EL POLLO LOCO FRANCHISE AGREEMENT

Dated: _____________________

Location:

Franchisee:

Effective March 2, 2004

EL POLLO LOCO FRANCHISE AGREEMENT

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EL POLLO LOCO

FRANCHISE AGREEMENT

This Franchise Agreement (Agreement), dated for identification purposes only as of                         , 200    , is made and entered into by and between EL POLLO LOCO, INC., a Delaware corporation (the Company), and                                  (Franchisee).

A.     The Company operates and franchises others to operate a number of retail outlets for the sale of flame-broiled food items and related products, in connection with the El Pollo Loco name and the Companys distinctive plan of food service operation.

B.     Franchisee desires to operate a restaurant under the Companys name and to utilize the Companys plan of food service operation, all in accordance with the terms, covenants and conditions of this Agreement.

C.     Franchisee understands that the success of the business contemplated by this Agreement is subject to substantial risks and depends in large part on the business ability of Franchisee and its active participation in the development and management of the franchise business.

1.	SCOPE AND PURPOSE OF AGREEMENT

1.1     Franchisee desires to operate and manage an El Pollo Loco restaurant to be located at                  City of , County of             , State of (the Location). The Company owns certain proprietary and other property rights and interests in and to the El Pollo Loco trademark and service mark, and such other trademarks, service marks, logo types, insignias, trade dress designs and commercial symbols as Company may from time to time authorize or direct Franchisee to use in connection with the operation of a El Pollo Loco Restaurant (the El Pollo Loco Marks). The Company has a distinctive plan for the operation of retail outlets for the sale of flame-broiled food items and related products, which plan includes but is not limited to the El Pollo Loco Marks and the Operations Manual (the Manual), policies, standards, procedures, employee uniforms, signs, menu boards and related items, and the reputation and goodwill of the Companys chain of restaurants (collectively, the El Pollo Loco System). Therefore, in entering into this Agreement, Franchisee fully understands and agrees that this Agreement is conditioned upon the continued strict adherence by Franchisee to all standards, policies, procedures and requirements published or which may from time to time be published or otherwise brought to Franchisees attention by the Company for the operation, maintenance or improvement of El Pollo Loco restaurants under the El Pollo Loco System and the El Pollo Loco Marks. Franchisee understands and agrees that strict adherence to these standards, policies, procedures and requirements is essential to the value of the El Pollo Loco System and the El Pollo Loco Marks.

1.2     Franchisee represents that it is experienced in and has independent knowledge of the nature and specifics of the restaurant business. Franchisee understands that there is not, nor can there be, any assurance or guaranty of success in the franchise business and that Franchisees business ability and attitude are primary in determining Franchisees success. Franchisee represents that, in entering into this Agreement, it has relied solely on its personal knowledge and understanding and has not relied on any representation of the Company or any of its officers, directors, employees or

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agents, except those representations contained in any legally required disclosure document delivered to Franchisee.

1.3    In consideration of the foregoing representations and agreements of Franchisee and other consideration as set forth herein, and subject to all of the terms, covenants and conditions of this Agreement, the Company hereby grants to Franchisee, and Franchisee hereby accepts from the Company, the right and license to operate the one El Pollo Loco restaurant under the El Pollo Loco Marks and in accordance with the El Pollo Loco System (the Restaurant) at the Location. Franchisee acknowledges that the franchise granted hereunder is only for the Location, and, as more fully provided for at Section 24.13, Franchisee is not granted any area, market or protected territorial rights. Franchisee expressly acknowledges and agrees that the Company and its affiliates have and expressly reserve the right to (a) operate and license others to operate El Pollo Loco restaurants at any location; and (b) merchandise and distribute goods and services identified by the El Pollo Loco Marks at any location through any method or channel of distribution, including, without limitation, grocery or convenience stores and via the Internet.

1.4    It is expressly understood and agreed by the parties that Franchisee is and shall be an independent contractor, that Franchisee is not for any purpose an employee or agent of the Company, and that all of the personnel employed by Franchisee at the Restaurant will be employees or agents of Franchisee as an independent contractor and will not be employees or agents of the Company. Franchisee understands and agrees that, as an independent contractor, it does not have the authority to do anything for or on behalf of the Company including, but not limited to, holding itself out as the Company; signing contracts, notes or other instruments; purchasing, acquiring or disposing of any property; or incurring any other obligation or liability.

2.	THE EL POLLO LOCO MARKS & SYSTEM

2.1    Upon the terms, covenants and conditions contained herein and during the term hereof, Franchisee shall have the right to display and use the El Pollo Loco Marks, but only for use in connection with retail sales and service of certain food products which Franchisee is required to prepare and sell to the general public in and at the Restaurant.

2.2    Nothing contained herein shall be construed as authorizing or permitting Franchisee to use the El Pollo Loco Marks or the El Pollo Loco System at any location other than the Location or for any purpose or in any manner other than that authorized herein; or in connection with the sale of any products for resale, or any products not required or approved by the Company, or any products prepared at any place other than at the Location; provided, however, that catering and special event sales may be undertaken by Franchisee in strict adherence with the limitations and procedures set forth in the Manual. Notwithstanding anything to the contrary contained herein, the Company may require Franchisee to discontinue the preparation, offer or sale of any product or item which, in the opinion of the Company or any of its representatives, does not conform to the quality standards or image of the Company and its products.

2.3    Nothing contained herein shall give Franchisee any right, title or interest in or to any of the El Pollo Loco Marks excepting only the privilege and license, during the term hereof, to display and use the same according to the foregoing limitations. Any and all goodwill arising in connection with Franchisees use of the El Pollo Loco Marks and the El Pollo Loco System of restaurant operation shall belong to the Company.

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2.4    Franchisee agrees that the business franchised hereunder shall be named El Pollo Loco without any suffix or prefix attached thereto. Franchisee shall use signs and other advertising which denote that the Restaurant is named El Pollo Loco and which are approved by the Company in advance. If Franchisee is an Entity (as defined below), the name of such corporation shall not contain any of the El Pollo Loco Marks.

2.5    Except as the Company may otherwise permit in writing, Franchisee shall not display or use the trademark, trade name, service mark, logo types, label, design or other identifying symbol or name of any other person, or Entity in, on or at the Restaurant or the Location.

2.6    Franchisee agrees that in all public records, in its relationship with other persons or companies, and in any offering circular, prospectus or similar document, Franchisee shall indicate clearly that Franchisees business is independently owned and that the operations of said business are separate and distinct from the operation of the Companys business. Franchisee shall display at the Restaurant, in such locations as may be specified by the Company and in all correspondence and forms, a notification that the Restaurant is operated by an independent operator and not by the Company.

2.7    Franchisee shall not develop, create, generate, own, license, lease or use in any manner any computer medium or electronic medium (including, without limitation, any Internet home page, e-mail address, website, domain name, bulletin board, newsgroup or other Internet-related medium) which in any way uses or displays, in whole or in part, the El Pollo Loco Marks, or any of them, or any words, symbols or terms confusingly similar thereto without Franchisors express written consent, and then only in such manner and in accordance with such procedures, policies, standards and specifications as Franchisor may establish from time to time.

2.8    Franchisor is the owner of, and will retain all right, title and interest in and to the domain names elpolloloco and crazychicken; the URLs: www.elpolloloco.com, www.elpolloloco.net, www.elpolloloco.org, www.elpollolocofranchising.com and www.crazychicken.com; all existing and future domain names, URLs, future addresses and subaddresses using the El Pollo Loco Marks in any manner; all software; all content prepared for, or used on, the Website; and all intellectual property rights in and to any of them.

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TERM

3.1    The term of this Agreement shall commence on the date Company executes this Agreement and shall end on the date which is the 20^th anniversary of the date Franchisee first opens the Restaurant to the public (the Opening Date), unless sooner terminated as provided herein. Promptly following the Opening Date, the parties shall execute an opening date memorandum in the form of Exhibit B which shall confirm the Opening Date; provided, however, if the parties fail to execute such memorandum, the Opening Date shall be as determined in good faith by Company. Upon the expiration or earlier termination of this Agreement, Franchisee shall have no right or option to extend the term of this Agreement. The sole conditions under which Franchisee will have the opportunity to obtain a successor franchise agreement upon the expiration of the term of this Agreement are set forth at Section 20.

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4.	SITE DEVELOPMENT

4.1    Franchisee shall submit a proposed site for the Restaurant for acceptance by Franchisors Real Estate Site Approval Committee (RESAC), together with such site information as may be reasonably required by Franchisor to evaluate the proposed site. Franchisor shall, provided there exists no default by Franchisee under this Agreement or any other development, franchise or other agreement between Franchisor and Franchisee, evaluate the site proposed for which Franchisee has provided all necessary evaluation information, and shall promptly, but not more than sixty (60) days after receipt of Franchisees proposal, send to Franchisee written notice of acceptance or non-acceptance of the site. Site approval does not assure that a Franchise Agreement will be executed. Execution of the Franchise Agreement is contingent upon Developer purchasing or leasing the proposed site.

Within ninety (90) days after Franchisors site acceptance, Franchisee shall:

a)

Submit in writing to Franchisor, satisfactory proof to Franchisor that Franchisee:

(i)

owns the site; or

(ii)

has leased the site for a term which, with renewal options is not less than the initial term of the Franchise Agreement; or

(iii)

has entered into a written agreement to purchase or to lease the approved site on terms provided herein, subject, only to obtaining necessary governmental permits.

(iv)

If Developer has leased the site, the lease shall contain the provisions required in Section 4.2 below.

4.2    After execution of this Agreement, Franchisee will be required to achieve certain milestones to assure the timely development of the Restaurant:

a.    Franchisee shall complete the acquisition of the Location, resulting in a fully executed lease or recorded grant deed (for real property which includes the Location) in the name of Franchisee within ninety (90) days following the date of Companys execution of this Agreement; and

b.    Within six (6) months following the date of Companys execution of this Agreement, Franchisee must have completed all of the site development work (including, but not limited to, engineering, architectural/design, entitlements, and permitting) and commence construction of the Restaurant.

c.    Within twelve (12) months following the date of Companys execution of this Agreement, Franchisee must have completed construction of the Restaurant at the Location and the Restaurant shall be open to the public.

The Company shall have no liability under any lease or purchase agreement for the Location and shall not guaranty Franchisees obligations under the same. In the event that Franchisee executes a lease for the Location site, Franchisee shall furnish to the Company a copy of the executed lease within fifteen (15) days of the date of execution

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of such lease. Company shall have no obligation to assist Franchisee to negotiate such lease.

The lease may not contain a non-competition covenant which restricts the Company, or any franchisee of the Company, from operating an El Pollo Loco Restaurant or any other retail restaurant, unless such covenant is approved by the Company in writing prior to the execution of the lease.

Any lease entered into by Franchisee shall include the following terms and conditions:

i.    The landlord consents to Franchisees use of the premises as an El Pollo Loco restaurant and such restaurant may be open for business during the required days and hours set forth in the Manual from time to time;

ii.    The landlord agrees to furnish the Company with copies of any and all notices of default, if any, pertaining to the lease and the premises, at the same time that such notices are sent to Franchisee; and

iii.    The landlord agrees that, subject to any other applicable provisions in this Agreement, the Company shall have the right, at its sole option and without any obligation whatsoever to do so, to assume Franchisees occupancy rights under the lease for the remainder of its term upon Franchisees default or termination under such lease, the termination of this Agreement, or the exercise by the Company of its right of first refusal or right to purchase as set forth at Sections 17 and 19 of this Agreement.

iv.    That upon expiration or termination of the lease for any reason, Franchisee shall, upon Companys demand, remove all of the El Pollo Loco Marks from the Restaurant and the Location and modify the decor of the Restaurant and Location so that it no longer resembles, in whole or in part, a El Pollo Loco restaurant and that if Franchisee shall fail do so, Company will be given written notice and the right to enter the Location to make such alterations, in which event Franchisee shall reimburse Company for all direct and indirect costs and expense it may incur in connection therewith, including attorneys fees.

4.3    Franchisee shall complete and open the Restaurant for business, in accordance with the provisions of this Agreement, no later than twelve (12) months from the date of Companys execution hereof; provided, however, if Franchisee purchases a currently operating and Company-owned Restaurant from the Company (a Turnkey Restaurant), then Franchisee shall begin operation of the Restaurant on the date possession of the Restaurant is transferred to Franchisee pursuant to the agreement entered into between Franchisee and the Company for the purchase of such restaurant facility. Failure to reach each milestone described in Section 4.1 a.-c. above within the specified time frames shall constitute a material default hereunder. Prior to opening the Restaurant, Franchisee shall obtain and thereafter maintain throughout the term of this Agreement all necessary business licenses, permits and other documentation necessary for the operation of an El Pollo Loco restaurant.

4.4    Franchisee understands and acknowledges that in accepting Franchisees Location, or by granting a franchise for a Location (whether or not formerly operated as a Company-owned Restaurant), the Company does not in any way endorse, warrant or guarantee either directly or indirectly the suitability of such Location or the success of

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the franchise business to be operated by Franchisee at such Location. The suitability of the Location and the success of the franchise business depends upon a number of factors outside of the Companys control including, but not limited to, the Franchisees operational abilities, site location, consumer trends and such other factors that are within the direct control of the Franchisee. Franchisor may require, as a condition to its approval of a site, a site description and analysis, traffic and other demographic information, all in such format as the Company may require, which information shall include, without limitation, a study prepared by a third party reasonably acceptable to the Company analyzing the impact of the proposed site on other franchised restaurants surrounding or within the vicinity of such proposed site. All such analyses, information and studies shall be prepared at the sole cost and expense of Franchisee.

5.	IMPROVEMENTS, FIXTURES AND EQUIPMENT

5.1    If the Location is other than a Turnkey Restaurant, then this Section 5 will apply to the building, reconstruction, remodeling, or other changes necessary to conform the Location to the requirements set forth in this Section or as provided and updated by the Company from time to time in accordance with this Section.

5.2    Franchisee, at its sole expense, shall construct or, in the case of an existing building, remodel the Location and install such signs, fixtures, furniture and equipment at the Location as are required in accordance with the Companys current requirements and specifications for same. Franchisee shall be responsible for obtaining all zoning classifications and clearances which may be required by state or local laws, ordinances or regulations. Franchisee shall obtain from applicable governmental authorities all permits, licenses and certifications required for lawful construction or remodeling work and for the operation of the Restaurant. If requested by the Company, Franchisee shall submit to the Company a copy of all such required permits, licenses and certifications for the construction or remodeling work prior to commencing the construction or remodeling of the Location.

5.3    The Company shall provide Franchisee with standard plans and a sample layout for a typical El Pollo Loco restaurant and a set of typical construction, equipment and decor specifications (the Plans). At all times, Franchisee shall use its best efforts to treat and keep the Plans and the information contained therein as confidential as possible and limit access to the Plans to employees and independent contractors of Franchisee on a need to know basis only. Franchisee acknowledges that the unauthorized use or disclosure of the Companys Plans and the confidential information contained therein will cause irreparable injury to the Company and that damages are not an adequate remedy. Franchisee accordingly covenants that without the Companys prior written consent, Franchisee shall not disclose (except to such employees, agents, contractors or subcontractors as must have access to such Plans in order to construct the Restaurant at the Location) or use or permit the use of such Plans (except as may be required by applicable law or authorized by this Agreement), or copy, duplicate, record or otherwise reproduce such Plans, in whole or in part, or otherwise make the same available to any person or source not authorized in writing by the Company to receive such Plans or the information contained therein at any time during the term of this Agreement or thereafter.

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5.4    Franchisee, at its sole expense, shall employ architects, designers, engineers or others as may be necessary to complete, substitute, adapt or modify the Plans for the Restaurant so as to create a set of final plans and specifications. FRANCHISEE SHALL SUBMIT TO THE COMPANY A COMPLETE SET OF FINAL PLANS AND SPECIFICATIONS, INCLUDING A SITE PLAN, AND OBTAIN THE COMPANYS WRITTEN APPROVAL OF SUCH PLANS AND SPECIFICATIONS PRIOR TO COMMENCING THE CONSTRUCTION OF THE RESTAURANT OR, IN THE CASE OF AN EXISTING BUILDING, THE REMODELING WORK FOR THE RESTAURANT. The Company shall review such final plans and specifications promptly and approve or disapprove the same, and the Company may provide comments on the plans and specifications to Franchisee. Such review and approval by the Company will be limited to items and issues relating to the El Pollo Loco System only and is not intended to be a verification or approval of the structure of the building, mechanical systems or document accuracy. Examples of conceptual areas related to the El Pollo Loco System include signs, logos, finishes, decor and aesthetics, guest comfort, and ability to serve food within the Companys standards for quality, timeliness and cleanliness.

5.5    Franchisee shall use a qualified licensed general contractor to perform the construction or remodeling work at the Restaurant. The Company shall not be responsible for delays in the construction, equipping or decoration of the Restaurant or for any loss resulting from the Restaurant design or construction. The Company must approve in writing any and all changes in the Restaurant plans relating to the El Pollo Loco System, as described in Section 5.4 above, prior to the construction or remodeling of the Restaurant or the implementation of such changes. FRANCHISEE SHALL PROVIDE WRITTEN NOTICE TO THE COMPANY OF THE DATE UPON WHICH CONSTRUCTION OF THE RESTAURANT COMMENCED WITHIN SEVEN (7) DAYS AFTER COMMENCEMENT AND THEREAFTER SHALL PROVIDE TO THE COMPANY MONTHLY PROGRESS REPORTS OF THE STATUS OF THE CONSTRUCTION WORK SIGNED BY FRANCHISEES ARCHITECT OR GENERAL CONTRACTOR. Franchisees failure to commence the design, construction or remodeling, equipping and opening of the Restaurant promptly and with due diligence shall be grounds for the termination of this Agreement. The Company shall make a final inspection of the completed Restaurant and Location and may require such corrections and modifications as it deems necessary to bring the Restaurant and the Location into compliance with approved final plans and specifications. FRANCHISEE SHALL NOTIFY THE COMPANY OF THE DATE OF COMPLETION OF CONSTRUCTION AND, WITHIN A REASONABLE TIME THEREAFTER, THE COMPANY SHALL CONDUCT THE FINAL INSPECTION OF THE RESTAURANT AND ITS PREMISES. Franchisee acknowledges and agrees that Franchisee shall not open the Restaurant for business without the express written authorization of the Company and that the Companys authorization to open shall be conditioned upon Franchisees furnishing to the Company:

a.     A letter from the general contractor responsible for the construction or remodeling of the Restaurant indicating that the Restaurant has been constructed or remodeled in substantial conformance with the approved final plans and specifications, including any changes thereto approved by the Company, and in accordance with all applicable state and local governmental laws, statutes and ordinances regulating such construction including, without limitation, building, fire, health and safety codes; and

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b.    A temporary or final Certificate of Occupancy issued by the applicable local governmental entity.

5.6    Franchisee shall, at its sole expense, purchase all required signs, fixtures, furniture and equipment for the Restaurant and Location from a distributor listed on the Approved Brands and Distributors List (as defined below) or another distributor approved pursuant to Section 11.4. The items purchased shall be installed in strict accordance with the specifications of the Company and erected and displayed in the manner and at such locations as are approved and authorized by the Company in writing. Franchisee shall maintain and display signs which reflect the current image of El Pollo Loco restaurants and shall not place additional signs at the Restaurant without the prior written consent of the Company. Franchisee shall discontinue the use of and remove, or modify, as applicable, such signs that are declared obsolete by the Company within thirty (30) days after Franchisees receipt of the Companys written request, subject to reasonable extension if Franchisee is unable after using reasonable diligence to obtain required governmental approvals for modification of such signs. Proper signage is fundamental to the El Pollo Loco System and Franchisee hereby grants to the Company the right to enter the Restaurant in order to remove and de-identify any unapproved or obsolete signs in the event Franchisee has failed to do so within the above-specified time frame.

5.7    Franchisee is solely responsible for the acts or omissions of its contractors regarding compliance with all of the provisions of this Section 5, and the Company shall have no responsibility for such acts or omissions. The Company shall not be liable for any loss or damage arising from the design or plan of the Restaurant by reason of its approval of plans and specifications, or otherwise. Franchisee shall indemnify the Company for any loss, cost or expense, including attorneys fees, that may be sustained by the Company because of the acts or omissions of Franchisees contractors or arising out of the design, construction or remodeling of the Restaurant, except to the extent that any such loss, cost or expense arises as a result of the negligent acts or omissions of the Company, its employees and/or agents.

5.8    Franchisee shall give to the Company at least thirty (30) days prior written notice of the anticipated Opening Date. If Franchisee did not deliver to the Company a final Certificate of Occupancy prior to the Opening Date, Franchisee shall deliver to the Company a copy of an unconditional final Certificate of Occupancy issued by the applicable local governmental entity no later than ninety (90) days following the Opening Date.

6.	FEES, TAXES AND OTHER CHARGES

6.1    Franchisee agrees to pay to the Company during the term of this Agreement the following:

a.    An initial franchise fee of Forty Thousand Dollars ($40,000.00), payable as follows: (i) Fifteen Thousand Dollars ($15,000.00) upon execution of this Agreement (and within 30 days of delivery of execution copies of this Agreement to Franchisee); and (ii) Twenty-five Thousand Dollars ($25,000.00) on the earlier of (x) forty-eight hours following the commencement of physical construction or remodeling of the Restaurant; or (y) 12 months following Companys execution of this Agreement; provided, however, if the Restaurant is a Turnkey Restaurant the

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initial franchise fee shall be payable upon execution of this Agreement. All such payments shall be made by cashiers check or other form of payment acceptable to the Company. Franchisee hereby acknowledges and agrees that the grant of this franchise and the agreements of the Company contained in this Agreement constitute the sole and only consideration for the payment of the initial franchise fee and the initial franchise fee shall be fully earned by the Company upon execution of this Agreement. In that regard, upon the payment of any portion of the initial franchise fee, the entire initial franchise fee shall be deemed fully earned and non-refundable in consideration of the administrative and other expenses incurred by the Company in granting this franchise and for the Companys lost or deferred opportunity to franchise to others.

b.    A Grand Opening Fee in an amount of no less than Five and nor more than Ten Thousand Dollars ($5,000.00$10,000.00), payable upon payment in full of the Initial Fee. The Company will use those funds exclusively for marketing and advertising for the Restaurants Grand Opening.

c.    A weekly royalty fee in the sum of four percent (4%) of Franchisees weekly Gross Sales (as defined below).

d.    A fee, which shall be used in accordance with Section 8.1, for advertising, public relations and promotion and for the creation and development of advertising, public relations and promotional campaigns in the amount of five percent (5%) of Franchisees weekly Gross Sales, if the Restaurant is located outside of the Los Angeles designated market area (DMA), or four percent (4%) of Franchisees weekly Gross Sales, as defined in Section 7.1., if the Restaurant is located within the Los Angeles DMA.

e.    The amount of all sales taxes, use taxes and similar taxes imposed upon or required to be collected or paid by the Company on account of goods or services furnished to Franchisee by the Company, whether such goods or services are furnished by sale, lease or otherwise. Franchisee shall reimburse the Company for the invoice amount within seven (7) days after the invoice has been delivered to Franchisee pursuant to Section 24.3 of this Agreement.

6.2    For any calendar year in which the Company has received the approval of the Qualified Franchisees (as that term is hereinafter defined) which own sixty percent (60%) of the El Pollo Loco restaurants owned by all of the Qualified Franchisees located in Franchisees DMA (as that term is hereinafter defined), Franchisee shall pay an advertising fee (the DMA Advertising Fee) based upon a percentage of Franchisees monthly Gross Sales generated during such calendar year, which fee shall be paid monthly along with and in addition to the advertising fee required to be paid pursuant to Section 6.1(c). The DMA Advertising Fee shall be used in accordance with Section 8.1. Such DMA Advertising Fee percentage will be determined, and is subject to the approval, by the Qualified Franchisees in Franchisees DMA.

A Qualified Franchisee is any franchisee who has entered into a Franchise Agreement with the Company containing terms and conditions substantially the same as this Section 6.2. DMA means the demographic market area in which the Restaurant is located as established periodically by Nielson Media Research, a Dunn & Bradstreet company, or any other similar type of designation used by the Company from time to time to identify advertising market areas.

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If the Company desires to impose the DMA Advertising Fee upon Franchisee during any calendar year (hereinafter the Applicable Calendar Year), it shall give notice of its desire to impose such fee and the proposed use of the funds to each of the Qualified Franchisees in Franchisees DMA not later than sixty (60) days prior to the beginning of the Applicable Calendar Year. If the Company obtains the sixty percent (60%) approval required in the first paragraph of this Section 6.2, it shall notify Franchisee of such approval and Franchisee shall begin paying the DMA Advertising Fee described in such paragraph beginning with the first month of the Applicable Calendar Year. Franchisee acknowledges that it is required to make such payment, whether or not it voted to approve the imposition of such DMA Advertising Fee. Franchisees obligation to pay such DMA Advertising Fee will expire upon the expiration of the Applicable Calendar Year unless the Company receives the required approval of the Qualified Franchisees to continue or reimpose such fee for the subsequent calendar year pursuant to the foregoing requirements.

6.3    Franchisee agrees to pay interest to the Company on any amounts which may become due to the Company from Franchisee, if such are not paid when due, at the rate of fifteen percent (15%) per annum or the maximum interest rate permitted by law, whichever is less.

7.	FINANCIAL REPORTING, BILLING AND PAYMENT

7.1    The term Gross Sales as used in this Agreement shall mean the total revenues derived by Franchisee in and from the Restaurant from all sales of food, goods, wares, merchandise and all services made in, upon, or from the Restaurant, whether for cash, check, credit or otherwise, without reserve or deduction for inability or failure to collect the same, including, without limitation, all revenues derived from delivery, catering, and special event sales, such sales and services where the orders therefore originate at and are accepted by Franchisee into the Restaurant but delivery or performance thereof is made from or at any other place, or other similar orders are received or billed at or from the Restaurant, and any sums or receipts derived from the sale of meals to employees of the Restaurant. Gross Sales shall not include rebates or refunds to customers; or the amount of any sales taxes or other similar taxes that Franchisee may be required to and does collect from customers to be paid to any federal, state or local taxing authority.

7.2    Franchisee shall deliver to the Company on or before the sixth (6th) calendar day after each week a weekly Gross Sales statement (Weekly T-Sheet), in the form specified by the Company, setting forth the amount of Gross Sales for the preceding week and a calculation of the weekly fees payable on such sales. Weekly fees, including royalty and advertising fees, shall be due and payable on the sixth(6th ) day after the close of the sales week, which closing shall be designated by El Pollo Loco in its sole discretion upon ten (10) days advance written notice to Franchisee. Franchisee shall make all payments due hereunder by one of the following forms of payment (the Forms of Payment): check, electronic funds transfer, pre-arranged draft or sweep of Franchisees bank account. Franchisee will give the Company authorization (in the form attached as Exhibit D ) for direct debits from Franchisees business bank operating account. The Company shall choose the Form of Payment in its sole discretion from time to time and shall provide written notice of any changes to Franchisee at least ten (10) business days prior to the effective date of the change.

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If Franchisee is delinquent in any payment of such fees, or if Franchisee has not submitted the Weekly T-Sheet for more than a two-week period, the Company may, in its sole discretion initiate an EFT transfer from Franchisees business bank account an estimated amount of fees due the Company for such period which shall be based on the average of the immediately preceding three (3) months Gross Sales. If, at any time, the Company determines that Franchisee has under-reported the weekly Gross Sales of the Restaurant, or underpaid the weekly royalty, advertising fees, DMA Advertising Fee, or other amounts due to the Company under this Agreement, or any other agreement, the Company may, in addition to exercising all other rights and remedies available to it under this Agreement, initiate an immediate transfer from the Account in the amount equal to the unpaid fees in accordance with the foregoing procedure, including interest as provided in Section 6.3 above. Any overpayment of fees will be credited to the Account effective as of the first Due Date after the Company and Franchisee determine that such credit is due.

In connection with payment of the weekly royalty fee and advertising fee by EFT, Franchisee shall: (1) comply with procedures specified by the Company relating to EFT transfers; (2) perform those acts and sign and deliver those documents as may be necessary to accomplish payment by EFT as described in this Section 7.2; (3) give the Company an authorization in the form designated by the Company to initiate debit entries and/or credit correction entries to the Account for payments of the weekly royalty and advertising fees, or other amounts due to the Company under this Agreement, or any other agreement, including any interest charges; and (4) make sufficient funds available in the Account for withdrawal by EFT of fees due no later than each Due Date.

7.3    In addition to the sales data required to be provided in the Weekly T-Sheet to be delivered pursuant to Section 7.2, Franchisee shall deliver (in the manner prescribed by Company) to the Company on or before the sixth (6th) day after the end of each sales week during the term of this Agreement any other sales and menu mix data reasonably requested by the Company with respect to the preceding sales week, whether specified in the Manual or otherwise.

7.4    One hundred twenty (120) days after the end of each fiscal year of the franchise business during the term of this Agreement, Franchisee shall provide to the Company an unaudited profit and loss statement and a balance sheet of the franchise business which shall include such information and data as specified by the Company. Such fiscal year-end financial statements must be signed by Franchisee, Franchisees treasurer or Franchisees chief financial officer and contain a representation that the financial statements present fairly the financial position of Franchisee and the results of operations of the franchise business during the period covered.

7.5    Franchisee agrees to make all payments when due to third parties for obligations arising out of or in any way connected with the existence, operation or maintenance of the Restaurant, including, but not limited to, rental and mortgage payments and payments for utilities, services, products, equipment, supplies, goods, inventory, materials, taxes, labor and other matters. In the event that Franchisee fails to make any such payment in accordance with the foregoing and the nonpayment results or may reasonably result in a condition or event which threatens public safety or health or which may materially and adversely affect the ownership, condition or operation of the Restaurant, in either case in the reasonable judgment of the Company, the Company shall have the right, after five (5) days written notice to Franchisee, but not the obligation, to make such payment on behalf of Franchisee. Such payment shall be

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without prejudice and in addition to all other available rights and remedies. Any payment made by the Company pursuant to this Section 7.5 shall be paid by Franchisee to the Company as an additional amount for the monthly billing period in which such payment is made by the Company.

7.6    Franchisee shall maintain accurate and complete books and records pertaining to the operation and maintenance of the Restaurant as required by the standards, policies and procedures established by the Company in accordance with the Manual. Franchisee shall be solely responsible for performing all record keeping duties, and the cost for all such services shall be borne solely by Franchisee.

7.7    Franchisee shall record all sales and all receipts of revenue on individual machine serial numbered guest checks. Cash registers must validate a receipt which will be presented at the time of sale to each customer. Franchisee shall only use cash registers of a cumulative non-resettable type as designated and approved in writing by the Company and shall provide the Company or its employees with a key to permit readings of the running of such cash registers at any time, at the Companys discretion. If, for any reason, the Restaurants cash registers must be repaired, replacement cash registers must be used in their absence, with a beginning non-resettable total recorded. The presence of any more than the original non-resettable cash registers must have the Companys prior written approval. During any period of repair of the authorized cash registers in the Restaurant, all business records of Franchisee shall be kept on forms and in accordance with the procedures as prescribed by the Company from time to time in its sole discretion. Notification of the replacement of any cash registers must be in accordance with Section 24.3, and notice must be given not more than twenty-four (24) hours from the time a cash register is determined to be inoperative. The Company may require Franchisee, at Franchisees expense, to convert to, install and use in the Restaurant a computer-based cash control and restaurant management, or point of sale, system. The Company must approve the criteria on which Franchisees system will run and communicate with the Companys system. Franchisee also agrees to procure and install such data processing equipment computer hardware, software, required dedicated telephone, communication and power lines, modems, printers, and other computer-related accessory or peripheral equipment as the Company may require. Franchisee agrees that the Company shall have the free and unfettered right to retrieve any data and information from Franchisees computers as the Company, in its sole discretion, may deem appropriate, with the telephonic (or similar means of communication) cost of the retrieval to be borne by the Company, including electronically polling the daily sales, menu mix and other data of the Restaurant. Company may require Franchisee to maintain an e-mail account and connect the Franchisees computer system to a telephone line (or other communications medium specified by the Company) at all times and be capable of accessing the internet via a designated third party network (such as MSN, Worldnet, Earthlink, AOL, etc.). Upon request, Franchisee shall permit the Company to access its computer system in the Restaurant and the files stored therein, with or without prior notice via any means specified by the Company, including electronic polling communications. All of the hardware and software specified to be installed or purchased, shall be at Franchisees expense. Franchisee must utilize any proprietary software program that the Company may develop in addition to system documentation manuals and other proprietary materials developed by the Company (or for the Company) in connection to the operation of the Restaurant. If and when the Company develops proprietary software, the Company may require that Franchisee execute a standard form software license agreement and input and maintain in the Franchisees computer the software programs,

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data and information as the Company prescribes. Franchisee must purchase the proprietary software programs, manuals and/or materials whenever the Company decides to use new or upgraded programs, manuals and/or materials from Company or an approved distributor, if any, and if from an approved distributor, upon terms determined by such distributor; provided, however, that Franchisee shall not be required to replace such system more frequently than once every seven (7) years during the term of this Agreement. In such event, Franchisee shall adopt such related procedures as the Company may require to obtain the efficient use of such system.

7.8    All of the accounts, books, records and federal, state and local tax returns and reports of Franchisee, so far as they pertain to the business transacted under this Agreement, shall be open to inspection, examination and audit by the Company and its authorized representatives at any and all times, and copies thereof may be made by the Company and retained for its own use. All of such records shall be maintained and retained by Franchisee for seven (7) years, and following the termination or expiration of this Agreement, the books and records for the preceding seven (7) years shall be maintained and retained by Franchisee for five (5) years. The Company may perform such auditing for the purpose of verifying the operating and financial data upon which the rents, fees and other charges payable to the Company hereunder are based. Any such inspection, examination and audit shall be at the Companys cost and expense unless the same is necessitated by Franchisees failure to prepare and deliver its transmittal reports to the Company as required herein, or to maintain books and records as hereinabove provided, or unless any such transmittal report is determined to be in error to an extent of two percent (2%) or more. In any such event, the cost and expense for such inspection, examination and audit shall be borne and paid by Franchisee. Any such cost and expense shall be set forth in a written invoice delivered to Franchisee by the Company. Franchisee shall reimburse the Company for the invoice amount within seven (7) days after the invoice has been delivered to Franchisee pursuant to Section 24.3 of this Agreement.

8.	REGIONAL ADVERTISING AND MARKETING

8.1    The Company shall use the advertising fees payable pursuant to Sections 6.1(c) and 6.2 to purchase, develop and engage in advertising, public relations and promotional campaigns (which may include internet web sites and internet advertising) designed to promote and enhance the value of El Pollo Loco restaurants, including, but not limited to, market research, the development of logotypes and slogans, direct media advertising and point of sale promotional materials. The Company shall be under no obligation to advertise equally for all markets or franchise areas; provided, however, that the DMA Advertising Fees payable by Franchisee pursuant to Section 6.2 shall be used by the Company solely for the purchase of media advertising and the research, development and production of advertising, public relations and promotional campaigns to be conducted in the DMA in which Franchisees Restaurant is located. All aspects of such media purchases and advertising activities and promotional campaigns, including, without limitation, the type, quantity, timing and choice of media or agency, shall be determined and conducted by the Company in its sole discretion. In this regard, the Company shall not be required to expend any particular amounts or conduct any particular method of advertising in any given period. The Company shall be under no obligation to determine the incremental cost of franchise sales advertising and investor

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relations sections of any internet web sites established by the Company and funded in whole or in part by advertising fees. The Company may from time to time develop brochures, posters and other advertising materials as it, in its sole discretion, deems beneficial to the marketing of the El Pollo Loco products and services. The Company shall make available to Franchisee reasonable quantities of such materials that are designed for use chain-wide and/or in the regional market in which the Restaurant is located, provided that Company reserves the right to impose a reasonable charge for such materials. Upon request by the Franchisee Association (as defined below), but not more frequently than annually, the Company shall provide to the Franchisee Association a written description of the expenditures made by the Company during the Companys fiscal year immediately preceding such request of the advertising fees of the type described in Section 6.1(c) received by the Company from its franchisees. In addition, not later than one hundred twenty (120) days following the end of the Companys fiscal year, the Company shall provide to the Franchisee Association an accounting describing any DMA Advertising Fees received pursuant to Section 6.2 and the expenditures made by the Company with respect to such fees for the purchase of media advertising and the research, development and production of advertising, promotional materials and promotional campaigns during such previous fiscal year.

8.2    Franchisee shall not engage in any advertising activities (including any electronic or internet advertising) directly nor shall it erect, hand out or display any sign, poster, coupon, advertising or promotional material of any type without the prior written consent of the Company or its authorized marketing agent. All of Franchisees local advertising will be subject to Companys approval. Company will not derive income from Franchisees purchase of local advertising. Ten (10) business days are required for review and approval of any materials submitted for Companys prior approval. In the event of a breach of this Section, the Company shall have the right to remove any unauthorized material at the expense of Franchisee.

8.3    In addition to advertising fees payable pursuant to Section 6.1 and 6.2 of this Agreement, Franchisee shall expend an amount determined by Company, of not less than $5,000 or and not more than $10,000, to conduct a grand opening advertising and promotion program for Franchisees Restaurant, utilizing advertising and promotional materials approved by Company, in the manner specified in Section 8.2. Such grand opening advertising shall be conducted in accordance with Companys specifications and standards and in accordance with a grand opening plan (which will cover advertising and promotion for the 15 days prior to the Opening Date and 45 days following the Opening Date) which Franchisee prepares and submits to Company for approval at least 30 days prior to the anticipated Opening Date. Franchisee shall submit to Company not later than 15 days following the conclusion of such grand opening promotion, written receipts and other evidence reasonably satisfactory to Company evidencing all amounts spent by Franchisee to conduct said grand opening promotion.

9.	INSURANCE AND INDEMNIFICATION

9.1    During the term hereof, Franchisee shall obtain and maintain insurance coverage with insurance carriers acceptable to the Company in accordance with the Companys current insurance requirements. The coverage shall commence when the Location is secured by Franchisee by executed deed or lease and shall comply with the requirements of Franchisees lease, if any, for products liability and broad form contractual liability coverage in the amount of at least two million dollars

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($2,000,000.00) combined single limit. Franchisee shall also carry fire and extended coverage insurance with a maximum deductible of $10,000 and with endorsements for vandalism and malicious mischief, covering the building, structures, equipment, improvements and the contents thereof in and at the Restaurant, on a full replacement cost basis, insuring against all risks of direct physical loss except for unusual perils such as nuclear attack, earth movement and war, and business interruption insurance in actual loss sustained form covering the rental of the Location, previous profit margins, maintenance of competent personnel and other fixed expenses. Franchisee shall also carry such workers compensation insurance as may be required by applicable law. In connection with and prior to commencing any construction, reimage or remodeling of the Restaurant, Franchisee shall maintain Builders All Risks Insurance and performance and completion bonds in forms and amounts, and written by a carrier or carriers, acceptable to the Company. As proof of such insurance, a certificate of insurance shall be submitted by Franchisee for the Companys approval prior to Franchisees commencement of any activities or services to be performed under this Agreement. Franchisee shall deliver a complete copy of Franchisees then-prevailing policies of insurance to the Company within thirty (30) days following the delivery of the certificate of insurance.

9.2    The Company shall be named as an additional insured on all of such policies referenced in Section 9.1 above to the extent of its interests and shall be provided with certificates of insurance evidencing such coverage prior to the Opening Date and promptly following the date any policy of insurance is renewed, modified or replaced during the term of this Agreement. All coverages shall be placed with an insurer with a rating of A or better from Moodys or S&P or a rating of A-VIII or better from Bests. All public liability and property damage policies shall contain a provision that the Company, although named as an additional insured, shall nevertheless be entitled to recover under such policies on any loss occasioned to it, its affiliates, officers, agents and employees by reason of the negligence of the Company, the Franchisee, or their respective principals, contractors, agents or employees. All policies shall extend to and provide indemnity for all obligations assumed by Franchisee hereunder and all other items for which Franchisee is required to indemnify the Company under the provisions of this Agreement, whether or not the liability arose from the negligence of the Company, its principals, contractors, agents or employees, and shall provide the Company with at least thirty (30) days prior written notice of cancellation, termination or material reduction of coverage. The Company reserves the right to specify reasonable changes (which may include increases) in the types and amounts of insurance coverage required by this Section 9. Should Franchisee fail or refuse to procure the required insurance coverage from an insurance carrier acceptable to the Company or to maintain it throughout the term of this franchise, the Company may in its discretion, but without any obligation to do so, obtain such coverage for Franchisee, in which event Franchisee agrees to pay the required premiums or to reimburse the Company therefore. The amount of such premiums shall be set forth in a written invoice delivered to Franchisee by the Company. Franchisee shall reimburse the Company for the invoice amount within seven (7) days after the invoice has been delivered to Franchisee pursuant to Section 24.3 of this Agreement. Failure to maintain the required insurance or to promptly reimburse the Company for any premiums paid on behalf of the Franchisee by the Company shall constitute a default hereunder.

9.3    Franchisee agrees to defend at its own cost and to indemnify and hold harmless the Company, its subsidiaries, parent and affiliates, shareholders, directors, officers, employees and agents (each an Indemnity) from and against any and all loss, costs,

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expenses (including attorneys fees), damages and liabilities, however caused, resulting directly or indirectly from or pertaining to the use, condition, construction, equipment, decorating, maintenance or operation of the Restaurant, and including the preparation and sale of any product made in or sold from the Restaurant, and including any labor or other employee related claims of any kind including, without limitation, any claims made by an employee of Franchisee resulting from the employees training in a Company operated facility or restaurant, and including Franchisees failure for any reason to fully inform any third party of Franchisees lack of authority to bind the Company for any purpose. Such loss, claims, costs, expenses, damages and liabilities shall include, without limitation, those arising from latent or other defects in the Restaurant, whether or not discoverable by the Company, and those arising from the death of or injury to any person or arising from damage to the property of Franchisee or the Company, their agents or employees, or any third person or Entity, whether or not such losses, claims, costs, expenses, damages or liabilities resulted from any strict liability imposed on the Company or any of its officers, agents or employees. Notwithstanding the foregoing, Franchisee shall not be responsible to an Indemnity for any loss, claim, cost, expense, damage or liability which arises as a result of the negligence of such Indemnity.

10.	VENDING MACHINES

Franchisee agrees that no cigarette machine, video game machine, juke box, public telephone or other type of vending machine or device, whether or not coin operated, shall be installed in the Restaurant, or on its premises, without the written approval of the Company. The revenues received by Franchisee from any approved machines shall be included in Franchisees Gross Sales.

11.	COMPLIANCE WITH MANUAL AND WITH SYSTEM STANDARDS

11.1    Franchisee acknowledges and agrees that strict and continued adherence by Franchisee to the Companys standards, policies, procedures and requirements, as set forth in this Section 11, is expressly made a condition of this Agreement, so that failure on the part of Franchisee to so perform will be grounds for termination of this Agreement as provided in Section 18 hereof. Franchisee acknowledges that changes, modifications, deletions and additions to the standards, specifications, procedures and menu items comprising the El Pollo Loco System may be necessary and desirable from time to time. The Company may make such modifications, revisions, deletions and additions, including without limitation modifications, revisions, deletions and additions to the Manual and to the menu items required to be offered by Franchisee, which the Company, in good faith and exercising its judgment, believes to be desirable and reasonably necessary. Franchisee agrees to comply with any such modification, revision, deletion or addition as of the date that such modification, revision, deletion or addition becomes effective. Franchisee acknowledges that it shall receive the Manual on loan from the Company and that the Manual shall at all times remain the sole property of the Company. Franchisee understands that the Company has entered into this Agreement in reliance upon Franchisees representation that it will strictly comply with all the provisions of the Manual. For purposes of this Agreement, the Manual shall be deemed to include all written directions delivered to Franchisee by Company from time to time setting forth standards, specifications and procedures for the operation of Franchisees El Pollo Loco restaurant.

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11.2    Franchisee agrees that it is in the best interest of the business conducted at the Restaurant to prepare and serve food in the Restaurant only from ingredients which meet the product specifications as communicated by Company to Franchisee from time to time (the Specifications), and Franchisee further agrees that all products, equipment, goods, inventory and supplies used in connection with the Restaurant will comply with the Specifications. Furthermore, Franchisee shall not offer or sell any product, service or other item at the Restaurant except those approved in writing by the Company.

a.    All menu items shall be made in strict compliance with the Companys written recipes and requirements, which the Company may change from time to time by amendments to the Manual.

b.    All proprietary El Pollo Loco marinades, marinade mixes and marinated ingredients used in the preparation of the required and approved El Pollo Loco food products are unique. Their formulae and the process of their manufacture constitute trade secrets. Franchisee agrees to purchase such marinades, marinade mixes and marinated ingredients exclusively from the Company or, in the Companys sole discretion, from the Companys designated distributor. The right to purchase and use such marinades, marinade mixes and marinated ingredients is licensed to Franchisee pursuant to this Agreement, and such right is restricted to use in the franchise business at the Restaurant and solely for the term of this Agreement.

11.3    Throughout the term of this Agreement, Franchisee shall have successfully completed Companys initial training program and be actively engaged in the management and day-to-day operation of the Restaurant. The Restaurant shall be managed by not less than four (4) managers (which need not be Franchisee) who have successfully completed the Companys initial training program and have received the ServSafe certification and who will assume responsibility for the day-to-day management of the operations of the Restaurant, including the preparation of food products, accounting and the supervision and training of personnel. Each of these trained managers of the Restaurant shall devote at least forty (40) hours per week to management responsibilities and shall be at the Restaurant during open and operating hours for that amount of time. If Franchisee is a corporation, partnership, limited liability company or other legal entity which is not an individual (Entity), Franchisee must also appoint a general operations manager, who shall be acceptable to Company, shall own at least a ten percent (10%) equity in the Entity, and shall have successfully completed Companys initial training program, to supervise all franchise operations.

11.4    Franchisee acknowledges that it has received a copy of the Companys list of approved brands and distributors (the Approved Brands and Distributors List). The Company has consulted with the distributors set forth on such list and each distributor has agreed to offer products, equipment, goods, inventory, supplies or paper products which will comply with the Specifications. Such Approved Brands and Distributors List is furnished to Franchisee for Franchisees convenience only, and, except for the Companys proprietary products which must be purchased from the Company or its designated distributors pursuant to Section 11.2(b), Franchisee shall be entitled to purchase products, equipment, goods, inventory, supplies and paper products which comply with the Specifications from any other distributor offering such items; provided, however, that if Franchisee desires to purchase any products from any distributor not

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named on the Approved Brands and Distributors List, Franchisee shall first submit to the Company a written request for approval of any such distributor prior to Franchisees use of any such distributor. The Company shall have the right to require that its representatives be permitted to inspect the distributors facilities and that samples from the distributor be delivered either to the Company or to an independent laboratory designated by the Company for testing. Upon completion of Companys inspection and/or evaluation of the proposed distributor (or samples provided by such distributor), and upon submission of any additional information or data required by Company, Company shall promptly approve or reject such proposed distributor. The Company reserves the right, at its option, to reinspect the facilities and products of any such approved distributor or of any distributor on the Companys Approved Brands and Distributors List and to revoke its approval upon the distributors failure to continue to meet any of the Companys then-current Specifications and criteria. Nothing in the foregoing shall require the Company to approve any distributor. The Company agrees to evaluate any item which Franchisee is considering procuring to determine whether such item complies with the Specifications. No charge shall be made by the Company for the services of the Companys employees in connection with such evaluation; however, Franchisee shall reimburse the Company for amounts paid to independent laboratories or consultants chosen by the Company in its sole discretion to assist in such evaluation. All such amounts shall be set forth in a written invoice delivered to Franchisee by the Company. Franchisee shall reimburse the Company for the invoice amount within seven (7) days after the invoice has been delivered to Franchisee pursuant to Section 24.3 of this Agreement. The Approved Brands and Distributors List and any guide containing such list is proprietary information of El Pollo Loco and must be kept strictly confidential by Franchisee. Franchisee shall not copy, distribute, release or otherwise provide any third party with all or any part of the information contained in the Approved Brands and Distributors List or guide without first obtaining the prior written approval of the Company, which approval may be withheld in the Companys sole discretion.

11.5    As uniformity of appearance and public recognition are important to the financial success of Franchisee and the Company hereunder, Franchisee agrees that in connection with the operation of the Restaurant, Franchisee shall:

a.    Use only uniforms, menu boards, signs, cards, posters, notices, displays, decorations, table tents and other such advertising materials which are identical in appearance and quality to those furnished or approved by the Company. The Company may make available its menu-stock (pre-printed as to all matters other than menu prices), including specials and fe