Business Assets will be valued at book value (cost less depreciation). The Franchisor will have the right, but not the obligation, to purchase any or all of the Business Assets from the Franchisee or the Affiliated Owners for cash within 30 business days after the fair market value of the Business Assets has been established by the Arbitrator(s) in writing. If any of the Business Assets are subject to a lien or other encumbrance, then the total amount of purchase price for the Business Assets purchase by the Franchisor will be reduced by the amount of the lien or encumbrance. The Franchisee will provide the Franchisor with a bill of sale for the Business Assets purchased upon receipt of the purchase price from the Franchisor. Nothing in this Article will prohibit the Franchisor from enforcing an)' terms and conditions of this Agreement, including any covenants not to compete.

18.8 Right to Record Instrument.

Franchisee and the Affiliated Owners hereby acknowledge and agree that Franchisor shall have the right to record a memorandum or other notice of the options granted to the Franchisor pursuant to this Article 18 with the Register of Deeds (or other applicable office which maintains the public land records) in the county where the land and building for the Franchisee's Big Boy Restaurant is located.

ARTICLE 19 LEASE AS SECURITY; TERMINATION OF LEASE

19.1         Review of Lease.

The Franchisee will submit the Lease for the Franchised Location to the Franchisor for review by the Franchisor prior to the Franchisee's signing the Lease. The Franchisor may, but is not under any obligation to, make recommendations regarding various terms and conditions of the Lease. At a minimum, the Lease must: (a) give the Franchisor the right to enter the premises of the Franchised Location to conduct inspections at any time during regular business hours; and (b) give the Franchisor the right (but not the duty) to assume the Lease for the remaining term of the Lease in accordance with the provisions of this Article if, prior to the expiration of the Lease, (i) the Franchisee is evicted by the Landlord, (ii) the Lease is terminated by either the Franchisee or the Landlord, or (Hi) this Agreement expires or is terminated by either the Franchisor or the Franchisee for any reason. The review of the Lease by the Franchisor prior to execution of the Lease will not be for the purpose of approving the legal aspects or rental terms of the Lease. Accordingly, the Franchisee will retain attorney or other legal advisor to review the terms and conditions of the Lease and to advise the Franchisee as to the legal and economic terms of the Lease. The Franchisor will have no responsibility to the Fr;inchisee for any terms or conditions of the lease or for the enforceability, economics or legality of the Lease. The Franchisee will not sign the Lease until this Agreement has been signed by both the Franchisee and the Franchisor, and the Franchisor has approved the Lease in writing.

19.2        Franchisee's Assignment of Lease.

The Franchisee hereby assigns all of its right, title and interest in and to the Lease (which is incorporated herein by reference) to the Franchisor as security for the Franchisee's performance of the terms and conditions of this Agreement. If this Agreement is terminated by the Franchisor in accordance with the terms and conditions of this Agreement, if the Franchisee wrongfully terminates this Agreement by failing to comply with the applicable termination provisions this Agreement, if the Franchisee at any time ceases to do business at the Franchised Location as a Big Boy Restaurant, or if this Agreement expires and the Franchisee does not reacquire the Franchise for the Franchised Location (hereinafter referred to as "Events of Default"), then the Franchisor will have the right and option, but not the obligation, to take and assume the Lease for the remaining term of the Lease under the same terms and conditions, including rental, as originally contracted by the Franchisee. The Franchisee will execute a UCC-1 Financing

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Statement and other documents as may be reasonably required by the attorneys for the Franchisor to perfect and record the security interest of the Franchisor in the Lease.

193 Perfected Assignment: Notice.

The assignment of all of the Franchisee's right, title and interest in the Lease pursuant to this Article will constitute a perfected, absolute and present assignment. However, the Franchisor will have no right to enforce the assignment provisions of this Article until there has been an Event of Default. After an Event of Default, the Franchisor will have the right, but not the obligation, to enforce the provisions of this Article and to take possession of the Franchised Location by giving the Franchisee and the Landlord written notice that the Franchisor has affirmatively exercised its rights under this assignment. The written notice will state: (a) that the Franchisor is taking and assuming the Lease from the Franchisee; (b) the date that the Franchisor will take physical possession of the Franchised Location; and (c) that the Franchisor agrees to be bound by the terms and conditions of the Lease being assumed for the remaining term of the Lease. The Franchisor will execute an assignment form at the time it gives such written notice to the Franchisee and the Landlord.

19.4        No Prior Assignments.

The Franchisee represents and warrants that there have been no prior assignments of the Lease by the Franchisee, that it has good right to assign the Lease, that the Lease is a valid and enforceable agreement, that neither party is in default to the other under the Lease and that all covenants, conditions and agreements have been performed as required therein, except those not due to be performed until after the date hereof. No change in the terms of the Lease will be valid without the written approval of the Franchisor. The Franchisee will not Transfer its interest in the Lease so long as this assignment is in effect. During the Term of this Agreement, the Franchisee will not lease or sublease all or any part of the Franchised Location without the prior written consent of the Franchisor.

19.5        Enforcement of Franchisee's Rights.

The Franchisee hereby irrevocably constitutes and appoints the Franchisor as its attomey-in-fact to demand, receive and enforce the Franchisee's rights with respect to the Lease, to make payments under the Lease and give appropriate receipts, releases and satisfactions for and on behalf of and in the name of the Franchisee or, at the option of the Franchisor, in the name of the Franchisor, with the same force and effect as the Franchisee could do if this assignment had not been made.

19.6        Rights and Remedies of Franchisor.

Upon taking physical possession of the Franchised Location, the Franchisor may, without affecting any of its rights or remedies against the Franchisee under any other instrument, document or agreement, exercise its rights under this assignment as the Franchisee's attorney-in-fact in any manner permitted by law. In addition, the Franchisor will have and possess, without limitation, any and all rights and remedies of a secured party under the Uniform Commercial Code, as enacted in the jurisdiction in which enforcement is sought, or otherwise provided by law.

19.7        Proration of Rents and Expenses.

At the time the Franchisor takes physical possession of the Franchised Location, all charges, real estate taxes, utilities and rentals will be prorated between the Franchisor and the Franchisee. The Franchisor will have no obligation to pay any past due obligations or arrearages of the Franchisee to any person or Entity, including the Landlord, as a condition to assuming the Lease.

19.8        Possession; Obligations of Franchisor and Franchisee.

The Franchisor will hold the Franchisee harmless from any and all obligations to the Landlord, including rental payments, arising out of the use of the Franchised Location from the date that the Franchisor takes physical possession of the Franchised Location. The Franchisee will pay all amounts due to the Landlord

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and other parties under the Lease including, but not limited to, rentals, insurance, rental overrides, real estate taxes, repairs and maintenance, up to and including the date that the Franchisor takes physical possession of the Franchised Location. With the specific and limited exception of rental payments and other obligations to the Landlord arising from use of the Franchised Location by the Franchisor after taking physical possession of the premises, the Franchisee will indemnify and hold the Franchisor harmless from and against any and all claims, demands, liabilities, losses, lawsuits, judgments, costs and expenses, including attorneys' fees, to which the Franchisor may become exposed, or which the Franchisor may incur, in exercising any of its rights under this assignment.

19.9        Landlord's Consent.

The Franchisee will secure the Landlord's written consent to the provisions contained in this Article in the form of consent attached to this Agreement.

19.10      Transfer by the Franchisor.

The Franchisor will have the right to Transfer its right, title and interest in the Lease to any persons or entities by giving written notice to the Franchisee and the Landlord without any consent whatever from the Franchisee or the Landlord, and any such Transfer will be valid and binding upon the Franchisee and the Landlord as fully as if each had expressly approved the Transfer. Subject to the limitation on further Transfer by the Franchisee contained in Article 20.3, a Transfer of the Lease by the Franchisor will be binding upon and inure to the benefit of the heirs, legal representatives, assigns and successors in interest of the Franchisee, the Franchisor and the Landlord.

19.11       Effective Date.

The provisions of Articles 19.2, 19.3, and 19.5 of this Agreement will take effect immediately upon the execution of the Lease. The representations of the Franchisee contained in Article 19.4 will be true and complete as of, and will be deemed to have been made at, the time the Lease is executed. The Franchisee agrees to execute any additional documents as may be required by the attorneys for the Franchisor to perfect the assignment of the Lease to the Franchisor.

ARTICLE 20 TERMINATION RIGHTS OF FRANCHISOR

20.1        Termination within 120 Days.

The Franchisor will, unless provided otherwise in a separate written agreement between the Franchisor and the Franchisee, have the right to terminate this Agreement at any time within ] 20 days after the date of this Agreement if: (a) any required or other financial, personal or other information provided by the Franchisee to the Franchisor is materially false, misleading, incomplete or inaccurate; (b) the Franchisee has not purchased or leased a site for the Franchised Location or has done so in a manner not in compliance with Article 2.4 or Article 10 of this Agreement; (c) the Franchisee fails to apply for and obtain a valid license for the service of food for its Big Boy Restaurant from the appropriate governmental agencies; or (d) the Franchisee fails to apply for and obtain a valid liquor license for its Big Boy Restaurant from the appropriate governmental authorities if the Franchisor has authorized the Franchisee to sell alcoholic beverages at the Restaurant. This provision is self-executing and no notice or cure period will be required for termination to be effective after a written notice of termination has been sent to the Franchisee. However, if this Agreement is governed by the laws of the state which requires notice and an opportunity to cure prior to termination, then this Article will be modified to conform to the laws of that state.

20.2        Termination; Conditions of Breach.

In addition to its other rights of termination contained in this Agreement, the Franchisor will have the right to terminate this Agreement if: (a) the Franchisee fails to open and commence operations of its Big

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Boy Restaurant within 12 months after the date of this Agreement or when the Franchised Location is ready for the Franchisee's occupancy, whichever is earlier; (b) the Franchisee violates any material provision, term or condition of this Agreement including, but not limited to, the failure to timely pay the Initial Fee, Royalty Fees, Advertising Fees or any other monetary obligations or fees due pursuant to this Agreement; (c) the Franchisee or any of its partners, directors, officers or majority Owners are convicted of, or plead guilty to or no contest to, a charge of violating any law relating to the Franchisee's Big Boy Restaurant, or any felony; (d) the Franchisee fails to timely pay any of its obligations or liabilities due and owing to the Franchisor, suppliers, banks, purveyors, other creditors or to any federal, state or municipal government (including, if applicable, federal and state income, sales, property, withholding and unemployment taxes); (e) the Franchisee is determined to be insolvent within the meaning of applicable state or federal law, any involuntary petition for bankruptcy is filed against the Franchisee, or the Franchisee files for bankruptcy or is adjudicated a bankrupt under applicable state or federal law; (f) the Franchisee makes an assignment for the benefit of creditors or enters into any similar arrangement for the disposition of its assets for the benefit of creditors; (g) any check issued by the Franchisee is dishonored because of insufficient funds (except where the check is dishonored because of an error in bookkeeping or accounting) or closed accounts; (h) the Franchisee voluntarily or otherwise abandons the franchised Restaurant; (i) the Franchisee is involved in any act or conduct which materially impairs the goodwill associated with the name "Big Boy®" or any other Marks or the Restaurant System; (j) the Lease for the Franchised Location is terminated or canceled for non-payment of rent or other legal reasons, or the Franchisee otherwise loses possession of all or a significant portion of the Franchised Location; (k) the Franchisee's food service license or liquor license for the Franchised Location is terminated or canceled for any reason, or the Franchisee otherwise loses the food service license or liquor license for its Big Boy Restaurant; (1) the Franchisee fails to timely file any federal or state income or sales tax return or fails to timely pay any federal or state income or sales taxes; (m) the Franchisee fails any Inspection conducted by the Franchisor pursuant to Article 7.33 and fails to correct the operational deficiencies with the required time, (n) the Franchisee or any of the Owners or Affiliated Owner make an unapproved transfer of any interest in the Business Assets or any Ownership Interest in violation of the terms of this Agreement; or (o) the Franchisee refuses to provide the documents, records and other materials requested by the Franchisor to substantiate the Weekly Report and Financial Statements pursuant to Article 6.2 or to permit the Franchisor to audit the Franchisee's Financial Records in accordance with Article 6.4 of this Agreement.

20.3         Notice of Breach.

Except as provided in Article 20.1, Article 20.5 and Article 20.6 of this Agreement, the Franchisor will not have the right to terminate this Agreement until: (a) written notice setting forth the alleged breach in detail has been delivered to the Franchisee by the Franchisor; and (b) after receiving the written notice, the Franchisee fails to correct the alleged breach within the period of time specified by applicable law. If applicable law does not specify a time period to correct an alleged breach, then the Franchisee will have 30 days after receipt of the written notice to correct the alleged breach, except where the written notice states that the Franchisee is delinquent in the payment of the Initial Fee, the Royalty Fees, the Advertising Fees or other payments due to the Franchisor pursuant to this Agreement, in which case the Franchisee will have 10 days after receipt of written notice to correct the breach by making full payment (including Administrative Fees and interest as provided for herein) to the Franchisor. If the Franchisee fails to correct the alleged breach set forth in the written notice within the applicable period of time, then this Agreement may be terminated by the Franchisor as provided for herein. For the purposes of this Agreement, an alleged breach of this Agreement by the Franchisee will be deemed to be "corrected" if both the Franchisor and the Franchisee agree in writing that the alleged breach has been corrected.

20.4        Arbitration.

If the Franchisee commences arbitration in accordance with Article 26 of this Agreement within the time period established in Article 20.3 for correcting the alleged breach, then the Franchisor will not have the

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right to terminate this Agreement until the facts of the alleged breach have been submitted to arbitration, the Arbitrators) determines that the Franchisee has breached this Agreement, and the Franchisee fails to correct the breach within the applicable time period. If the Arbitrator(s) determines that the Franchisee has violated or breached this Agreement as alleged by the Franchisor in the written notice given to the Franchisee, then unless applicable law specifies otherwise, the Franchisee will have 30 days after the date the Arbitrator(s) issues a written determination on the matter to correct the specified breach or violation of this Agreement, except where the Franchisee's breach is for failure to pay any fees or other payments to the Franchisor, in which case the Franchisee will have 10 days to make full payment, including all interest and Administrative Fees, to the Franchisor. If the Franchisee does timely correct the specified breach or violation of this Agreement, then this Agreement will remain in full force and effect. For the purpose of this Agreement, any controversy or dispute on the issue of whether the Franchisee has timely corrected the specified breach or violation of this Agreement will also be subject to arbitration as provided for herein. The time limitations set forth in this Article within which the Franchisee may demand arbitration of a dispute or controversy relating to the right of the Franchisor to terminate this Agreement for an alleged breach are mandatory. If the Franchisee fails to comply with the time limitations set forth in this Article, then the Franchisor may terminate this Agreement as provided for herein.

20.5        Notice of Termination,

Except as provided in Article 20.6 and Article 20.7, if the Franchisor has complied with the provisions of Article 20.3 and the Franchisee has not corrected the alleged breach set forth in the written notice within the applicable time period specified in this Agreement, then the Franchisor will have the absolute right to terminate this Agreement by giving the Franchisee written notice of termination and in that event, the effective date of termination of this Agreement will be the day the written notice of termination is received by the Franchisee.

20.6        Immediate Termination Rights of Franchisor.

The Franchisor will have the absolute right, unless specifically precluded by applicable law, to immediately terminate this Agreement (except as provided in Article 20.7(b)) if: (a) the Franchisee or any of its partners, directors, officers or majority Owners are convicted of, or plead guilty to or no contest to a charge of violating any law relating to the Franchisee's Big Boy Restaurant, or any felony; (b) the Franchisee is deemed insolvent within the meaning of applicable state or federal law, any involuntary petition for bankruptcy is filed against the Franchisee, or the Franchisee files for bankruptcy or is adjudicated a bankrupt under applicable state or federal law; (c) the Franchisee makes an assignment for the benefit of creditors or enters into any similar arrangement for the disposition of its assets for the benefit of creditors; (d) the Franchisee voluntarily or otherwise abandons the Restaurant; (e) the Franchisee fails or refuses to provide the Financial Records requested by the Franchisor to substantiate the Weekly Report and Financial Statements pursuant to Article 6.2 or to produce and permit the Franchisor to audit the Franchisee's Financial Records in accordance with Article 6.4 of this Agreement; (f) the Franchisee is involved in any act or conduct which materially impairs the goodwill associated with the Marks or with the Restaurant System and the Franchisee fails to correct the breach within 24 hours of receipt of written notice from the Franchisor of the breach; or (g) the Franchisee violates any provision, term or condition of this Agreement three or more times during a 12 month period, without regard to whether the breach or violation was of a similar or different nature or whether the breach or violation was corrected within the prescribed cure period after receipt of written notice of the breach or violation.

20.7        Notice of Immediate Termination.

Except as set forth in Article 20.6(f), if this Agreement is terminated by the Franchisor pursuant to Article 20.6 above, then the Franchisor will give the Franchisee written notice by personal service or prepaid registered or certified mail that this Agreement is terminated and in that event, the effective date of termination of this Agreement will be the day the written notice of termination is received by the Franchisee. If this Agreement is terminated by the Franchisor pursuant to Article 20.6(f), then this

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Agreement will terminate on the first minute of the 25th hour after receipt of the written notice of termination if the Franchisee did not correct the alleged breach within 24 hours after receiving the written notice of termination from the Franchisor.

20.8 Other Remedies.

Nothing in this Article will preclude the Franchisor from seeking other remedies or damages under state or federal laws, common law, or under this Agreement against the Franchisee including, but not limited to, attorneys' fees and injunctive relief. If this Agreement is terminated by the Franchisor pursuant to this Article, or if the Franchisee breaches this Agreement by a wrongful termination or a termination that is not in strict compliance with the terms and conditions of Article 21 of this Agreement, then the Franchisor will be entitled to recover all damages from the Franchisee that the Franchisor has sustained and will sustain in the future as a result of the Franchisee's breach of this Agreement.

ARTICLE 21 FRANCHISEE'S TERMINATION RIGHTS

21.1         Conditions of Breach.

The Franchisee will have the right to terminate this Agreement, as provided herein, if the Franchisor violates any material provision, term or condition of this Agreement, or fails to timely pay any material uncontested obligations due and owing to the Franchisee.

21.2         Notice of Breach.

The Franchisee will not have the right to terminate this Agreement or to commence any action, lawsuit or proceeding against the Franchisor for breach of this Agreement, injunctive relief, violation of any state, federal or local law (including alleged violations of franchise laws), violation of common law (including allegations of fraud and misrepresentation), rescission, Claims and Damages, or termination, unless and until: (a) written notice setting forth the alleged breach or violation in detail has been delivered to the Franchisor by the Franchisee; and (b) the Franchisor fails to correct the alleged breach or violation within 30 days after receipt of the written notice. If the Franchisor fails to correct the alleged breach or violation within 30 days after receiving written notice, then this Agreement may be terminated by the Franchisee as provided for in this Agreement. For the purposes of this Agreement, an alleged breach or violation of this Agreement by the Franchisor will be deemed to be "corrected" if both the Franchisor and the Franchisee agree in writing that the alleged breach or violation has been corrected.

21.3         Arbitration.

If the Franchisor notices arbitration in accordance with Article 26 of this Agreement within 30 days after the date the Franchisor receives written notice of any alleged breach of this Agreement from the Franchisee, then the Franchisee will not have the right to terminate this Agreement until the facts of the alleged breach have been submitted to arbitration, the Arbitrator(s) determines that the Franchisor has breached this Agreement and the Franchisor fails to timely correct the breach as set forth in this Agreement. If the Arbitrators) determines that the Franchisor has violated or breached this Agreement as alleged by the Franchisee in the written notice given to the Franchisor, then the Franchisor will have 30 days after the date the Arbitrators) issues a written determination on the matter to correct the specified breach or violation of this Agreement. If the Franchisor does timely correct the specified breach or violation of this Agreement, then this Agreement will remain in full force and effect. If the Franchisor does not correct the specified breach or violation of this Agreement, then the Franchisee will have the right to terminate this Agreement by giving the Franchisor written notice of termination and in that event, the effective date of termination of this Agreement will be the day the written notice of termination is received by the Franchisor. For the purpose of this Agreement, any controversy or dispute on the issue of whether the Franchisor has timely corrected the specified breach or violation of this Agreement will also be subject to arbitration as provided for herein. The time limitation set forth in this Article within which

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the Franchisor may demand arbitration of a dispute or controversy relating to the right of the Franchisee to terminate this Agreement for an alleged breach is mandatory. If the Franchisor fails to comply with the time limitation set forth in this Article, then the Franchisee may terminate this Agreement as provided for herein.

21.4 Waiver.

The Franchisee must give the Franchisor immediate written notice of any alleged breach or violation of this Agreement after the Franchisee has knowledge of, believes, determines, is of the opinion, or becomes aware of facts and circumstances reasonably indicating that there has been an alleged breach or violation of this Agreement by the Franchisor. If the Franchisee fails to give written notice to the Franchisor as provided for herein of any alleged breach or violation of this Agreement within one year after the date that the Franchisee has knowledge of, believes, determines, is of the opinion thai, or becomes aware of facts and circumstances reasonably indicating that the Franchisee may have a claim under any state law, federal law or common law because there has been an alleged breach or violation by the Franchisor or the Franchisor's officers or directors, then the alleged breach or violation by the Franchisor will be deemed to be condoned, approved and waived by the Franchisee, the alleged breach or violation by the Franchisor will not be deemed to be a breach or violation of this Agreement by the Franchisor, and the Franchisee will be barred from commencing any action against the Franchisor for that specific alleged breach or violation.

ARTICLE 22 FRANCHISEE'S OBLIGATIONS UPON TERMINATION OR EXPIRATION

22.1         Termination of Use of Marks; Other Oblieations.

If this Agreement is canceled or terminated for any reason or this Agreement expiies, then the Franchisee will: (a) within five days after termination, pay all Royalty Fees, Advertising Fees and other fees and other amounts due and owing by the Franchisee to the Franchisor under this Agreement or under any other contract, promissory note or other obligation; (b) immediately return to the Franchisor by first class prepaid United States mail the Operations Manual, menus, advertising materials and all other printed materials pertaining to the Restaurant or the Restaurant System; and (c) comply with all other applicable provisions of this Agreement. Upon termination or expiration of this Agreement for any reason, the Franchisee's right to use the name "Big Boy®" and the other Marks and the Restaurant System will terminate immediately in all respects, and the Franchisee will not thereafter have any right to conduct or promote any business under any name that is similar to the Marks or in any manner that might tend to give the general public the impression that the Franchisee is continuing to operate as a franchisee of the Franchisor. Without limiting the generality of the foregoing, the Franchisee will immediately cease any and all advertising that includes any of the Marks, will delete all content containing the Marks or any references to the Franchisor or the Franchisee's Big Boy Restaurant from any Home Page maintained by the Franchisee, and will cease using any and all items or materials which bear or include any of the Marks.

22.2        Alteration of Franchised Location.

If this Agreement expires or is terminated for any reason or if the Franchised Location ever ceases to be used for the Franchisee's Big Boy Restaurant, then within 15 days after the date of the expiration or termination of this Agreement the Franchisee will, at its expense, alter, modify and change both the exterior and interior appearance of the building and the Franchised Location so that it will be clearly distinguished from the standard appearance of a Big Boy Restaurant. At a minimum, such changes and modifications to the Franchised Location will include: (a) repainting and, where applicable, recovering both the exterior and interior walls of the Franchised Location with totally different colors, including removing any distinctive colors and designs from the walls; (b) removing all FF&12 and other decor items associated with a Big Boy Restaurant and replacing them with other decor items not of the general type

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and appearance customarily used in Big Boy Restaurants; (c) removing all Signs; (d) immediately discontinuing use of the approved wall decor items and window decals, and refraining from using any products or items that may be confusingly similar to those used in a Big Boy Restaurant; and (e) modifying the premises as necessary to comply with the covenant not to compete provisions set forth in Article 23.3 of this Agreement.

223 Cancellation of Telephone Directory Listings.

Upon termination or expiration of this Agreement, or if the Franchisor acquires the Franchisee's Big Boy Restaurant pursuant to this Agreement, the Franchisor will have the absolute right to notify the telephone company and all listing agencies of the termination or expiration of the Franchisee's right to use all telephone numbers and all classified and other directory listings for the Restaurant and to authorize the telephone company and all listing agencies to Transfer to the Franchisor or its assignee all telephone numbers and directory listings of the Franchisee's Big Boy Restaurant. The Franchisee acknowledges and agrees that the Franchisor has the absolute right and interest in and to all telephone numbers and directory listings associated with the Marks, and the Franchisee hereby authorizes the Franchisor to direct the telephone company and all listing agencies to Transfer the Franchisee's telephone numbers and directory listings to the Franchisor or to an assignee of the Franchisor, if this Agreement expires or is terminated or if the Franchisor acquires the Franchisee's Big Boy Restaurant. The telephone company and all listing agencies may accept this Agreement as evidence of the exclusive rights of the Franchisor to such telephone numbers and directory listings and this Agreement will constitute the authority from the Franchisee for the telephone company and listing agency to Transfer all such telephone numbers and directory listings to the Franchisor. This Agreement will constitute a release of the telephone company and listing agencies by the Franchisee from any and all Claims and Damages that the Franchisee may at any time have the right to allege against them in connection with this Article.

22.4 Continuation of Obligations.

The indemnities and covenants contained in this Agreement will continue in full force and effect subsequent to and notwithstanding the expiration or termination of this Agreement.

ARTICLE 23 FRANCHISEE'S COVENANTS NOT TO COMPETE

23.1         Consideration.

Trie Franchisee, the Owners and the Personal Guarantors acknowledge that the Franchisee, its partners or officers and employees will receive specialized training, marketing and advertising plans, business strategies, confidential recipe, cooking, and food preparation information, and trade secrets from the Franchisor pertaining to the Restaurant System and the operation of the Big Boy Restaurant. In consideration for the Franchisor providing this information, the Franchisee, the Owners and the Personal Guarantors will comply in all respects with the provisions of this Article. The Franchisor has advised the Franchisee that this provision is a material provision of this Agreement, and that the Franchisor will not sell a Big Boy Restaurant Franchise to any person or Entity that owns or intends to own, operate or be involved in any Competitive Restaurant; provided however, that the Franchisor may, under certain circumstances, exclude from the coverage of Article 23.2 and Article 23.3 existing operational restaurant(s) owned and operated by the Franchisee as of the date of this Agreement, and the Franchisee may, with the written consent of the Franchisor, continue to own and operate such restaurants during the Term of this Agreement and thereafter.

23.2        In-Term Covenant Not to Compete.

The Franchisee, the Owners and the Personal Guarantors will not, during the Term of this Agreement, on their own account or as an employee, agent, consultant, affiliate, licensee, partner, officer, director, or shareholder of any other person, firm, entity, partnership or corporation, own, operate, lease, franchise,

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conduct, engage in, be connected with, have any interest in, or assist any person or Entity engaged in any Competitive Restaurant, except with the prior written consent of the Franchisor.

23.3         Post-Term Covenant Not to Compete.

The Franchisee, the Owners and the Personal Guarantors will not, for a period of 12 months after the termination or expiration of this Agreement: (a) on their own account or as an employee, principal, agent, independent contractor, consultant, affiliate, licensee, partner, officer, director or shareholder of any other person, firm, entity, partnership or corporation, own, operate, manage, lease, franchise, conduct, consult with, engage in, be connected with, have any interest in or assist any person or Entity that owns, operates or manages any Competitive Restaurant which is located within a five mile radius of the Franchised Location, within five miles of any other Big Boy Restaurant, or within any exclusive area granted by the Franchisor to any franchisee or area developer of the Franchisor pursuant to a development agreement or other territorial agreement; or (b) convert the Franchised Location to a Major Brand Name Restaurant. The Franchisee, the Owners and the Personal Guarantors expressly agree that the time and geographical limitations set forth in this provision are reasonable and necessary to protect the Franchisor and its franchisees if this Agreement expires or is terminated by either party for any leason, and that this covenant not to compete is necessary to permit the Franchisor the opportunity to resell and/or develop a new Big Boy Restaurant at or in the area near the Franchised Location.

23.4        Injunctive Relief.

The Franchisee, the Owners and the Personal Guarantors agree that the provisions of this Article are necessary to protect the legitimate business interest of the Franchisor and its franchisees including, without limitation, preventing the unauthorized dissemination of marketing, promotional and other confidential information to competitors of the Franchisor and its franchisees, protecting recipes, cooking and food preparation techniques and other trade secrets, protecting the integrity of the franchise system preventing duplication of the Restaurant System by unauthorized third parties, and preventing damage to and/or loss of goodwill associated with the Marks. The Franchisee, the Owners and the Personal Guarantors also agree that damages alone cannot adequately compensate the Franchisor if there is a violation of this Article by the Franchisee, the Owners or the Personal Guarantor;, and that injunctive relief against the Franchisee is essential for the protection of the Franchisor and its franchisees. The Franchisee, the Owners and the Personal Guarantors agree therefore, that if the Franchisor alleges that the Franchisee, the Owners or the Personal Guarantors have breached or violated this Article, then the Franchisor will have the right to petition a court of competent jurisdiction for injunctive relief against the Franchisee, the Owners and the Personal Guarantors, in addition to all other remedies that may be available to the Franchisor. The Franchisor will not be required to post a bond or other security for any injunctive proceeding. If the Franchisor is granted ex parte injunctive relief against the Franchisee, the Franchisee's Owners or the Personal Guarantors, then the Franchisee, the Owners or the Personal Guarantors will have the right to petition the court for a hearing on the merit;; at the earliest time convenient to the court.

23.5        Severability.

It is the desire and intent of the parties to this Agreement, including the Owners and the Personal Guarantors, that the provisions of this Article be enforced to the fullest extent permissible under the laws and public policy applied in each jurisdiction in which enforcement is sought. Accordingly, if any part of this Article is adjudicated to be invalid or unenforceable, then this Article will be deemed to modify or delete that portion thus adjudicated to be invalid or unenforceable, such modification or deletion to apply only with respect to the operation of this Article in the particular jurisdiction in which the adjudication is made. Further, to the extent any provision of this Article is deemed unenforceable by virtue of its scope or limitation, the parties to this Agreement, including the Owners and the Personal Guarantors, agree that the scope and limitation provisions will nevertheless, be enforceable to the fullest extent permissible under the laws and public policies applied in such jurisdiction where enforcement is sought.

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ARTICLE 24 INDEPENDENT CONTRACTORS

The Franchisor and the Franchisee are each independent contractors and, as a consequence, there is no employer-employee or principal-agent relationship between the Franchisor and the Franchisee. The Franchisee will not have the right to and will not make any agreements, representations or warranties in the name of or on behalf of the Franchisor or represent that their relationship is other than that of franchisor and franchisee. Neither the Franchisor nor the Franchisee will be obligated by or have any liability to the other under any agreements or representations made by the other to any third parties.

ARTICLE 25 INDEMNIFICATION

25.1         Indemnification.

The Franchisor, its sole member or affiliates ("Indemnitees"), will not be obligated to any person or Entity for any Claims and Damages incurred as a result of the Franchisee's negligence, wrongdoing or operation of its Big Boy Restaurant. Therefore, the Franchisee will indemnify, defend and hold the Indemnitees harmless against, and will reimburse the Indemnitees for, all Claim and Damages for which the Indemnitees are held liable arising from, out of, in connection with, or as a result of the Franchisee's negligence, the Franchisee's wrongdoing; or the operation of the Franchisee's Big Boy Restaurant including, without limitation, all Cost and Expenses. The Franchisee will indemnify the Indemnitees, without limitation, for all Claims and Damages arising from, out of, in connection with, or as a result of: (a) any personal injury, property damage, commercial loss or environmental contamination resulting from any act or omission of the Franchisee or its employees, agents or representatives; (b) any failure on the part of the Franchisee or its employees, agents or representatives to comply with any requirement of any federal, state, or local laws or any governmental rules or regulations, (c) any failure of the Franchisee to pay any of its uncontested obligations to any person or Entity; (d) any failure of the Franchisee or its employees, agents or representatives to comply with any requirement or condition of this Agreement or any other agreement with the Franchisor; (e) any misfeasance or malfeasance by the Franchisee or its employees, agents or representatives; and (f) any tort committed by the Franchisee or its employees, agents or representatives. The Indemnitees will have the right to defend any claim made against them arising from, out of, as a result of, or in connection with the operation of the Franchisee's Big Boy Restaurant.

25.2         Payment of Costs and Expenses.

The Franchisee will pay all Costs and Expenses incurred by the Franchisor in successfully enforcing any term, condition or provision of this Agreement against the Franchisee or in enjoining any violation of this Agreement by the Franchisee.

25.3        Interest on Unpaid Fees; Administrative Fee.

If the Franchisee fails to timely pay any Royalty Fees, Advertising Fees or other amounts due to the Franchisor under this Agreement, then the amount which is unpaid and past due will bear simple interest at the lesser of: (a) the maximum legal rate allowable by applicable law; or (b) 18% simple interest per annum. In addition, the Franchisee will pay the Franchisor an Administrative Fee of $150 for each payment that is over 10 days delinquent.

25.4        Continuation of Obligations.

The indemnification and other obligations contained herein will continue in full force and effect subsequent to and notwithstanding the expiration or termination of this Agreement.

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ARTICLE 26 ARBITRATION

26.1         Disputes Subject to Arbitration.

Except as expressly provided to the contrary in Article 26.6 of this Agreement, all disputes and controversies ("dispute" or "disputes") between the Franchisee and the Franchisor and their respective officers, directors, shareholders, members, governors, partners, employees, and agents, including (a) allegations of fraud, misrepresentation and violation of any federal, state, municipal or local laws, rules or regulations, and (b) claims against any officer, director, shareholder, member, governor, partner, employee or agent arising under, as a result of, or in connection with this Agreement, the Franchised Location or the Franchisee's Big Boy Restaurant will be resolved exclusively by arbitration conducted in accordance with the Code of Procedure of the National Arbitration Forum, Post Office Box 50191, Minneapolis, MN, 1-800^*74-2371 (www.arb-forum.com) (the "NAF").

26.2        Notice of Dispute.

The party alleging the dispute must provide the other party with written notice sel ting forth the alleged dispute in detail. The party who receives written notice alleging the dispute will have 20 days after receipt of the written notice to correct, settle or compromise the dispute specified in the written notice. If the written notice alleges that the Franchisee is delinquent in the payment of any fees or other payments payable to the Franchisor, the Franchisee will have 10 days to make full payment (including interest and Administrative Fees as provided for herein) to the Franchisor.

26.3        Demand for Arbitration.

If the dispute alleged by any party has not been corrected, settled or compromised within1 the time period provided for in this Agreement, then any party may demand arbitration by giving written notice to the other party and to the office of the NAF. Any party will have the right to have three Arbitrators appointed to hear the matter, one of which must be a retired appellate or trial court judge. The Arbitrators) will be appointed as provided herein within 30 days after a written demand for arbitration has been made by either party.

26.4        Venue and Jurisdiction.

All arbitration hearings will take place exclusively in Warren, Michigan, and will bo held no later than six months after the Arbitrators) has been selected. The Franchisor and its officers, managers, directors or governors and the Franchisee and its respective partners, officers, managers, dirsctors, governors and Owners and the Personal Guarantors do hereby agree and submit to personal jurisdiction in the State of Michigan in connection with any arbitration hearings hereunder and any suits brought to enforce the decision of the Arbitrators), and do hereby waive any rights to contest venue and jurisdiction in the State of Michigan and any claims that venue and jurisdiction are invalid.

26.5        Powers of Arbitrate r(s).

The authority of the Arbitrators) will be limited to making a finding, judgment, decision and award relating to the interpretation of or adherence to the written provisions of this Agreement. The Federal Rules of Evidence (the "Rules") will apply to all arbitration hearings and the introduction of all evidence, testimony, records, affidavits, documents and memoranda in any arbitration hearing must comply in all respects with the Rules and legal precedents interpreting the Rules. Both parties will have the absolute right to cross-examine any person who has testified against them or in favor of the other party. The Arbitrator(s) will have no authority to add to, delete or modify in any manner the terms and provisions of this Agreement. All findings, judgments, decisions and awards of the Arbitrator(s) will be limited to the dispute set forth in the written demand for arbitration, and the Arbitrators) will have no authority to decide any other issues. The Arbitrators) will not have the right or authority to award punitive damages to either the Franchisor or the Franchisee or their partners, officers, managers, directors, governors,

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members, shareholders, Owners and Personal Guarantors, and all parties expressly waive their rights to plead or seek punitive damages. All findings, judgments, decisions and awards by the Arbitrator(s) will be in writing, will be made within 60 days after the arbitration hearing has been completed, and will be final and binding on the Franchisor and the Franchisee. The written decision of the Arbitrators) will be deemed to be an order, judgment and decree and may be entered as such in any court of competent jurisdiction by either party. If, during the course of Arbitration, either party fails to appear at a meeting or hearing duly scheduled in accordance with the Code of Procedure of the NAF, then the Arbitrators) will have the absolute right to enter a default judgment against the party failing to appear and may grant the appropriate remedy and/or relief in favor of the appearing party, including the awarding of attorneys' fees.

26.6        Disputes Not Subject to Arbitration.

Notwithstanding the provisions of this Article 26, the disputes set forth in Article 27.1 will not be subject to arbitration.

26.7        No Collateral Estoppel or Class Actions.

All arbitration findings, conclusions, orders and awards made by the Arbitrators) will be final and binding on the Franchisor and the Franchisee; however, in recognition of the fact that arbitration proceedings are not subject to the same standards as those afforded the parties in a court of law, the arbitration findings, conclusions, orders and awards may not be used to collaterally estop either the Franchisee or the Franchisor from raising any like or similar issue or defense in any subsequent arbitration, litigation, court hearing or other proceeding involving third parties and other franchisees. No person or Entity except the Franchisor and the Franchisee, and their partners, officers, managers, directors, governors, members, shareholders, Owners and the Personal Guarantors, will have the right to join in or participate in any arbitration proceeding arising under this Agreement, and therefore, the Arbitrators) will not be authorized to permit class actions or to permit any other person or Entity to be involved in or be named as a party to any arbitration proceeding brought by either party under this Agreement. The Franchisee and the Franchisor agree that neither party will be entitled to allege or recover punitive damages. Thus, the Arbitrators) will not have the right to award punitive damages to either party and both parties expressly waive their rights allege or claim punitive damages.

26.8        Confidentiality.

All evidence, testimony, records, documents, findings, decisions, judgments and awards pertaining to any arbitration hearing between the Franchisor and the Franchisee will be secret and confidential in all respects. The Franchisor and the Franchisee will not disclose the decision or award of the Arbitrator(s) and will not disclose any evidence, testimony, records, documents, findings, orders, or other matters from the arbitration hearing to any person or Entity except as required by law. Nothing herein will prevent either party from disclosing or using any information presented in any arbitration proceeding in any appropriate subsequent court hearing brought by either party.

26.9        Performance During Arbitration of Disputes.

The Franchisor and the Franchisee will fully comply with all of the terms and conditions of this Agreement and will fully perform their respective obligations under this Agreement during the entire time of the arbitration process.

26.10      Federal Arbitration Act.

This Agreement and any issue regarding arbitration arising under this Agreement will be governed by the Federal Arbitration Act and the federal common law of arbitration.

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ARTICLE 27 ENFORCEMENT

27.1         Injunctive Relief.

Notwithstanding the provisions of Article 26, the Franchisor and the Franchisee will have the right to petition a court of competent jurisdiction for the entry of temporary and permanent injunctions and orders of specific performance enforcing the provisions of this Agreement for any action relating to: (a) the Franchisee's use of the Marks or the Restaurant System; (b) the obligations of the Franchisee upon termination or expiration of this Agreement; (c) the Transfer of this Agreement, the; Business Assets or the Ownership Interests in the Franchisee; (d) the violation of the provisions of this Agreement relating to confidentiality including, but not limited to, those contained in Articles 6.7, 9.3, 9.4, 12.6 and 26.8, (e) the violation of the provisions of this Agreement relating to the covenants not to compete including, but not limited to, those contained in Article 23; (f) any dispute involving the immediate termination of this Agreement by the Franchisor, and (g) any act or omission by the Franchisee or the Franchisee's employees that (1) constitutes a violation of any applicable federal, state or local law; ordinance or regulation, (2) is dishonest or misleading to the guests or customers of the Franchisee's Restaurant or other Big Boy Restaurants, (3) constitutes a danger to the employees, public, guests or customers of the Franchisee's Restaurant, or (4) may impair the goodwill associated with the Maries or the Restaurant System.

27.2        Severability.

All provisions of this Agreement are severable and this Agreement will be interpreted and enforced as if all completely invalid or unenforceable provisions were not contained herein and partially valid and enforceable provisions will be enforced to the extent valid and enforceable. If any applicable law or rule of any jurisdiction requires a greater prior notice of the termination of this Agreement than is required hereunder or the taking of some other action not required hereunder, or if under any applicable law or rule of any jurisdiction, any provision of this Agreement or any specification, standard or operating procedure prescribed by the Franchisor is invalid or unenforceable under applicable law, then the prior notice or other action required by such law or rule will be substituted for the notice requirements hereof, or such invalid or unenforceable provision, specification, standard or operating procedure will be modified to the extent required to be valid and enforceable. Such modifications to this Agreement will be effective only in such jurisdiction.

273 Waiver.

The Franchisor and the Franchisee may, by written instrument signed by the Franchisor and the Franchisee, waive any obligation of or restriction upon the other under this Agreement. Acceptance by the Franchisor of any payment by the Franchisee and the failure, refusal or neglect of the Franchisor to exercise any right under this Agreement or to insist upon full compliance by the Franchisee of its obligations hereunder including, without limitation, any mandatory specification, standard or operating procedure, will not constitute a waiver by the Franchisor of any provision of this Agreement. The Franchisor will have the absolute right to waive obligations or restrictions for other franchisees under their franchise agreements without waiving those obligations or restrictions for the Fi"anchisee and, except to the extent provided by law, the Franchisor will have the right to negotiate terms and conditions, grant concessions and waive obligations for other Big Boy franchisees without granting those same rights to the Franchisee and without incurring any liability or obligation to the Franchisee whatsoever.

27.4 Payments to Franchisor.

The Franchisee will not, on grounds of the alleged nonperformance by the Franchisor of any of its obligations under this Agreement, any other contract between the Franchisor and the Franchisee, or for any other reason, withhold payment of any Royalty Fees, Advertising Fees or any olher fees or payments due the Franchisor under this Agreement or pursuant to any other contract or agreement with the

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Franchisor. The Franchisee will not have the right to "offset" or withhold any liquidated or unliquidated amounts, damages or other funds allegedly due to the Franchisee by the Franchisor against any Royalty Fees, Advertising Fees or any other fees or payments due to the Franchisor by the Franchisee under this Agreement.

27.5        Effect of Wrongful Termination.

If either the Franchisor or the Franchisee takes any action to terminate this Agreement or the Franchisee takes any action to convert its Big Boy Restaurant to another restaurant or other business, and such actions were taken without first complying with the terms and conditions of Article 20 or Article 21 of this Agreement, as applicable, then such actions will not relieve either party of, or release either party from, any of its obligations under this Agreement, and the terms and conditions of this Agreement will remain in full force and effect and the parties will be obligated to fully perform all terms and conditions until such time as this Agreement expires or is terminated in accordance with the provisions of this Agreement and applicable law, as determined by arbitration or a court of competent jurisdiction.

27.6        Cumulative Rights.

The rights of the Franchisor hereunder are cumulative and no exercise or enforcement by the Franchisor of any right or remedy hereunder will preclude the exercise or enforcement by the Franchisor of any other right or remedy hereunder or which the Franchisor is entitled by law to enforce.

27.7        Binding Agreement.

This Agreement is binding upon the parties hereto and their respective executors, administrators, heirs, assigns and successors in interest.

27.8        Joint and Several Liability.

If the Franchisee consists of more than one person or Entity, their liability under this Agreement will be deemed to be joint and several.

27.9        No Oral Modification.

No modification, change, addition, rescission, release, amendment or waiver of this Agreement and no approval, consent or authorization required by any provision of this Agreement may be made by any person except by a written agreement signed by a duly authorized officer, manager or partner of the Franchisee and the Chief Executive Officer, the Chief Financial Officer or a Vice President of the Franchisor.

27.10      Entire Agreement.

This Agreement supersedes and terminates all prior agreements, either oral or in writing, between the parties involving the franchise relationship and therefore, representations, inducements, promises or agreements alleged by either the Franchisor or the Franchisee that are not contained in this Agreement will not be enforceable. The Introduction is part of this Agreement, which constitutes the entire agreement of the parties, and there are no other oral or written understandings or agreements between the Franchisor and the Franchisee relating to the subject matter of this Agreement. This Agreement will not supersede any written agreements or contracts that are signed concurrently with this Agreement or agreements or contracts that do not conflict with the terms and conditions of this Agreement.

27.11       Headings: Terms.

The headings of the Articles are for convenience only and do not in any way define, limit or construe the contents of such Articles. The term "Franchisee" as used herein is applicable to one or more individuals, a general or limited partnership; a corporation, a limited liability Franchisor, or a partnership, as the case may be, and the singular usage includes the plural, the masculine usage includes the neuter and the feminine, and the neuter usage includes the masculine and the feminine. References to "Franchisee,"

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"assignee" and "transferee" which are applicable to an individual or individuals will mean the Owner or Owners of the equity and operating control.

27.12      Venue and Jurisdiction.

All litigation, court proceedings, arbitration proceedings, lawsuits, court hearings and other hearings initiated by the Franchisee or the Franchisor, including any action commenced by either party contesting the arbitration provisions of this Agreement, must and will be venued exclusively in Macomb County, Michigan. The Franchisor and the Franchisee, and their partners, officers, managers, directors, governors, Owners, and Personal Guarantors do hereby agree and submit to personal jurisdiction in the State of Michigan for the purposes of any suit, proceeding or hearing brought in any court to enforce or construe the terms of this Agreement or to resolve any dispute or controversy arising under, as a result of, or in connection with this Agreement, the Franchised Location or the Franchisee's Big Boy Restaurant, and agree and stipulate that all such suits, proceedings and hearings will be exclusively venued and held in Macomb County, Michigan. The Franchisee and each of its partners, officers, managers, directors, governors, Owners, and Personal Guarantors waive any rights to contest such venue and jurisdiction and any claims that such venue and jurisdiction are invalid.

27.13      Contractual Statute of Limitations.

Except as provided otherwise in this Agreement or by applicable law, any and all claims and actions arising out of, in connection with, or relating to this Agreement, the relationship between the Franchisee and the Franchisor, or the Franchisee's operation of the Restaurant, brought by either party against the other, whether in arbitration or in any other appropriate proceeding, must be commenced within 12 months after the occurrence of the facts giving rise to such claim or action. If the complaining party fails to commence an arbitration proceeding or other appropriate proceeding within 12 months after the occurrence of the facts giving rise to such claim or action, then such claim or action will be absolutely barred and waived and the complaining party will have no further right to pursue any action based on such claim or action.

27.14      Franchisee's Grant of Security Interest to Franchisor

Franchisee shall grant Franchisor a security interest in all of the furniture, fixtures, equipment and other personal property of the Franchised Unit to secure Franchisee's prompt payment of any financial obligations it incurs with Franchisor under this Agreement. Franchisee acknowledges Franchisor will file a financing statement as evidence of the Security Agreement. If the acquisition or development of the Franchised Unit is to be financed by the Franchisee, Franchisor will subordinate its security interest to Franchisee's principal lender, upon written request by Franchisee.

ARTICLE 28 ACKNOWLEDGMENTS; DISCLAIMER

28.1         Disclaimer.

The Franchisor does not warrant or guarantee to the Franchisee that the Franchises will derive income or profit from the Big Boy Restaurant, or that the Franchisor will refund all or part of the Initial Fee or the price paid for the Franchisee's Restaurant or repurchase any of the supplies, products, technology or equipment supplied or sold by the Franchisor or by an Approved Supplier or Designated Supplier if the Franchisee is in any way unsatisfied with the purchase of the Franchise or the operation of its Restaurant. The Franchisor expressly disclaims the making of any express or implied representations or warranties regarding the sales, earnings, income, profits, Gross Revenues, business or financial success, or value of the Franchisee's Restaurant except as contained in the Franchisor's Uniform Franchise Offering Circular received by the Franchisee.

28.2        Acknowledgments by Franchisee.

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The Franchisee acknowledges that it has conducted an independent investigation of the Big Boy Restaurant and recognizes that the business venture contemplated by this Agreement involves business and economic risks. The Franchisee acknowledges that the financial, business and economic success of the Franchisee's Big Boy Restaurant will be primarily dependent upon the personal efforts of the Franchisee, its Management Team and its employees, and on economic conditions in the area where the Franchised Location is located and economic conditions of the United States in general. The Franchisee acknowledges that it has not received any estimates, projections, representations, warranties or guaranties, expressed or implied, regarding potential sales, Gross Revenues, income, profits, earnings, expenses, financial or business success, value of the Restaurant, or other economic matters pertaining to the Franchisee's Restaurant from the Franchisor or any of its agents that were not expressly set forth in the Franchisor's Uniform Franchise Offering Circular received by the Franchisee from the Franchisor (hereinafter referred to in this provision as "Representations"). The Franchisee further acknowledges that if it had received any such Representations, it would not have executed this Agreement, and that it would have promptly notified an officer of the Franchisor in writing of the name of the person or persons making such Representations and provided the Franchisor with a specific written statement detailing the Representations made.

28.3         Representations of Entity Franchisee.

If the Franchisee is an Entity, the Owners represent and warrant that: (a) the Franchisee is duly organized, validly existing and in good standing under the laws of the state of its organization; (b) the Franchisee is qualified to do business in the state in which the Franchisee's Big Boy Restaurant is located; (c) the Franchisee has delivered to the Franchisor a copy of its corporate charter or certificate of organization and current good standing certificates from all states in which the Franchisee is incorporated / organized or qualified to do business; and (d) the Ownership Interests of the Franchisee are accurately stated in the connection with the signatures of the Owners appearing below.

28.4        Other Franchisees.

The Franchisee acknowledges that other Big Boy franchisees have or will be granted franchises at different times, different locations, under different economic conditions and in different situations, and further acknowledges that the Royalty Fees, Advertising Fees, payments, rights, obligations, economics, and terms and conditions of other franchise agreements may vary substantially in form and in substance from those contained in this Agreement. The Franchisee further acknowledges that in the future the Franchisor may operate and franchise or license restaurant operations under various trade names, and that nothing in this Agreement shall be deemed to restrict the Franchisor from operating or franchising any restaurant or other operation under any trade name at any location.

28.5        Receipt of Agreement and Uniform Franchise Offering Circular.

The Franchisee acknowledges that it received a copy of this Agreement with all material blanks fully completed at least five business days prior to the date that this Agreement was executed by the Franchisee. The Franchisee further acknowledges that it received a copy of the Franchisor's Uniform Franchise Offering Circular at least 10 business days prior to the date on which this Agreement was executed.

ARTICLE 29 FRANCHISEE'S LEGAL COUNSEL

The Franchisee acknowledges that this Agreement constitutes a legal document which grants certain rights to and imposes certain obligations upon the Franchisee. The Franchisee has been advised by the Franchisor to retain an attorney or advisor prior to the execution of this Agreement to review the Franchisor's Uniform Franchise Offering Circular, to review this Agreement in detail, to review all legal documents, to review the economics, operations and other business aspects of the Big Boy Restaurant, to

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determine compliance with franchising and other applicable laws, and to advise the Franchisee on economic risks, liabilities, obligations and rights under this Agreement and to advise the Franchisee on tax issues, financing matters, applicable state and federal laws, liquor laws, health and safety laws, environmental laws, employee issues, insurance, structure of the Restaurant business, and other business matters. The name and telephone number of the Franchisee's attorney or other advisor is:_____________

telephone number (____)__________________. .

ARTICLE 30 NOTICES

All notices to the Franchisor will be in writing and will be addressed to the Chief Executive Office of the Franchisor with copies to Jennifer Bourgoin, Esq., Vice President and General Counsel, Big Boy Franchise Management LLC, Attn: Legal Department, One Big Boy Drive, Ml 48091, or such other address as the Franchisor may subsequently designate in writing. Except as otherwise provided by applicable law, all notices under this Agreement will be in writing and delivered to the addressee by any of the following means: (a) by personal service, (b) by prepaid certified U. S. mail, (c) by facsimile, e-mail or other electronic transmission, or (d) by a recognized overnight delivery service (such as Federal Express, United States Express Mail, Airborne Express or UPS) which requires a written receipt or acknowledgement of delivery. All notices to the Franchisee will be sent to the Franchised Location, or such other address as the Franchisee may subsequently designate in writing. For the purposes of this Agreement, written notice will be deemed received by the addressee (i) on the day received, if it is sent by personal service, U.S. certified mail or by a recognized overnight delivery service, (ii) on the date of transmission, if it is sent by facsimile and the transmission has been confirmed by the sender, or (iii) on the date of transmission, if sent by e-mail or other electronic transmission and the sender does not receive a notice of non-delivery.

ARTICLE 31 GOVERNING LAW: STATE MODIFICATIONS

31.1         Governing Law

Except to the extent governed by the United States Trademark Act of 1946 (Lanham Act, 15 U.S.C. §1051 et seq.), this Agreement and the relationship between the Franchisor and the Franchisee will be governed by the laws of the state in which the Territory is located. The provisions of this Agreement which conflict with or are inconsistent with applicable governing law will be superseded and/or modified by such applicable law only to the extent such provisions are inconsistent. All other provisions of this Agreement will be enforceable as originally made and entered into upon the execution of this Agreement by the Franchisee and the Franchisor.

31.2        State Modifications

If the Franchised Location is located in anyone of the states indicated below in this Article 31.2, or if the laws of any such state are otherwise applicable, then the designated provisions of this Agreement will be amended and revised as follows:

(a) California. If this Agreement is governed by the laws of the State of California, then: (1) California Business and Professions Code, Sections 20000 through 20043 provides rights to the Franchisee concerning the termination and nonrenewal of the Franchise which wilt supersede any inconsistent provisions of this Agreement; (2) California Corporations Code, Section 31125 requires the that the Franchisor give the Franchisee a disclosure document, approved by the Department of Corporations, prior to a solicitation of a proposed material modification of this Agreement; (3) the provisions of this Agreement

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which allow the Franchisor to terminate this Agreement when an involuntary petition for bankruptcy is filed against the Franchisee, or the Franchisee files for bankruptcy or is adjudicated a bankrupt may not be enforceable under federal bankruptcy law (II U.S.C.A. Section 101, et seq.); and (4) the covenant not to compete upon termination or expiration of this Agreement contained in Article 23.3 of this Agreement may be unenforceable, except in certain circumstances provided by law;

(b)        Illinois. If this Agreement is governed by the laws of the State of Illinois, then: (1) any provision of this Agreement that designated jurisdiction or venue in a forum outside the State of Illinois is void, provided that this Agreement may provide for mediation or arbitration in a forum outside Illinois; (2) Sections 19 and 20 of the Illinois Franchise Disclosure Act provide rights to the Franchisee relating to the termination and nonrenewal of the Franchise which will superseded any inconsistent provisions of this Agreement; (3) this Agreement is amended to provide that the periods of limitation contained in Section 27 of the Illinois Franchise Disclosure Act are applicable to any action maintained by the Franchisee to enforce any liability created by the Act; and (4) Section 41 of the Illinois Franchise Disclosure Act states that any condition, stipulation or provision purporting to bind any person acquiring any franchise to waive compliance with any provision of the Act is void; therefore, any acknowledgments or other language contained in Article 28 of this Agreement which purport to waive compliance with the Act will be unenforceable against the Franchisee;

(c)        Minnesota. If this Agreement is governed by the laws of the State of Minnesota, then: (1) except in certain circumstances specified by law, the Franchisor must give the Franchisee at least 180 days prior written notice of nonrenewal of this Agreement; (2) in the event the Franchisor gives the Franchisee written notice that the Franchisee has breached this Agreement, such written notice will be given to the Franchisee at least 90 days prior to the date this Agreement is terminated by the Franchisor, and the Franchisee will have 60 days after such written notice within which to correct the breach specified in the written notice; (3) notwithstanding any provisions of this Agreement to the contrary, a Court of competent jurisdiction will determine whether the Franchisor will be required to post a bond or other security, and the amount of such bond or other security, in any injunctive proceeding commenced by the Franchisor against the Franchisee, the Franchisee's Owners or the Personal Guarantors; (4) Article 17.5(d) of this Agreement will be inapplicable to rights provided to the Franchisee or to any liability imposed by Minn. Stat. Sections 80C.01 to 80C.22; (5) in accordance with Minn. Stat. Sec. 80C.17, Subd. 5, the Franchisee will have no more than three years after the cause of action accrues to commence an action pursuant to Minn. Stat. Sec. 80C.17; and (6) any provision of this Agreement which requires the Franchisee to waive its rights to jurisdiction or venue in the State of Minnesota will not be applicable to the Franchisee.

(d)       North Dakota. If this Agreement is governed by the laws of the State of North Dakota, then: (1) in the event the Franchisor gives the Franchisee written notice that the Franchisee is delinquent in the payment of any fees or other payments payable to the Franchisor, the Franchisee will have 30 days after such written notice within which to correct the breach by making full payment (including interest as provided for herein) to the Franchisor; (2) the covenant not to compete upon termination or expiration of this Agreement contained in Article 23.3 may be unenforceable, except in certain circumstances provided by law; (3) Article 25.2 is amended to provide that the prevailing party will pay all attorneys' fees, costs and expenses incurred by the other party in enforcing any term, condition or provision of this Agreement or in enjoining any violation of this Agreement by the other party; (4) the consent by the Franchisee to

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jurisdiction and venue in Macomb County, Michigan contained in Article 27.12 may be inapplicable; provided, however, that such inapplicability in the State of North Dakota will not be construed to mean that venue in Macomb County, M ichigan is improper, or that the Franchisee, its officers, directors, Owners and Personal Guarantors are not subject to jurisdiction in Macomb County, Michigan, or in any other state; and (5) the provisions of Article 26.4 requiring arbitration hearings to lake place in Warren, Michigan will be inapplicable and in the event of arbitration between the Franchisor and the Franchisee, such arbitration will be conducted in North D;ikota or at a mutually agreed upon location.

(e) Wisconsin. If this Agreement is governed by the laws of the State of Wisconsin, then the provisions of the Wisconsin Fair Dealership Law, Wis. Stat. Chapter 135, will supersede any conflicting terms of this Agreement.

31.3 Severability.

It is the desire and intent of the parties to this Agreement, including the Franchisee's Owners and the Personal Guarantors, that the provisions of this Agreement be enforced to the fullest extent permissible under the laws and public policy applied in each jurisdiction in which enforcement is sought. All provisions of this Agreement are severable and this Agreement will be interpreted and enforced as if all completely invalid or unenforceable provisions were not contained herein and partially valid and enforceable provisions will be enforced to the extent valid and enforceable. If any applicable law or rule of any jurisdiction requires a greater prior notice of the termination or nonrenewal of this Agreement than is required hereunder or the taking of some other action not required hereunder, oi if under any applicable law or rule of any jurisdiction, any provision of this Agreement or any specification, standard or operating procedure prescribed by the Franchisor is invalid or unenforceable, the prior notice or other action required by such law or rule will be substituted for the notice requirements hereof, or such invalid or unenforceable provision, specification, standard or operating procedure will be modified to the extent required to be valid and enforceable. If any provision of this Agreement is adjudicated to be invalid or unenforceable, then such provision will be deemed amended to modify or delete that portion thus adjudicated to be invalid or unenforceable. Such modification or deletion will apply only with respect to the operation of such provision in the particular jurisdiction in which the adjudication is made. Further, to the extent any provision of this Agreement is deemed unenforceable by virtue of its scope or limitation, the parties to this Agreement, including the Franchisee's Owners and the Personal Guarantors, agree that the scope and limitation provisions will, nevertheless, be enforceable to the fullest extent permissible under the applicable laws and public policies applied in such jurisdiction where enforcement is sought.

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IN WITNESS WHEREOF, the Franchisor, the Franchisee and the Owners have respectively signed this Agreement effective as of the day and year first above written.

In the Presence of:                                                   Big Boy Franchise Management LLC

By

Anthony T. Michaels

Its: Chief Executive Officer

In the Presence of:                                                   "Franchisee'

By

Its:

The undersigned Owners hereby agree to be bound by the provisions of this Agreement applicable to Owners, including, but not limited to, the provisions contained in Articles 1-4, 1.21, 1.28, 1.29, 13.6, 17.2, 17.4, 17.5, 17.8, 17.9, 18.3 through 18.5, 20.2, 23.1 through 23.5, 26.5, 27.11, 27.12, 28.3, and 29 of this Agreement.

In the Presence of:                                  Owners                                                       Percentage

of Ownership

% %

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PERSONAL GUARANTY

THIS PERSONAL GUARANTY (this "Guaranty") is made and entered into this______day of

________________, 200__, by and between Big Boy Franchise Management LLC, a Michigan limited

liability Franchisor, ("Big Boy"), and the undersigned personal guarantors (the "Peisonal Guarantors").

WHEREAS, Big Boy and____________________________________. (the "Franchisee") have entered

into a Franchise Agreement, dated the same date as set forth above, for the operation of a franchised "Big

Boy Restaurant" at_________________________________________________________________(the

"Franchise Agreement").

WHEREAS, it is the desire of the undersigned Personal Guarantors to personally guaranty the obligations of the Franchisee under the Franchise Agreement, which is incorporated herein by reference, and to be individually, jointly and severally bound by the terms and conditions of the Franchise Agreement.

NOW, THEREFORE, in consideration of the execution of the Franchise Agreement by Big Boy, and for other good and valuable consideration, the undersigned, for themselves, their heirs, successors, and assigns, do individually, jointly and severally hereby become surety and guaranty for the payment of all amounts and the performance of the covenants, terms and conditions of the Franchise Agreement, including the covenants not to compete, to be paid, kept and performed by the Franchisee.

Obligations under Agreement. The undersigned, individually and jointly, hereby agree to be personally bound by each and every condition and term contained in the Franchise Agreement, including the covenants not to compete, and restrictions on transfer of the Business Assets, and agree that this Personal Guaranty should be construed as though the undersigned and each of them executed an agreement containing the identical terms and conditions of the Franchise Agreement. The undersigned acknowledge receiving a copy of the Franchise Agreement.

Default of Franchisee. If any default should at any time be made therein by the Franchisee, then the undersigned, their heirs, successors and assigns, do hereby, individually, jointly and severally, promise and agree to pay to Big Boy the Initial Fee, the Opening Assistance Fee, the Royalty Fees, the Advertising Fees and all other monies due and payable to Big Boy under the terms and conditions of the Franchise Agreement.

Non-Compliance by Franchisee. If the Franchisee fails to comply with any other terms and conditions of the Franchise Agreement, then the undersigned, their heirs, successors and assigns, do hereby, individually, jointly and severally, promise and agree to comply with the terms and conditions of the Franchise Agreement for and on behalf of the Franchisee.

Obligations of Big Boy. If the Franchisee is at any time in default on any obligation to pay monies due to Big Boy or any subsidiary or affiliate of Big Boy, whether for the Initial Fee, the Royalty Fees, the Advertising Fees, merchandise, products, supplies, FF&E, or other products purchased by the Franchisee or for any other indebtedness of the Franchisee to Big Boy or any subsidiary or affiliate of Big Boy, then the undersigned, their heirs, successors and assigns, do hereby, individually, jointly and severally, promise and agree to pay all such monies due and payable from the Franchisee to Big Boy or any subsidiary or affiliate of Big Boy upon default by the Franchisee.

Maximum Liability. The maximum individual liability that a Personal Guarantor will incur under this Personal Guaranty is $250,000.

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Binding Agreement. The provisions, covenants and conditions of this Personal Guaranty will inure to the benefit of the successors and assigns of Big Boy.

Jurisdiction and Venue. Except as precluded by applicable law, all arbitration hearings, litigation, actions or proceedings pertaining to this Personal Guaranty will be brought and venued in accordance with Articles 26.4 and 27.12 of the Franchise Agreement.

PERSONAL GUARANTORS

Individually

Individually

Address

Address

City, State and Zip

City, State and Zip

Area code and Telephone

Area code and Telephone

Individually

Individually

Address

Address

City, State and Zip

City, State and Zip

Area code and Telephone

Area code and Telephone

Individually

Individually

Address

Address

City, State and Zip

City, State and Zip

Area code and Telephone

Area code and Telephone

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LANDLORD'S CONSENT TO ASSIGNMENT OF LEASE

The undersigned landlord (the "Landlord") hereby consents to the Assignment by__________________.

(the "Franchisee") of its right, title and interest in the premises lease dated____________________by

and between the Landlord and the Franchisee (the "Premises Lease") to Big Boy Fj-anchise Management LLC ("Big Boy") pursuant to a Franchise Agreement between Big Boy and the Franchisee dated _________________, 200__(the "Agreement"), and agrees as follows:

1.          If the Franchisee defaults under the Agreement, then Big Boy or its designee may assume, enforce and perform the obligations of the Premises Lease with the same force and effect as if assumed, enforced and performed by the Franchisee. The Landlord will accept performance by Big Boy or its designee in lieu of performance by the Franchisee in satisfaction of the Franchisee's future obligations under the Premises Lease.

2.          The Landlord will not terminate the Premises Lease on account of any default of the Franchisee hereunder without written notice to Big Boy and without first providing to Big Boy a reasonable opportunity, but not less than 30 days, to: (a) cause the Franchisee to cure the default; or (b) declare the Franchisee in default under the Agreement and exercise its rights under the Assignment of Lease provisions of the Agreement. If Big Boy elects to exercise its rights under the Assignment, then the Landlord agrees not to terminate the Premises Lease so long as Big Boy or its designee agrees, within 30 days after the date Big Boy gives written notice to the Landlord of its election to exercise its rights under this Assignment, to perform the future obligations of the Franchisee under the Premises Lease. However, nothing herein will require Big Boy to cure any default of the Franchisee under the Premises Lease, but only gives Big Boy the option to assume the Franchisee's future rights and obligations under the Premises Lease.

3.          The Landlord hereby represents and warrants to Big Boy that: (a) the Premises Lease is a valid enforceable agreement; (b) there has been no prior assignment of the Premises Lease of which the Landlord has notice or is aware; (c) neither the Landlord nor the Franchisee is in default under the Premises Lease; and (d) all covenants, conditions and agreements have been performed as required therein except those not due to be performed until after the date hereof.

LANDLORD

Date:________________________________________________________________________________

By:

Its:

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AUTHORIZATION TO HONOR BIG BOY FRANCHISE MANAGEMENT LLC ELECTRONIC FUNDS TRANSFER

PAYEE BANK NAME ACCOUNT NO. ABA NO. Big Boy Franchise Management LLC         ________________ ________________ _____________

The undersigned Depositor hereby authorizes and requests the Depository designated below to honor and to charge to the following designated account, checks, drafts, orders and electronic debits (collectively "debits") drawn on such account which are payable to the above named Payee. It is agreed that the Depository's rights with respect to each such debit shall be the same as if it were a check drawn and signed by the Depositor. It is further agreed that if any such debit is not honored, whether with or without cause and whether intentionally or inadvertently, the Depository shall be under no liability whatsoever. This authorization shall continue in force until the Depository and the Payee have received at least 30 days written notification from the Depositor of its termination.

The Depositor agrees with respect to any action taken pursuant to the above authorization:

(1)         To indemnify the Depository and hold it harmless from any loss it may suffer resulting from or in connection with any debit including, without limitation, execution and issuance of any check, draft or order, whether or not genuine, purporting to be authorized or executed by the Payee and received by the Depository in the regular course of business for the purpose of payment, including any costs or expenses reasonably incurred in connection therewith.

(2)         To indemnify the Payee and the Depository for any loss arising in the event that any such debit shall be dishonored, whether with or without cause and whether intentionally or inadvertently.

(3)         To defend, at the Depositor's own cost and expense, any action which might be brought by any persons or entities because of any actions taken by the Depository or the Payee pursuant to the foregoing request and authorization, or in any manner arising by reason of the Depository's or the Payee's participation therein.

Name of Depository Bank (Franchisee's Bank):______________________________________________

Name of Franchisee/Depositor (as listed on account):__________________________________________

Designated Bank Account (Franchisor's Bank):_______________________________________________

(Please attach one voided check for the above account of the Franchisee.)

Franchised Location:___________________________________________________________________

Address                                             City                                     State                      Zip Code

For information call:____________________________________________________________________

Print Name of Franchisee's Contact Person

Restaurant Number:__________________________ E-Mail Address:__________________________

Telephone Number:__________________________ Fax Number:____________________________

Name of Franchisee/Depositor as Listed on Account (please print)

By:_____________________________________________ ____

Signature of Franchisee's Authorized Representative            Title

Date:__________________, 200_


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