ADVERTISING EXPENDITURES...........29 11.F. USE OF TRADEMARK REFERENCES AND APPROVAL............... OF FRANCHISEE'S MARKETING..............29 12. ADHERENCE TO UNIFORM STANDARDS....................................30 12.A. STANDARDS AND OPERATIONS MANUAL..........................30 12.B. CONFIDENTIALITY OF OPERATIONS MANUAL.....................32 12.C. INCORPORATION OF OPERATIONS MANUAL INTO AGREEMENT........32 12.D. MODIFICATIONS/UPDATES OF OPERATIONS MANUAL...............33 13. UNIT IMAGE AND OPERATION..........................................33 13.A. CONDITION AND APPEARANCE OF UNIT.........................33 13.B. UNIT MENU..................................................35 13.C. ADHERENCE TO APPROVED ITEMS..............................35 13.D. EXCEPTION PROCESS........................................36 13.E. PROMOTIONAL ALLOWANCES.....................................37 14. FRANCHISEE OPERATIONS.............................................37 14.A. MANAGEMENT...............................................37 14.B. SUFFICIENT WORKING CAPITAL.................................38 14.C. FILING OF OPERATIONS AND SALES REPORTS.....................38 14.D. EMPLOYEE DRESS AND CUSTOMER SERVICE......................38 14.E. COMPLIANCE WITH LAWS AND GOOD BUSINESS PRACTICES...........38 14.F. PAYMENT OF TAXES.........................................39 14.G. SALE OF PRODUCT..........................................39 14.H. COOPERATION..............................................39 14.I. INSURANCE................................................39 14.J. SUGGESTED RETAIL PRICES..................................40 15. ACCOUNTING, REPORTS AND FINANCIAL STATEMENTS......................41 15.A. ESTABLISHMENT OF ACCOUNTING SYSTEM.........................41 15.B. MAINTENANCE OF RECORDS....................................41 16. AUDITS AND INSPECTIONS............................................42 16.A. AUDITS...................................................42 16.B. RIGHT OF ENTRY AND INSPECTION............................42 17. TRANSFER, ASSIGNMENT AND REPURCHASE. .............................43 17.A. BY PRETZEL TIME............................................43 17.B. BY FRANCHISEE..............................................43 17.C. CONDITIONS FOR APPROVAL OF TRANSFER........................44 17.D. TRANSFER TO A WHOLLY-OWNED CORPORATION...................45 17.E. FORMATION OF A CORPORATION.................................46 17.F. DEATH OR DISABILITY OF FRANCHISEE..........................47 17.G. PRETZEL TIME'S FIRST RIGHT OF REFUSAL....................47 17.H. PUBLIC OR PRIVATE OFFERINGS..............................48 18. TERMINATION OF AGREEMENT BY FRANCHISEE............................49 18.A. FRANCHISEE'S RIGHT TO TERMINATE............................49 19. DEFAULT AND TERMINATION...........................................50 19.A. EXACT AND COMPLETE PERFORMANCE REQUIRED....................50 19.B. DEFAULT AND RIGHT TO CURE................................50 19.C. EXTENSION OF NOTICE........................................50 19.D. REPEATED BREACHES..........................................50 19.E. EVENTS OF DEFAULT - 30 DAYS NOTICE - CURABLE DEFAULTS....51 19.F. EVENTS OF DEFAULT - IMMEDIATE TERMINATION - NO RIGHT TO CURE............................................53 20. RIGHTS AND OBLIGATIONS OF PRETZEL TIME AND FRANCHISEE UPON TERMINATION OR EXPIRATION OF THE FRANCHISE..................................56 20.A. AMOUNTS OWED...............................................56 20.B. DISCONTINUANCE OF MARKS..................................56 20.C. RETURN OF MATERIALS......................................57 20.D. TELEPHONE COMPANY........................................57 20.E. CONFIDENTIAL INFORMATION.................................58 20.F. LEASING..................................................58 20.G. COVENANT NOT TO COMPETE..................................58 20.H. PRETZEL TIME'S RIGHT TO PURCHASE ASSETS OF THE UNIT........59 21. RELATIONSHIP OF THE PARTIES/INDEMNIFICATION.......................60 21.A. EXCLUSIVE RELATIONSHIP...................................60