EXHIBIT 10.3
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                     SPEAKING ROSES DEVELOPMENT CORPORATION
                               FRANCHISE AGREEMENT



















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                            Franchisee Name

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                            Franchise Location/Franchise Number

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                            Area Developer

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                            Date



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                                TABLE OF CONTENTS

Section                                                                     Page
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1.       GRANT OF FRANCHISE....................................................2
         1.1      Operation of Store...........................................2
         1.2      Limitations on Franchisee Sales..............................2
         1.3      No Other Distribution Channels...............................3
         1.4      Restrictions on Franchisor...................................3
         1.5      Retained Franchisor Rights...................................3
         1.6      No Exclusive Rights..........................................4
         1.7      Advertising Within Territory.................................5

2.       TERM AND RENEWAL......................................................5
         2.1      Initial Term.................................................5
         2.2      Renewal Terms................................................5

3.       FRANCHISOR'S DUTIES...................................................6
         3.1      Designs and Specifications...................................6
         3.2      Training.....................................................7
         3.3      Market Introduction Program..................................8
         3.4      Manual.......................................................8
         3.5      Supplier List................................................8
         3.6      Advertising Approval.........................................8
         3.7      Franchisor Inspection........................................8
         3.8      Advisory Assistance..........................................8
         3.9      Designee Performance.........................................8

4.       FEES..................................................................9
         4.1      Initial Franchise Fee........................................9
         4.2      Initial Franchise Fee Refund.................................9
         4.3      Royalty Fee..................................................9
         4.4      Monthly Advertising Obligations.............................10
         4.5      Payment Procedure...........................................10
         4.6      Gross Sales.................................................11

5.       REVENUE ALLOCATION FOR CARRY OUT ORDERS, DELIVERY, SPECIAL
            OCCASIONS AND REFERRAL ORDERS.....................................11
         5.1      Carry Out Orders, Delivery Orders and Special
                    Occasion Orders...........................................11
         5.2      Referral Obligation.........................................12
         5.3      Referral Fee................................................12

6.       REVENUE ALLOCATION FOR NATIONAL ACCOUNTS AND ALTERNATIVE SALES.......13
         6.1      National Account............................................13
         6.2      Alternative Sales...........................................13



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7.       CONSTRUCTION AND OPENING OF STORE....................................15
         7.1      Store Site and Lease Approval...............................15
         7.2      Actions Prior to Construction...............................17
         7.3      Construction Deadline.......................................18
         7.4      Thirty Day Notice...........................................18
         7.5      Market Introduction Activities..............................18

8.       TRAINING.............................................................18
         8.1      Initial Training Obligations................................18
         8.2      Designated Individual.......................................19
         8.3      Refresher Courses...........................................19
         8.4      Certified Floral Designer...................................20
         8.5      Charges for Certain Training................................20

9.       FRANCHISEE'S DUTIES..................................................20
         9.1      Importance of System Details................................20
         9.2      Responsibilities of Designated Individual...................21
         9.3      Responsibilities of Store Manager...........................21
         9.4      Responsibilities of General Manager and other
                    Support Personnel.........................................21
         9.5      Responsibilities of Certified Floral Designer...............22
         9.6      Store Operations............................................22
         9.7      Staffing....................................................22
         9.8      Annual Convention...........................................22
         9.9      Inspections.................................................22
         9.10     Store Order and Repair......................................22
         9.11     Product List................................................23
         9.12     Equipment and Product Purchases and Leases..................23
         9.13     Approval of Equipment and Product Selections................23
         9.14     Pricing.....................................................24
         9.15     Proprietary Marks on Products and Other Materials...........24
         9.16     Acquisition and Maintenance of Communications and
                    Information Systems.......................................24
         9.17     Refurbishing Requirements...................................27
         9.18     Right of Entry..............................................27
         9.19     Accounts Payable Requirements...............................27
         9.20     Entity Information..........................................28

10.      PROPRIETARY MARKS....................................................29
         10.1     Franchisor Representations..................................29
         10.2     Franchisee Obligations......................................30
         10.3     Franchisee Representations Regarding Proprietary Marks......32

11.      CONFIDENTIAL INFORMATION.............................................32
         11.1     Non-Disclosure Obligation...................................33
         11.2     Disclosure Injuries.........................................33

12.      CONFIDENTIAL OPERATING MANUALS.......................................33
         12.1     Franchisee Compliance with Manual...........................33



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         12.2     No Duplications.............................................34
         12.3     Manual Is Franchisor Property...............................34
         12.4     Revision of Manual..........................................34
         12.5     Maintenance of Manual.......................................34

13.      ACCOUNTING AND RECORDS...............................................34
         13.1     Presentation of Records.....................................34
         13.2     Monthly Reports.............................................34
         13.3     Quarterly Reports...........................................35
         13.4     Annual Reports..............................................35
         13.5     Other Reports...............................................35
         13.6     Right of Inspection.........................................35

14.      ADVERTISING..........................................................36
         14.1     Fund........................................................36
         14.2     Franchise Advertising Obligations...........................36
         14.3     Local Advertising Obligations...............................37
         14.4     Operation of National Fund..................................38
         14.5     Franchisor Promotional Materials............................40
         14.6     Samples.....................................................40
         14.7     Telephone Directory Listings................................40
         14.8     Coupons and Discounts.......................................40
         14.9     Website Advertising.........................................40
         14.10    Ownership of Copyrights.....................................41

15.      INSURANCE............................................................41
         15.1     Procurement and Maintenance of Insurance....................41
         15.2     Effect of Franchisor Insurance..............................42
         15.3     Certificates of Insurance...................................42
         15.4     Failure to Procure or Maintain Insurance....................42
         15.5     Changes in Insurance Requirements...........................42

16.      TRANSFERS OF INTERESTS...............................................43
         16.1     Transfer by Franchisor......................................43
         16.2     Transfer by Franchisee......................................43
         16.3     Offer of Securities of Franchisee...........................45
         16.4     Right of First Offer........................................46
         16.5     Transfers Upon Death or Permanent Disability................47
         16.6     Limited Exceptions..........................................48
         16.7     Non-Waiver of Claims........................................48
         16.8     Bankruptcy..................................................48

17.      DEFAULT AND TERMINATION..............................................48
         17.1     Franchisee Default..........................................48
         17.2     Default Events..............................................49
         17.3     Default Rights..............................................51




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18.      OBLIGATIONS UPON TERMINATION OR EXPIRATION...........................51
         18.1     Franchise Operations........................................51
         18.2     System Methods and Proprietary Marks........................51
         18.3     Assumed Names...............................................51
         18.4     Assignment of Lease.........................................52
         18.5     Entry by Franchisor.........................................52
         18.6     No Descriptive or Confusing Operations......................52
         18.7     Payment of Sums Due.........................................52
         18.8     Transfer of Telephone Listings..............................52
         18.9     Post-Termination Covenants..................................53
         18.10    Return of Manual............................................53
         18.11    Equipment, Inventory and Related Materials..................53
         18.12    Execution of Documents......................................53
         18.13    Payment of Costs and Damages................................53

19.      COVENANTS............................................................53
         19.1     Best Efforts................................................53
         19.2     Operation of Business.......................................53
         19.3     Competitive Activities......................................54
         19.4     Exception...................................................55
         19.5     Affiliate and Management Competitive Activities.............55
         19.6     Independent Covenants.......................................55
         19.7     Franchisor's Rights Regarding Covenants.....................55
         19.8     No Defense to Enforcement...................................55
         19.9     Anti-Terrorism Laws.........................................55
         19.10    Irreparable Injury..........................................56

20.      TAXES, PERMITS, AND INDEBTEDNESS.....................................56
         20.1     Payment when Due............................................57
         20.2     Bona Fide Dispute Exception.................................57
         20.3     Compliance with Laws........................................57
         20.4     Notice of Suit..............................................57

21.      INDEPENDENT CONTRACTOR AND INDEMNIFICATION...........................57
         21.1     No Fiduciary Relationship...................................57
         21.2     Independent Contractor Status...............................57
         21.3     No Franchisor Obligations...................................58
         21.4     Indemnification.............................................58

22.      APPROVALS AND WAIVERS................................................58
         22.1     Franchisor Approvals and Consents...........................58
         22.2     No Liability for Waiver or Consent..........................58
         22.3     No Waiver by Implication....................................58

23.      NOTICES..............................................................59

24.      ENTIRE AGREEMENT AND AMENDMENT.......................................59




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25.      SEVERABILITY AND CONSTRUCTION........................................59
         25.1     Severability................................................59
         25.2     No Benefits.................................................59
         25.3     Stricken Provisions.........................................60
         25.4     Captions....................................................60
         25.5     Survival....................................................60

26.      APPLICABLE LAW AND DISPUTE RESOLUTION................................60
         26.1     Applicable Law..............................................60
         26.2     Mediation...................................................60
         26.3     Arbitration.................................................61
         26.4     Additional Terms............................................64
         26.5     No Waiver of Injunctive Relief..............................65

27.      ACKNOWLEDGMENTS......................................................65
         27.1     Independent Investigation...................................65
         27.2     Copies of Documents.........................................65
         27.3     Franchisee Understandings...................................65

APPENDIX A to Speaking Roses Development Corporation Franchise Agreement.....A-1

APPENDIX B to Speaking Roses Development Corporation Franchise Agreement.....B-1

APPENDIX C to Speaking Roses Development Corporation Franchise Agreement.....C-1

APPENDIX D to Speaking Roses Development Corporation Franchise Agreement.....D-1




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                     SPEAKING ROSES DEVELOPMENT CORPORATION
                               FRANCHISE AGREEMENT


         THIS FRANCHISE AGREEMENT (this "Agreement") is made and entered into on
________  20____,  between  SPEAKING  ROSES  DEVELOPMENT  CORPORATION,   a  Utah
corporation with its principal  offices at 545 West 500 South,  Bountiful,  Utah
84010  ("Franchisor"),  and  ________________________________________  a  (check
appropriate box) sole  proprietorship,  corporation,  limited liability company,
partnership, with its principal offices at  ____________________________________
("Franchisee").

                                    RECITALS:

         A. Franchisor and/or its affiliates own a distinctive format and system
(the  "System")  relating to the  establishment  and  operation of retail floral
businesses  that (i)  operate at stores  displaying  Franchisor's  interior  and
exterior trade dress  ("Stores"),  (ii) utilize certain  proprietary  technology
(including,  without limitation,  under pending and issued patents),  processes,
know  how,  trade  secrets  and  methods  to emboss  images on floral  and other
products  (the  "Technology"),  (iii) operate  under the  Proprietary  Marks (as
defined  below) (iv) and that are primarily  engaged in the sale of high quality
fresh cut flowers,  plants, gifts and complementary and compatible products that
are embossed with  customized  images,  and other gift items and related  floral
product and services  designated  and/or  approved in writing by Franchisor  for
sale in Stores (together, the "Products").

         B. The Products include select varieties of flowers, plants and related
merchandise  that (i)  Franchisor  designates  for sale in all  Stores and which
incorporate specialized products,  equipment,  supplies, packaging materials and
fresh floral products that use or display the Proprietary Marks, (ii) facilitate
the use of the  Technology or (iii) result from certain  business  relationships
which are in each case  designated by, and that must be acquired from Franchisor
or  its   affiliates  or  designers   ("Core   Products"),   and  other  popular
complementary  and  compatible  merchandise  and gift  items  designated  and/or
approved in writing by Franchisor for sale in Stores ("Accessory Products").

         C. The distinguishing  characteristics  of the System include,  without
limitation,  (i) the Technology;  (ii) distinctive  interior and exterior decor,
color schemes,  designs, and furnishings;  (iii) product purchasing and sourcing
procedures;  (iv) uniform standards,  specifications and procedures for managing
inventory and quality control; (v) training and assistance; and (vi) advertising
and promotional  programs;  all of which may be changed,  improved,  and further
developed by Franchisor from time to time.

         D.  Franchisor  identifies  the System by means of certain trade names,
service marks,  trademarks,  logos,  specialized coloring schemes,  emblems, and
other  indicia  of origin,  including  but not  limited  to the marks  "Speaking
Roses",  and a stylized logo incorporating the phrase "Speaking Roses", and such
other trade names,  service marks and trademarks as are now designated  (and may
hereinafter  be designated by Franchisor in writing) for use in connection  with
the System (the "Proprietary Marks").

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         E.  Franchisor  continues  to develop,  use, and control the use of the
Proprietary Marks to identify for the public the source of services and products
marketed  thereunder  and  under  the  System  (including  through  the  use and
application of the Technology),  and to represent the System's high standards of
quality, appearance, and service.

         F.  Franchisee  desires  to enter  into a  business  relationship  with
Franchisor  under  which  Franchisee  will  operate a Store under the System and
wishes to obtain a franchise  from  Franchisor  for that purpose,  as well as to
receive the training and other  assistance  provided by Franchisor in connection
therewith.

         G.   Franchisee   understands  and   acknowledges   the  importance  of
Franchisor's high standards of quality,  cleanliness,  appearance,  and service,
the uniqueness of the Technology and the Proprietary Marks, and the necessity of
operating  the business  franchised  hereunder in conformity  with  Franchisor's
standards and specifications and in accordance with the System.

         NOW, THEREFORE, in consideration of the undertakings and commitments of
each party to the other party set forth herein,  the parties hereto hereby agree
as follows:

1.       GRANT OF FRANCHISE
         ------------------

         1.1 Operation of Store.  Franchisor grants to Franchisee the right, and
Franchisee  undertakes the obligation,  to operate a Store under and pursuant to
the System and the  Proprietary  Marks at the  location  specified in Appendix A
(the  "Approved  Location"),  and to  offer  and sell  Products  at and from the
Approved  Location in accordance with and subject to the limitations  imposed by
Section 1.2 below and the further  provisions of this  Agreement  (collectively,
the "Franchised Business").  Franchisee shall not relocate the Store without the
express prior  written  consent of  Franchisor.  If, at the time of execution of
this Agreement, a location for the Store has not been obtained by Franchisee and
approved by Franchisor,  Franchisee shall lease,  sublease or acquire a site for
the  Store,  subject  to  Franchisor's  approval  and  in  accordance  with  the
provisions of Sections 7.1 below.  Franchisee  acknowledges that (i) approval of
Franchisee's proposed location under this Section 1.1 or pursuant to Section 7.1
below  does  not  constitute  any  assurance,   representation  or  warranty  of
Franchisor of any kind, including with respect to the financial viability of the
Store or of the Franchised  Business and (ii) except as provided in Sections 1.4
and 1.5 below  with  respect  to  certain  restrictions  that  apply  within the
Territory (as defined in Section 1.2.2 below),  the franchise and rights granted
Franchisee herein are non-exclusive.

         1.2  Limitations on Franchisee  Sales.  Franchisee's  rights under this
Agreement  shall  be  limited  to  offering  and  selling  the  Products,  which
Franchisee  shall  purchase,  stock and  provide to  customers  as  required  by
Franchisor in accordance with Sections 9.9 through 9.12 below, from the Approved
Location to final consumers via:

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              1.2.1  personal  carry  out from the  Store  by  retail  customers
         ("Carry Out Orders");

              1.2.2 delivery service to locations within a designated geographic
         area in which the Approved Location is located as described in Appendix
         A (the "Territory") by Franchisee and/or the use of a local third-party
         provider of delivery  services  ("Delivery"),  and  delivery and floral
         embossing and arrangement  services provided at or to customers' homes,
         offices,  and other locations for special events and functions (such as
         weddings,  funerals, and parties)  (collectively,  "Special Occasions")
         that are held at sites within the Territory. In performing all Delivery
         and Special  Occasions  activities,  Franchisee  shall  comply with the
         terms,  conditions,   and  standards  (a)  stated  in  this  Agreement,
         including,  but not  limited  to,  the  insurance  and  indemnification
         obligations in Sections 15, and 22.3);  and (b) as Franchisor may, from
         time to time,  set forth in the  Manual  (as  defined  in  Section  3.4
         below),  including,  without  limitation,  guidelines and  requirements
         relating  to any  vehicles  to be used  for the  Delivery  and  Special
         Occasions activities; and

              1.2.3 sales and/or  fulfillment  and/or delivery services pursuant
         to (i) National Accounts,  as described in Section 5 below, referred by
         Franchisor  to  Franchisee  as  set  forth  in  such  Section  5,  (ii)
         Alternative  Sales  made  by  Franchisor  (or  Franchisor's   designee,
         affiliate  or  contract  partner),  as  described  in  Section 6 below,
         referred by Franchisor to Franchisee as set forth in such Section 6, or
         (iii) other orders  directed by Franchisor (or  Franchisor's  designee,
         including other  franchisees of Franchisor) to Franchisee,  as provided
         in Section 6 below.

         1.3 No Other Distribution Channels. Except as set forth in Section 1.2,
Franchisee shall not,  without the prior written approval of Franchisor,  engage
in any  other  type of sale of,  offer to sell,  or  distribution  of  Products,
including, but not limited to (i) selling,  distributing or otherwise providing,
any Products to third parties at wholesale, or for resale or distribution by any
third party, or (ii) selling, distributing or, except as permitted under Section
14.9,  otherwise providing any Products through catalogs,  mail order, toll free
numbers  for  delivery,  or  electronic  means  (such as but not  limited to the
Internet).  Without the prior  written  approval of  Franchisor  and,  except as
otherwise  specifically  set forth herein,  Franchisee shall also not conduct or
participate in any advertising and promotional  activities that are directed to,
or which target, potential customers located outside of the Territory.

         1.4  Restrictions  on  Franchisor.  During the term of this  Agreement,
provided that  Franchisee is in compliance  with this  Agreement,  and except as
otherwise  set forth  herein,  Franchisor  shall not  establish,  or  franchise,
license or permit another to establish, a Store within the Territory;  provided,
however,  Franchisor and its affiliates  retain the rights  described in Section
1.5.

         1.5 Retained  Franchisor  Rights.  Franchisor  retains the right, among
others,  in any manner and on any terms and  conditions  that  Franchisor  deems

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desirable or advisable,  and without granting  Franchisee any rights therein, to
engage in the following activities and exercise the following rights:

              1.5.1 Franchisor may own, acquire,  establish and/or operate,  and
         license  others to establish  and operate,  stores  (including  Stores)
         selling the Products at any locations outside the Territory.

              1.5.2 Franchisor may own, acquire,  establish and/or operate,  and
         license others to establish and operate,  businesses under  proprietary
         marks  other  than the  Proprietary  Marks and  systems  other than the
         System,  whether such  businesses  are similar or different from Stores
         operating  under the  System,  at any  location  within or outside  the
         Territory;  provided,  that  Franchisor  shall not own,  acquire and/or
         operate,  or license  others to establish or operate any business  that
         more than 20% of its  product mix or  offerings  consist of products or
         offerings substantially similar to the products and services offered by
         Stores  under the System  unless  such  business  shall have first been
         subject to the  Franchisee  Purchase  Right,  as  described  in Section
         1.5.2.2.

                     1.5.2.1  Franchisor's rights under this Section 1.5.2 shall
              include the right to acquire one or more retail floral and/or gift
              businesses  that are the same or similar in material  respects to,
              the Stores then operating under the System ("Acquired Stores").

                     1.5.2.2  Franchisee  shall have the right to purchase,  and
              Franchisor  shall be obligated to offer  Franchisee  the option to
              purchase  for a  period  of sixty  (60)  days  after  Franchisor's
              acquisition  of the Acquired  System,  any Acquired  Store that is
              operated  by a  licensee,  franchise  or similar  party  under the
              Acquired Stores and within the Territory (the "Franchisee Purchase
              Right").  The purchase  price for any Acquired  Store  acquired by
              Franchisee's exercise of the Franchisee Purchase Right shall be an
              amount equal to Franchisor's purchase price for the Acquired Store
              (as  determined  in good faith by  Franchisor  and including a pro
              rata position of Franchisor's  acquisition  costs for the Acquired
              Store,  and shall be paid by the Franchisee at the closing thereof
              (which shall not be later than 60 days after Franchisee  exercises
              the  Franchise  Purchase  Right)  in  cash  or  upon  other  terms
              acceptable  to  Franchisor.  If  Franchisee  does not exercise the
              Franchisee  Purchase  Right in a  timely  manner,  Franchisor  may
              license,  franchise or enter into a similar  relationship for each
              unit of the Acquired Stores not purchased with a third party under
              any trade name or trademarks other than the Proprietary Marks, may
              dispose of the Acquired  Stores in the  Territory not so purchased
              to a third party, or may own,  operate or enter into an operations
              plan itself or through a related  party,  so long as the  Acquired
              Stores are not operated under the Proprietary Marks.

         1.6 No Exclusive  Rights.  This Agreement does not grant Franchisee the
exclusive  right to sell or deliver  Products in the Territory,  and (without in
any way otherwise  limiting  Franchisor's  rights under Section 1.5 above) other

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Stores, including those operated by Franchisor (and/or its affiliates) and other
franchisees  and licensees of Franchisor in connection  with  Delivery,  Special
Occasions, National Accounts, and Alternative Sales activities.

         1.7 Advertising Within Territory. Nothing in this Agreement shall limit
or prohibit Franchisee under the System from (as approved by Franchisor pursuant
to the Manual or otherwise in writing) creating,  placing,  and/or distributing,
advertising  and promotional  materials in media  distributed in, or directed to
prospective customers located within, the Territory.

2.       TERM AND RENEWAL
         ----------------

         2.1 Initial Term. The term of this Agreement shall commence on the date
first set forth above (the "Commencement Date") and, unless sooner terminated in
accordance  with the  provisions  hereof,  shall expire ten (10) years from such
Commencement Date (the "Initial Term").

         2.2 Renewal  Terms.  Following  the  expiration  of the  Initial  Term,
Franchisee  may, at its option,  renew its rights and obligations to operate the
Store  for up to two  (2)  additional  terms  of five  (5)  years  each,  if the
following conditions are met prior to each renewal:

              2.2.1   Franchisee   shall  give  Franchisor   written  notice  of
         Franchisee's  election  to renew not less than six (6)  months nor more
         than twelve (12)  months  prior to the end of the Initial  Term and the
         period of each renewal,  if applicable.  Unless  otherwise  noted,  the
         periods  "term" shall mean the Initial Term as set forth in Section 2.1
         and any applicable renewal terms under this Section 2.2.

              2.2.2  Franchisee shall not be in default of any provision of this
         Agreement,  any amendment or restatement hereof (or replacement thereof
         as  provided  in  Section  2.2.6),   or  any  other  agreement  between
         Franchisee and Franchisor or its affiliates,  approved suppliers of the
         System, or the lessor of the premises of the Store, if applicable; and,
         in  the  reasonable  judgment  of  Franchisor,  Franchisee  shall  have
         complied  substantially  with  all the  terms  and  conditions  of this
         Agreement,  other agreements between Franchisor and Franchisee, as well
         as the operating standards prescribed by Franchisor and as set forth in
         the Manual, as defined below, during the term hereof.

              2.2.3  Franchisee  shall have  satisfied all monetary  obligations
         owed by  Franchisee  to  Franchisor  and its  affiliates,  the approved
         suppliers  of the System,  and any lessor of the premises of the Store,
         and shall have timely met those obligations throughout the term of this
         Agreement.

              2.2.4   Franchisee  shall  present  evidence  to  Franchisor  that
         Franchisee has the right to remain in possession of the premises of the
         Store for the duration of the renewal term, or shall obtain approval by
         Franchisor  of a new  location  for the Store for the  duration  of the
         renewal term.

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              2.2.5   Franchisee   shall  make  or  provide  for,  in  a  manner
         satisfactory  to  Franchisor,   such  remodeling,   refurbishment   and
         modernization  of the  Store  as  Franchisor  may  reasonably  require,
         including,  without  limitation,  renovation of the exterior facade (if
         any), signs,  interior furnishings,  equipment,  fixtures and decor, to
         reflect the then-current  standards and image of the System, as well as
         such upgrades as Franchisor may require to bring the computer  hardware
         and software,  the equipment related to the use of the Technology,  and
         any related  peripheral  equipment,  into conformity with  Franchisor's
         then-current standards for new franchisees.

              2.2.6 Franchisee shall execute  Franchisor's  then-current form of
         franchise agreement,  which agreement shall supersede this Agreement in
         all respects  (except for the number of remaining  renewal  terms which
         shall be governed by this Agreement), and the terms of which may differ
         from the terms of this Agreement,  including, without limitation, as to
         a higher  or  lower  percentage  royalty  fee or as to an  increase  or
         decrease in the advertising  contributions and expenditures;  provided,
         however,  that  Franchisee  shall  not be  required  to pay an  initial
         franchise fee or a renewal fee.

              2.2.7  Franchisee  and  Franchisor  shall execute a mutual general
         release,  in a form prescribed by Franchisor,  by which  Franchisor and
         Franchisee  release any and all claims each has against the other,  and
         their  respective   affiliates,   officers,   directors,   agents,  and
         employees,  up to and through the date of the  renewal;  provided  that
         Franchisor's release may exclude monetary obligations,  indemnification
         obligations, and such other obligations that, by their terms or intent,
         are  designed  to  survive  the   termination  or  expiration  of  this
         Agreement.

              2.2.8 Franchisee and its personnel shall comply with  Franchisor's
         then-current  qualification,  training and certification  requirements,
         for which  Franchisee  may be required to pay training or other fees or
         costs.

3.       FRANCHISOR'S DUTIES
         -------------------

         3.1 Designs and Specifications.  Franchisor shall provide, at no charge
to   Franchisee,   standard  plans  and   specifications   for  the  design  and
configuration of a prototype Store,  including  exterior and interior design and
layout, fixtures, furnishings,  equipment, and signs. Such prototype plans shall
not  contain  the  requirements  of any  federal,  state or local  law,  code or
regulation,  including  those  concerning  the Americans with  Disabilities  Act
("ADA")  or  similar  rules  governing  public   accommodations   or  commercial
facilities  for  persons  with  disabilities,  nor shall such plans  contain the
requirements of, or be used for,  construction  drawings or other  documentation
necessary  to  obtain  permits  or  authorizations  to build a  specific  Store.
Franchisee shall, at Franchisee's expense,  adopt and modify the prototype plans
and  specifications to the Store's  location,  as provided in Section 5.2 hereof
subject to Franchisor's  approval;  except that Franchisor will not unreasonably
withhold approval of special plans and specifications,  prepared at Franchisee's
expense,  when the Approved Location will not accommodate  Franchisor's standard
plans and  specifications,  as long as  Franchisee's  plans  and  specifications
conform to Franchisor's general design criteria.

                                       6
<PAGE>

         3.2  Training.  Subject  in all cases to the  provisions  of  Section 8
hereof,  Franchisor  shall  provide  Franchisee  with  the  following  training,
programs and classes:

              3.2.1 Prior to the opening of a Store,  Franchisor  shall  provide
         (subject to Franchisee's  compliance  with the payment  requirements of
         Section 3.2.5 below) its initial  training  program for Franchisee (or,
         if Franchisee is other than an individual,  the Designated  Individual,
         as defined in Section 9.2 below)  and,  as may be required  pursuant to
         Section 8 below,  the Store Manager  and/or  General  Manager (as those
         terms are defined in Sections 9.3 and 9.4 below).  Franchisor shall not
         be obligated to train more than three (3) individuals  pursuant to this
         Section  3.2.1 or  conduct  more  than  one  training  program  for the
         individuals  described  in this  Section  3.2.1.1  but may, in its sole
         discretion,  request that Franchisee train additional persons or attend
         additional training sessions.

              3.2.2 If Franchisee's trained Designated Individual, Store Manager
         and/or General  Manager cease to be employed by Franchisee,  Franchisor
         shall  provide  (subject to  Franchisee's  compliance  with the payment
         requirements  of Section 3.2.5 below) some or all, as Franchisor  deems
         appropriate,  of  its  initial  training  program  to  the  replacement
         personnel,  as described in Section 8.3 below.  Under no  circumstances
         shall   Franchisor   be   obligated   to  train  more  than  three  (3)
         representatives   of  Franchisee  during  any  individual   replacement
         training  program  under this  Section  3.2.2 or conduct  more than one
         training program for the individuals described in this Section 3.2.2.

              3.2.3  Franchisor  or its  designee  shall  recommend  (subject to
         Franchisee's  compliance with the payment requirements of Section 3.2.5
         below)  a floral  design  training  or  certification  program  for the
         Certified Floral Designer, as defined in Section 8.

              3.2.4  Franchisor  shall provide such ongoing  training as it may,
         from time to time, deem appropriate, and may from time to time, provide
         Franchisee with materials for use in the training of Franchisee's sales
         associates. Franchisor shall be responsible for the cost of instruction
         and  materials  for such  training,  subject  to the terms set forth in
         Sections 3.2.5 below.

              3.2.5  Franchisee  shall  (i)  pay to  Franchisor  the  sum of Two
         Thousand Five Hundred  Dollars  ($2,500) for the training  described in
         Section 3.2.1 upon the execution of this Agreement, (ii) pay Franchisor
         the sum of Two Thousand Five Hundred Dollars ($2,500) for each training
         session   described  in  Section  3.2.2  within  twenty  (20)  days  of
         Franchisor's  demand  therefor,  and (iii) pay to  Franchisor,  or to a
         party  designated by  Franchisor,  the sum of One Thousand Five Hundred
         Dollars ($1,500) for each training or certification  session  described
         in  Section  3.2.3  within  twenty  (20)  days of  Franchisor's  or its
         designee's demand therefor. The training,  certification and class fees
         described in this Section 3.2.5 may be increased or decreased from time
         to time by Franchisor  upon written notice to Franchisee,  including as
         set  forth in the  Manual.  In  addition  to the fees set forth in this
         Section 3.2.5,  Franchisee shall be responsible for, and shall pay, all
         costs  and  expenses  of  the  parties   attending   the  training  and
         certification programs on behalf of Franchisee,  including all costs of
         transportation,  lodging, meals and wages for such individuals (and, in

                                       7
<PAGE>

         the case of the  Certification  program described in Section 3.2.3, the
         costs of the  trainee's  floral  supplies).  All training  sessions and
         classes described in this Section 3.2 shall be held in such location or
         locations as  Franchisor  (or in the case of the programs  described in
         Section 3.2.3, Franchisor's designee) shall designate from time to time
         in writing, including as set forth in the Manual.

         3.3 Market Introduction Program. Franchisor shall provide, at no charge
to Franchisee,  information  regarding  Franchisor's Market Introduction Program
(as  defined in Section  7.5 below) and such  on-site  pre-opening  and  opening
supervision and assistance and services as Franchisor deems advisable.

         3.4  Manual.  Franchisor  shall  provide  Franchisee,  at no  charge to
Franchisee,  on loan, one copy of the confidential  operations manuals and other
manuals,  instructional  materials,  and  written  policies  and  correspondence
relating to the System (collectively, the "Manual"), as more fully described in,
and subject to the provisions of, Section 12 hereof.

         3.5 Supplier List. Franchisor shall provide Franchisee, at no charge to
Franchisee,  a list of the  designated  and/or  approved  suppliers  of the Core
Products and the Accessory  Products,  which  Franchisor  may modify,  update or
amend from time to time.

         3.6 Advertising  Approval.  Franchisor shall review, and shall have the
right to approve or disapprove pursuant to Section 14 below, all advertising and
promotional materials which Franchisee proposes to use.

         3.7  Franchisor   Inspection.   Franchisor   shall,  at  no  charge  to
Franchisee,  inspect and  approve the Store for opening  prior to the opening of
the Store if it is the first  Store to be  opened  by  Franchisee,  or any other
Speaking Roses  franchisee  that controls,  is controlled by, or is under common
control with Franchisee (a "Franchisee Affiliate"). If the Store is a subsequent
Store of Franchisee or a Franchisee  Affiliate,  Franchisor  may conduct such an
inspection. Franchisee shall not commence operation of the Store until receiving
such  approval  from  Franchisor.  Franchisor  shall seek to  maintain  the high
standards of quality, appearance, service, and cleanliness of the System, and to
that end may conduct, as it deems advisable,  periodic  inspections of the Store
and may provide  evaluations  of the Products sold and services  rendered by the
Franchised Business.

         3.8  Advisory  Assistance.  Franchisor  will  provide,  at no charge to
Franchisee,  periodic and continuing advisory assistance to Franchisee as to the
operation  and  promotion of the  Franchised  Business,  including  required and
suggested  inventories  for the  Products,  new  developments  in  Products  and
marketing and management techniques.

         3.9  Designee  Performance.  Franchisee  acknowledges  that any duty or
obligation  imposed on  Franchisor  by this  Agreement  may be  performed by any
distributor,  designee,  employee,  or agent of  Franchisor,  as Franchisor  may
direct.

                                       8
<PAGE>

4.       FEES
         ----

         4.1 Initial  Franchise  Fee. The initial  franchise  fee due under this
Agreement  is set forth on  Appendix A hereto  ("Initial  Franchise  Fee").  The
Initial  Franchise  Fee is due  and  payable  in  full  upon  execution  of this
Agreement.

         4.2 Initial  Franchise Fee Refund.  The Initial  Franchise Fee is fully
earned when paid and is  non-refundable  in consideration of the  administrative
and other  expenses  incurred by Franchisor  in granting this  franchise and for
Franchisor's lost or deferred  opportunity to franchise to others in and for the
Territory and otherwise.  Franchisor shall refund to Franchisee, within ten (10)
days of the  satisfaction  of one of the two  conditions  specified  in Sections
4.2.1 and 4.2.2, an amount equal to fifty percent (50%) of the Initial Franchise
Fee actually  paid by  Franchisee  less (a) expenses  incurred by  Franchisor in
providing training or site selection services to Franchisee, and (b) any fees or
commissions Franchisor paid to brokers or sales agents on account of the sale by
Franchisor  to  Franchisee  of the  franchise  rights  granted  pursuant to this
Agreement  (other than to the Area Developer,  as defined in Section 27), if one
of the following two circumstances is met:

              4.2.1  Franchisor  terminates this Agreement  because  Franchisee,
         and/or any other person  associated with Franchisee and who is required
         to  complete a  training  or  certification  program  under  Section 8,
         despite  diligent  efforts,  is unable to  complete  such  training  or
         certification programs to Franchisor's satisfaction.

              4.2.2  Franchisee  terminates  this  Agreement  because,   despite
         Franchisee's  diligent  efforts:  (a) it has not  been  able to  obtain
         Franchisor's  approval  for an  Approved  Location  within one  hundred
         twenty (120) days after the Commencement Date, or (b) Franchisee is not
         able to obtain the consents and approvals  necessary for the opening of
         the store  within one  hundred  eighty  (180) days of the  Commencement
         Date.

         -----------------------------------------------------------------
         Initials of Franchisee Regarding Refund Terms:
         _________     _____________ (Title)
         -----------------------------------------------------------------

         4.3  Royalty  Fee.  For each month  during  the term of this  Agreement
(including,  without limitation, any renewal term hereof),  Franchisee shall pay
to  Franchisor  a five percent  (5%)  continuing  royalty fee based on the Gross
Sales (as such term is defined in Section  4.6 below) of and for the  Franchised
Business (the "Royalty Rate"):

              4.3.1 If Franchisee  (a) has a minimum of five (5) Stores open and
         in operation (excluding the Store operated pursuant to this Agreement),
         and  (b) in  Franchisor's  sole  determination  satisfies  Franchisor's
         standards  relating to support services and staffing for  multiple-unit
         operators  as  described  in Section  4.3.3,  the Royalty Rate for this
         Store shall be reduced to four  percent  (4%) and,  subject to Sections

                                       9
<PAGE>

         2.2.6  or  4.3.2,  shall  remain  at such  reduced  percentage  for the
         remainder of the term of this Agreement.

              4.3.2 If at any time,  (a) the total  number of Stores open and in
         operation by Franchisee (including pursuant to this Agreement) drops to
         five (5) or  fewer,  and/or  (b) in  Franchisor's  sole  determination,
         Franchisee  ceases to comply with its  obligations to maintain  service
         and  support   staff  that   satisfies   Franchisor's   standards   for
         multiple-unit  operators  as set forth in the Manual or other  writings
         from  Franchisor,  then the  Royalty  Rate for the  Store  operated  by
         Franchisee  pursuant to this  Agreement  shall increase to five percent
         (5%)  effective  as  of  the  month  immediately   following  the  time
         Franchisee ceased to maintain the conditions set forth in Section 4.3.1
         for the rate  reduction,  and the  Royalty  Rate for each  Store  shall
         remain at that  rate for the  remainder  of the term of each  Franchise
         Agreement  for each  Store of  Franchisee;  except  that if  Franchisee
         regains  compliance  with the  conditions for the rate  reduction,  the
         Royalty Rate shall again be determined in accordance with Section 4.3.1
         above.

         4.4 Monthly Advertising Obligations.  For each month during the term of
this Agreement,  Franchisee shall submit, expend, and contribute its Advertising
Obligations  (as defined in Section  14.2) in such  amounts and  proportions  as
Franchisor may require and approve pursuant to Section 14.

         4.5 Payment  Procedure.  Unless otherwise provided herein, all payments
to be made to  Franchisor  under this  Section 4 shall be paid by the  fifteenth
(15th) day after each month by  pre-authorized  and automatic  electronic  funds
transfer,  or such other means as Franchisor may specify from time to time, to a
bank account designated by Franchisor. Franchisee shall execute (i) Franchisor's
current  form of  "Authorization  Agreement  for  Prearranged  Payments  (Direct
Debits)," a copy of which is attached to this  Agreement as Appendix D, and (ii)
such other agreements as shall be necessary to authorize Franchisor's processing
of Franchisee's credit or debit card transactions,  and, except as authorized by
Franchisor  in  writing,  shall not  amend,  modify,  revoke or  terminate  such
authorizations  during the term of this Franchise  Agreement.  Concurrently with
such payments,  Franchisee shall deliver to Franchisor any reports or statements
required under Sections 13.2 and 14 hereof.

              4.5.1 Any payment or report not actually received by Franchisor on
         the date  specified for delivery  shall be deemed overdue and, if there
         are insufficient  funds in Franchisee's  account to cover  Franchisee's
         obligations  under this Agreement,  any amounts unpaid by Franchisee on
         such  date  shall  be  deemed  overdue.  If  any  payment  is  overdue,
         Franchisee  shall pay  Franchisor,  in addition to the overdue  amount,
         interest on such overdue amount (and unpaid interest  thereon) from the
         date it was due until  paid,  at the rate which is the lower of (i) one
         percent  (1%) per month,  or (ii) the maximum  rate  permitted  by law.
         Franchisor  shall be entitled to such interest in addition to any other
         remedies Franchisor may have hereunder.

                                       10
<PAGE>

              4.5.2  Franchisee  shall  maintain  (i) in the account  from which
         Franchisee's  electronic  transfer  of funds are made  pursuant to this
         Section  4.5,  a  balance  that  is  sufficient  to  meet  Franchisee's
         estimated payment obligations for royalties and Advertising Obligations
         for the next month, and (ii) in a segregated  account or accounts owned
         by  Franchisee,   an  amount  sufficient  in  Franchisor's   reasonable
         determination  (and which shall not exceed two (2) months'  anticipated
         operating  expenses for the Store) to provide for an operating  reserve
         for the Store (the "Operating Reserves").

              4.5.3  Franchisor  shall be  entitled to demand  payment  from the
         Operating  Reserves of any amounts due but not paid  Franchisor  or its
         designated  suppliers or affiliates.  Any such payment demands shall be
         satisfied by Franchisee  within three (3) business days of Franchisee's
         receipt of demand  therefore.  If  Franchisee  is  obligated to use any
         portion  of the  Operating  Reserve  for the  payment  of  such  unpaid
         amounts,  Franchise  shall,  within ten (10) business days of such use,
         deposit  into the  Operating  Reserve  account an amount  equal to such
         expended  Operating  Reserves.  Upon  Franchisee's  written  request to
         Franchisor  not  earlier  than  the  first  annual  anniversary  of the
         Commencement  Date,  Franchisor may, in its sole discretion,  authorize
         Franchisee  to decrease or terminate  Franchisee's  Operating  Reserves
         obligation hereunder.

              4.5.4  Franchisor  may  modify,  upgrade or  otherwise  update the
         payment  procedures  described in this Section 4.5 (pursuant to changes
         in the POS, as described in Section  9.17, or otherwise) to (i) utilize
         or employ  changes in  technology,  banking  procedures or  transaction
         processing,  (ii)  provide  for  "real-time"  (or other  than  monthly)
         reconciliations   of  the  amounts   payable  to  Franchisor  (and  its
         affiliates)  by  Franchisee  or payable  to  Franchisee  by  Franchisor
         hereunder, or (iii) improve the accuracy,  reliability or efficiency of
         the System and its  financial  reporting  functions.  Franchisor  shall
         provide  Franchisee with notice of, and reasonable time to comply with,
         any such modification, upgrade or update.

         4.6 Gross  Sales.  As used in this  Agreement,  the term "Gross  Sales"
shall  mean,  subject to the  exclusions  described  in the next  sentence,  all
revenue  arising or resulting  from the sale or provision by  Franchisee  of all
services and products  (including  the  Products) and all other revenue of every
kind and nature  related  to, or derived,  or  originating  from the  Franchised
Business  (including,  without limitation,  revenue from Franchisee's  Delivery,
Special Occasions activities, and for any National Account and Alternative Sales
activities, but excluding interest on any amounts held in Franchisee's operating
or other  accounts  relating to the  Franchised  Business),  whether for cash or
credit,  reduced only by (a) any sales, use or other taxes or other governmental
assessments   collected  from   customers  by  Franchisee  in  accordance   with
Franchisor's  written  policies and procedures  and actually  transmitted to the
appropriate taxing authorities,  and (b) rebates,  credits or discounts actually
provided customers.

5.       REVENUE ALLOCATION FOR CARRY OUT ORDERS, DELIVERY, SPECIAL OCCASIONS
         --------------------------------------------------------------------
         AND REFERRAL ORDERS
         -------------------

         5.1 Carry Out Orders,  Delivery Orders and Special Occasion Orders. For
each  Carry Out  Order,  Delivery  order or  Special  Occasion  Order  received,
processed and completed by Franchisee, Franchisee shall be credited with 100% of
the gross sales  proceeds  from such  orders.  Franchisee  shall be obligated to

                                       11
<PAGE>

fulfill all such Carry Out,  Delivery and Special Occasions orders in accordance
with such  procedures as are  described in the Manual or such other  writings as
Franchisor shall issue from time to time and shall be obligated,  in addition to
fulfilling such orders, to process payment therefor. If Franchisee shall receive
any Carry Out Order, Delivery order or Special Occasion Order (or related series
of such  orders)  that has a gross sales volume that is in excess of one hundred
percent  (100%) of  Franchisee's  current  average  weekly  gross sales  volume,
Franchisee shall promptly notify  Franchisor of the existence,  terms,  delivery
date and other  relevant  conditions of such order and shall provide  Franchisor
with a plan,  reasonably  acceptable  to  Franchisor,  to fulfill  that order in
compliance  with and adherence to  Franchisor's  quality,  customer  service and
other  standards for the System.  If Franchisee is unable to provide  Franchisor
with  assurances  reasonably  acceptable  to  Franchisee,  as  provided  in  the
preceding sentence, Franchisor shall have the right to refer all or a portion of
such  order to another  System  franchisee  for  processing  or process  itself,
notwithstanding the fact that the purchaser and recipient of such order may both
be situated within the Territory (and, in such case, the referred portion of the
order  shall be treated in  accordance  with the  provisions  of Section 5.2 and
5.3). If, in Franchisor's sole determination,  the order is not capable of being
referred to another  franchisee  (including  by reason of the lack of additional
franchisees in the area of Franchisee's Territory), Franchisor shall be entitled
to fulfill all or a portion of the order,  and such  fulfilled  portion shall be
treated as an order under Section 6.2.1 below.

         5.2  Referral  Obligation.  If  Franchisee  receives  an  order  from a
customer  for Delivery or Special  Occasions  activities  to a location  that is
outside of the Delivery  Area,  Franchisee  shall process such order for payment
but shall  immediately  transmit  such  customer  order to  Franchisor or to the
Speaking Roses franchisee that is authorized,  under a franchise  agreement with
Franchisor,  to fulfill  orders at such location.  Franchisee  shall comply with
such terms, conditions,  standards and guidelines as Franchisor may periodically
set forth in the  Manual or  otherwise  in  writing  regarding  the  intake  and
transmission of all such customer orders.

         5.3 Referral Fee. For each customer order that Franchisee  transmits to
Franchisor and for which a transaction is completed by Franchisor  under Section
5.2,  Franchisor  shall pay to  Franchisee  a referral fee in an amount equal to
twenty  (20%)  percent of the Gross Sales  Price  collected  for such  completed
customer order. Any monies to be paid under this Section 5.3 shall accrue and be
paid  (subject to the  provisions  of 4.5) on a monthly basis not later than the
15th day for orders for which payment was received during the prior month.

                                       12
<PAGE>

6.       REVENUE ALLOCATION FOR NATIONAL ACCOUNTS AND ALTERNATIVE SALES
         --------------------------------------------------------------

         6.1 National Account.  A "National  Account" is defined as any customer
or potential customer that has multiple business or delivery locations,  some or
all  of  which  are  located  outside  of  the  Territory  of a  Speaking  Roses
franchisee.

              6.1.1  Franchisee  Prohibitions.  Franchisee  is not  permitted to
         negotiate with respect to, or enter into,  agreements for the servicing
         of National  Accounts without  Franchisor's  prior written  permission,
         which Franchisor may approve or deny in its sole discretion.

              6.1.2 National  Account  Terms.  Franchisor may elect to negotiate
         and enter into  agreements  for  National  Accounts,  pursuant to which
         Franchisor  and  the  National  Account  will  agree  upon  the  terms,
         conditions,  and prices at which Franchisor or its designees (including
         Franchisor's  franchisees)  will provide for the sale,  fulfillment and
         delivery of Products  to the  locations  of the  National  Account.  If
         Franchisor  enters  into  any  such  National  Account  agreements  and
         receives  orders  for the  delivery  of  Products  within  Franchisee's
         Territory,  Franchisor  shall direct such  National  Account  orders to
         Franchisee,   and   Franchisee   agrees   to  serve   as   Franchisor's
         subcontractor  for the purpose of fulfilling  the order and  delivering
         the  Products  as  specified  by  Franchisor  to the  locations  of the
         National Account specified by Franchisor within Franchisee's Territory.
         Franchisee  acknowledges that, in connection with such National Account
         contracts,  Franchisee  will not be offering or selling  Products,  but
         will  only  be  fulfilling  a  portion  of   Franchisor's   contractual
         obligations to the National Account.  Accordingly,  Franchisee shall be
         compensated  only by Franchisor in such  circumstances,  and Franchisor
         shall pay  Franchisee a  "fulfillment  fee" for each such processed and
         delivered  Product  order made by  Franchisee  to the  locations of the
         National  Account  specified by Franchisor  within the  Territory.  The
         gross sales revenues of such fulfillment fee shall be determined solely
         by  Franchisor,  but shall be not less than eighty percent (80%) of the
         amount received by Franchisor for such Products.

         6.2 Alternative  Sales.  Franchisor  shall have the right,  but not the
obligation,  (i) to  maintain  Websites,  as defined in  Section  14.9,  (ii) to
operate or maintain  telephone  call  centers  that  utilize  toll-free  call-in
numbers (the  "Toll-free  Numbers") and (iii) to operate or maintain one or more
print-media  catalogues  pursuant to which it may solicit  orders for,  sell and
distribute, directly or indirectly (including by licensing others to sell and/or
distribute),  the Products under the Proprietary  Marks at or from any location,
whether  within  or  outside  the  Territory,  for  delivery  to  any  customer,
regardless  of their  location  ("Catalogue  Sales").  The  methods of sales and
distribution  described in this Section 6.2 shall be collectively referred to as
"Alternative  Sales".  Franchisor  shall  process all  payments  with respect to
Alternate Sales.

              6.2.1  Right  to  Conduct.  Franchisor  shall  have  the  right to
         implement,  direct, manage, and carry out any and all Alternative Sales
         activities either directly,  or through licensing or other arrangements
         subject  to the terms of this  Section  6.  Franchisor  may  license or
         otherwise  authorize or designate a third party to conduct,  or provide

                                       13
<PAGE>

         support services for, any or all aspects of the Alternative Sales other
         than as is set forth in this Section 6 including  through  arrangements
         whereby third parties  utilize links to the Websites to generate orders
         for Products and pursuant to which such parties may process payment for
         such Products  ("Linked  Orders") in consideration for a fee or portion
         of the gross sales  revenues  generated  from such Linked  Orders (such
         consideration  being the "Linked Account Fee").  All Alternative  Sales
         shall be  conducted  in  accordance  with such  terms  and  conditions,
         policies and standards as  Franchisor  may specify or approve from time
         to time, which may include,  without limitation,  designating  specific
         Products to be sold through an  Alternative  Sales  method.  Franchisor
         may, at any time,  modify or discontinue any or all  Alternative  Sales
         activities.

              6.2.2 Alternative Sales Conditions. In connection with Alternative
         Sales, Franchisee acknowledges as follows:

                     6.2.2.1 The  fulfillment of  Alternative  Sales may require
              the  delivery  of  Products  to  customers   located   within  the
              Territory,  and Franchisor shall have the right, regardless of the
              customer's   proximity  to  the  Approved  Location,   to  require
              Franchisee  to fulfill  any or all  Alternative  Sales  orders for
              delivery  within  the  Territory.  Franchisor  shall (i) direct to
              Franchisee all  Alternative  Sales orders for delivery  within the
              Territory  generated  through  Alternative Sale activities  (other
              than Linked Orders,  which Franchisor may direct to Franchisee for
              delivery  within the  Territory),  and (ii) pay to Franchisee  the
              consideration  set  forth in  Section  6.2.4 as  compensation  for
              Franchisee's  services  with  respect  to such  Alternative  Sales
              Orders under this Section 6.2.2.

                     6.2.2.2  Franchisee shall fulfill  Alternative Sales orders
              directed to it by Franchisor in the manner specified by Franchisor
              and shall,  from time to time,  execute such  agreements  or other
              documents as Franchisor  deems  necessary to implement this clause
              and the  Alternative  Sales program,  and Franchisee  shall comply
              with such  policies  and  terms of  participation  concerning  the
              Alternative  Sales as Franchisor may prepare  (including,  without
              limitation,  quality and performance standards and specifications,
              guaranty requirements, and policies regarding customer privacy and
              end-user information).

                     6.2.2.3    For    any     Website-originated,     Toll-free
              Number-originated or Catalogue Sales-originated  Alternative Sales
              that  Franchisor  or  its  designee  negotiates  but  subsequently
              directs  to  Franchisee   for   completion  of  the   transaction,
              Franchisee shall, on behalf of Franchisor or its designee, fulfill
              and/or transact the  Alternative  Sales order and shall charge not
              more  than  the  price(s)  Franchisor  or  Franchisor's   designee
              designates,  which  price(s) may be  different  than the prices at
              which  Franchisee  offers  to  and  does  sell  such  Products  to
              non-Alternative Sale retail customers.

                     6.2.2.4 Franchisee shall not have the right to conduct, and
              shall be in default  under this  Agreement  it if does so conduct,
              without  Franchisor's  written  approval,  Alternate  Sales orders
              outside of the  Territory or processes  payment for any  Alternate
              Sales, whether inside or outside of the Territory.

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<PAGE>

              6.2.3 Website Access.  Without in any way limiting  Sections 6.2.2
         above, Franchisor shall have the right to use any Website designated by
         Franchisor  for the  purpose of  engaging  in  Alternate  Sales,  or to
         license a third  party  vendor to sell  Products  by means of  websites
         other  than the  Websites  (including  by way of  internal  "links"  or
         "jumpsites"  from such websites to the Websites) or to provide  support
         services for Franchisor's Alternate Sales activities.

              6.2.4  Alternate  Sales  Consideration.  In  consideration  of the
         services provided by Franchisee with respect to Alternative Sales under
         this Section 6.2,  Franchisor  shall pay to  Franchisee  (i) 80% of the
         collected  gross  sales  revenues  from any  orders  generated  through
         Toll-free  Numbers  or  Catalogue  Orders  and which are  fulfilled  by
         Franchisee, and (ii) 93% of the collected gross sales revenues from any
         Website  orders where the ordering  customer and  recipient  are within
         Franchisee's  Territory and 80% of the collected  gross sales  revenues
         from any Website orders where the recipient is within the Territory but
         the  ordering  customer is from outside the  Territory,  and (iii) with
         respect to Linked  Orders,  73% of the gross sales  revenues from those
         orders  that are  fulfilled  and  delivered  by  Franchisee  within the
         Territory  and 10% of the gross sales revenue from such orders that are
         fulfilled by Franchisor or a party other than  Franchisee and which are
         delivered by that fulfilling party within the Territory.

7.       CONSTRUCTION AND OPENING OF STORE
         ---------------------------------

         7.1 Store Site and Lease Approval.

              7.1.1 Within one hundred twenty (120) days after execution of this
         Agreement (the "Selection Period"),  Franchisee shall acquire or lease,
         at Franchisee's expense, a location for the Store at a site approved by
         Franchisor  within the Territory.  Franchisor  shall not establish,  or
         license  another  to  establish,  a Store  within the  Territory  until
         Franchisor  approves  of  a  location  for  the  Store,  or  until  the
         expiration of the Selection Period, whichever event first occurs.

              7.1.2  Within  sixty  (60)  days  after  the   execution  of  this
         Agreement,  Franchisee shall submit to Franchisor,  in a form specified
         by Franchisor,  an option contract,  letter of intent, or other written
         evidence  satisfactory  to  Franchisor  which  describes   Franchisee's
         favorable  prospects for obtaining such site,  photographs of the site,
         demographic  statistics,  and such other  information  or  materials as
         Franchisor may reasonably require. Franchisee acknowledges that time is
         of the essence. Franchisor shall have thirty (30) days after receipt of
         such information from Franchisee to approve or disapprove,  in its sole
         discretion,  the proposed site for the Store.  If  Franchisor  does not
         approve a proposed  site by written  notice to  Franchisee  within such
         thirty (30) days, such site shall be deemed approved by Franchisor.

              7.1.3 Franchisor shall furnish to Franchisee the following:

                                       15
<PAGE>

                     7.1.3.1 Site selection guidelines,  including  Franchisor's
              minimum  standards  for a location  for the  Store,  and such site
              selection   counseling  and  assistance  as  Franchisor  may  deem
              advisable.

                     7.1.3.2  Such on-site  evaluation  as  Franchisor  may deem
              advisable in response to Franchisee's  requests for site approval;
              provided,  however,  that  Franchisor  shall not  provide  on-site
              evaluation  for any  proposed  site  prior to the  receipt  of the
              information  for such site specified in Section 7.1.2.  If on-site
              evaluation is deemed  necessary  and  appropriate  by  Franchisor,
              Franchisor shall conduct an on-site  evaluation.  Franchisee shall
              reimburse   Franchisor  for  Franchisor's   reasonable   expenses,
              including,  without limitation,  the costs of travel, lodging, and
              meals for such on-site inspection.

              7.1.4 After the location  for the Store is approved by  Franchisor
         and leased or acquired by Franchisee  pursuant to Section 5 hereof, the
         location shall  constitute the approved  location  described in Section
         1.1  of  this  Agreement  ("Approved   Location").   Franchisee  hereby
         acknowledges  that approval by Franchisor of a site does not constitute
         an  assurance,  representation,  or  warranty  of any kind,  express or
         implied,  as to the  suitability  of the site for the  Store or for any
         other  purpose.  Approval by Franchisor of the site indicates only that
         Franchisor  believes the site complies with acceptable minimum criteria
         established by Franchisor solely for its purposes as of the time of the
         evaluation.   Franchisee  further   acknowledges  that  application  of
         criteria  that have been  effective  with  respect  to other  sites and
         premises may not be  predictive  of  potential  for all sites and that,
         subsequent  to approval by  Franchisor  of a site,  demographic  and/or
         economic  factors,  such as competition from other similar  businesses,
         included in or excluded from criteria used by Franchisor  could change,
         thereby   altering  the   potential   of  a  site.   Such  factors  are
         unpredictable  and are beyond the  control  of  Franchisor.  Franchisor
         shall  not  be  responsible  for  the  failure  of a site  approved  by
         Franchisor  to  meet   Franchisee's   expectations  as  to  revenue  or
         operational   criteria.   Franchisee  further   acknowledges  that  its
         acceptance of a franchise for the operation of the Store at the site is
         based on its own  independent  investigation  of the suitability of the
         site.

              7.1.5 If Franchisee  will occupy the premises from which the Store
         is operated under a lease or sublease,  Franchisee shall,  prior to the
         execution  of the lease or  sublease,  submit the lease or  sublease to
         Franchisor  for its review and approval,  which  approval  shall not be
         unreasonably  withheld  so long as the  lease  or  sublease  (or  rider
         thereto)  complies  with  Franchisor's   lease   requirements  for  the
         premises,  including,  without limitation,  (i) a provision restricting
         use of the premises solely to the operation of the Franchised Business,
         (ii) the lessor's consent to Franchisee's use of such Proprietary Marks
         and  signage  as  Franchisor  may  prescribe  for the  Store,  (iii) if
         Franchisee  fails to timely pay amounts due to  Franchisor or to lessor
         under the lease or  sub-lease,  Franchisor  has the right to charge and
         collect from Franchisee all resulting  costs and expenses  incurred by,
         and penalties imposed on, Franchisor, (iv) prohibitions on Franchisee's
         right to sublease or assign its occupancy rights, or extending the term
         of or renewing the lease without  Franchisor's  prior written approval,
         (v) a right in favor  of  Franchisor  to  enter  the  premises  to make
         modifications necessary to protect the Proprietary Marks or the System,
         or to cure a default under this Agreement, and to receive on assignment

                                       16
<PAGE>

         of the leasehold interest (with rights to sublease) upon termination of
         such lease or this Agreement without assessment or acceleration of rent
         or fees, (vi) a provision requiring lessor to provide Franchisor with a
         copy of all  notices  given to  Franchisee  under  the  lease,  (vii) a
         provision restricting modifications of the lease in a manner that could
         materially   affect   Franchisor's   rights  under  the  lease  without
         Franchisor's  written  approval,  and  (viii) a  provision  restricting
         lessor from leasing or subleasing any portion of lessor's  premises not
         occupied by  Franchisee  to any person or entity  engaged in a business
         similar to the Franchised Business.

         7.2 Actions Prior to Construction.  Before  commencing any construction
of  the  Store,  Franchisee,  at  its  expense,  shall  comply  to  Franchisor's
satisfaction with all of the following requirements:

              7.2.1  Franchisee  shall,  at  Franchisor's   request,   employ  a
         qualified,  licensed architect or engineer who is reasonably acceptable
         to Franchisor to prepare, subject to Franchisor's approval, preliminary
         plans and specifications  for site improvement  and/or  construction of
         the Store based upon prototype plans furnished by Franchisor.

              7.2.2  Franchisee  shall comply with all federal,  state and local
         laws, codes and regulations, including the applicable provisions of the
         ADA, regarding the construction,  design and operation of the Store. If
         Franchisee  receives any  complaint,  claim,  other  notice  alleging a
         failure to comply with the ADA,  Franchisee  shall  provide  Franchisor
         with a copy of such notice within three (3) days after receipt thereof.

              7.2.3  Franchisee  shall be  responsible  for obtaining all zoning
         classifications,  permits  and  clearances  required  by state or local
         laws, ordinances, or regulations or necessary or advisable owing to any
         restrictive  covenants relating to the Approved Location.  After having
         obtained such  approvals  and  clearances,  Franchisee  shall submit to
         Franchisor,  for Franchisor's approval, final plans for construction of
         the  Store  based  upon  the  preliminary  plans  and   specifications.
         Franchisor's review and approval of plans shall be limited to review of
         such plans to assess compliance with Franchisor's  design standards for
         Store, including such items as trade dress, presentation of Proprietary
         Marks, and the providing to the potential  customer of certain products
         and services  that are central to the  functioning  of the Store.  Such
         review is not  intended to assess or verify  compliance  with  federal,
         state or local laws or  regulations,  including the ADA, and compliance
         with  such  laws  and  regulations  is  the  sole   responsibility   of
         Franchisee.  Once  approved by  Franchisor,  such final plans shall not
         thereafter be changed or modified  without the prior written consent of
         Franchisor.  Any change made without Franchisor's prior written consent
         shall  constitute a default  hereunder and  Franchisor may withhold its
         authorization  to open the Store for  business  until the  unauthorized
         change  is  rectified   (or   reversed)  to   Franchisor's   reasonable
         satisfaction.

                                       17
<PAGE>

              7.2.4  Franchisee  shall  obtain all  permits  and  certifications
         required for the lawful  construction of the Store and operation of the
         Franchised  Business,  and shall certify in writing to Franchisor  that
         all such permits and certifications have been obtained.

              7.2.5  Franchisee  shall  employ  a  qualified   licensed  general
         contractor who is reasonably  acceptable to Franchisor to construct the
         improvements to the Store and to complete all construction necessary to
         implement  the  approved  final  plans.  Franchisee  shall  obtain  and
         maintain  in  force  during  the  entire  period  of  construction  the
         insurance required under Section 15 below.

         7.3  Construction  Deadline.  Franchisee shall complete all pre-opening
requirements  hereunder  before opening the Store, and Franchisee shall open the
Store,  all according to the  requirements  contained  herein and in the Manual,
and/or  elsewhere in writing by Franchisor,  not later than six (6) months after
the  Commencement  Date.  Time  is of the  essence  under  this  Agreement,  and
Franchisee's  failure to satisfy the six (6) month deadline  shall  constitute a
material default under this Agreement.

         7.4 Thirty Day Notice.  Franchisee  shall  provide at least thirty (30)
days prior  notice to  Franchisor  of the date on which  Franchisee  proposes to
first open the Store for business.

         7.5 Market Introduction  Activities.  In addition to and not in lieu of
any  advertising  contribution  or expenditure  otherwise  permitted or required
hereunder,  Franchisee  shall  conduct  a market  introduction  advertising  and
promotion program,  which program must be submitted in writing to Franchisor for
prior approval (the "Market Introduction Program").  Franchisee shall expend not
less than Five Thousand  Dollars  ($5,000) on the Market  Introduction  Program,
provided that  Franchisor  shall not require  Franchisee to expend more than Ten
Thousand Dollars ($10,000). The Market Introduction Program must be conducted in
accordance with Franchisor's  specifications  therefore,  as may be set forth in
the Manual or otherwise approved in writing by Franchisor, and, unless otherwise
approved by Franchisor,  shall  commence no later than the scheduled  opening of
the Store and shall  continue  until at least  three (3) months from the date on
which the Store  first  opens for  business.  All  materials  used in the Market
Introduction  Program shall be subject to  Franchisor's  approval  under Section
14.7 hereof

8.       TRAINING
         --------

         8.1  Initial  Training  Obligations.  Franchisee  shall  satisfied  all
initial training obligations  required by Franchisor,  described below, no later
than ten (10) business days prior to the scheduled opening date of the Store.

              8.1.1 If the Store  shall be the  first  Store to be  operated  by
         Franchisee  and/or a  Franchisee  Affiliate,  the  Franchisee  (or,  if
         Franchisee is other than an individual,  the Designated Individual,  as
         defined in Section 9.2 below),  and the Store  Manager shall attend and
         successfully  complete,  to  Franchisor's  satisfaction,   the  initial
         training  program  at a  location  designated  by  Franchisor.  If  any

                                       18
<PAGE>

         required  attendee  does not  satisfactorily  complete  such  training,
         Franchisor   may  require  that  a   replacement   person   attend  and
         successfully  complete,  to  Franchisor's  satisfaction,   the  initial
         training program.

              8.1.2  If the  Store  is the  second  or  subsequent  Store  to be
         operated by  Franchisee  and/or a  Franchisee  Affiliate,  Franchisee's
         General Manager shall attend and successfully complete, to Franchisor's
         satisfaction,  the initial  training program offered by Franchisor at a
         location designated by Franchisor.  Franchisee shall have the option of
         training any Store Manager  (following  the training of the first Store
         Manager  by  Franchisor)  at a  Store  operated  by  Franchisee  or its
         affiliates;  provided  that  the  training  is  conducted  (a)  by  the
         Designated Individual or another person who has completed  Franchisor's
         initial training program to the satisfaction of the Franchisor (and who
         is  acceptable  to  Franchisor  to provide such  training),  and (b) in
         accordance with any requirements or standards established by Franchisor
         in writing from time to time for such training.

              8.1.3 The Store shall  retain one  employee  who has  successfully
         completed,  and who is certified as a "Certified  Floral Designer" by a
         nationally  recognized  floral design school or  certification  program
         acceptable to  Franchisor,  and who shall meet such other floral design
         requirements  and  standards as Franchisor  shall  establish in writing
         from time to time for such person. The Certified Floral Designer may be
         Franchisee's  Designated  Individual,   Store  Manager  and/or  General
         Manager or other employee.

              8.1.4 Franchisee  acknowledges  this Agreement is conditioned upon
         (among   other   things)  the   personal   abilities,   aptitudes   and
         qualifications of Franchisee (and the persons  designated by Franchisee
         for training or certification  hereunder).  If Franchisor determines in
         its sole  discretion  that  Franchisee  and/or the  designated  persons
         is/are  unable  to  satisfactorily   complete  the  training  programs,
         Franchisor shall have the right to terminate this Agreement,  effective
         immediately  upon the  delivery  of  written  notice to  Franchisee  by
         Franchisor and in the manner set forth in Section 23 below.

         8.2 Designated Individual.  If Franchisee's  Designated Individual,  or
(if required)  Store Manager and/or General  Manager cease active  employment in
the Franchised Business (or, as determined by Franchisor,  fails to successfully
complete a training  program),  Franchisee shall enroll a qualified  replacement
who is  acceptable to Franchisor in  Franchisor's  training  program  reasonably
promptly  following  cessation of employment of such  individual,  provided that
Franchisee may train replacement Store Managers in accordance with Section 8.1.2
above.  The replacement  Designated  Individual,  and any required Store Manager
and/or General Manager shall complete the initial training program as soon as is
practicable and, in no event, later than any time periods Franchisor may specify
from time to time in the Manual or otherwise in writing. Franchisor reserves the
right to  review  any  Franchisee-trained  personnel  and to  require  that such
persons attend and complete,  to the  satisfaction  of  Franchisor,  the initial
training program offered by Franchisor at a location designated by Franchisor.

         8.3 Refresher  Courses.  Franchisor may require no more frequently than
once  during any twelve  (12) month  period that  Franchisee  or its  Designated

                                       19
<PAGE>

Individual  and Manager  attend,  at  Franchisee's  sole cost and expense,  such
refresher  courses,  seminars,  and other  training  programs as Franchisor  may
reasonably require from time to time.

         8.4  Certified  Floral  Designer.  If  Franchisee's   Certified  Floral
Designer ceases active employment in the Franchised  Business,  Franchisee shall
enroll  a  qualified  replacement  in  the  Certified  Floral  Designer  program
established by a nationally  recognized  floral design or certification  program
acceptable  to  Franchisor  or  shall  employ  a person  who has  obtained  that
certification.

         8.5 Charges for Certain Training.  For all training courses,  seminars,
and programs,  Franchisor  shall  provide  instructors  and training  materials,
provided  that  Franchisor  reserves  the right to change or modify the content,
scope and duration of any such  training  and, in the case of the  certification
and training program for the Certified Floral Designer,  designate a third party
as the  provider  of such  services.  Franchisee  shall pay  Franchisor  (or its
designee  in the  case of the  Certified  Floral  Designer)  the  fees  for such
training  programs as are  established  from time to time by  Franchisor  in the
Manual or otherwise in writing,  and shall bear the cost of all expenses for the
Franchisee,  the Designated Individual,  and/or the Store Manager and/or General
Manager  and/or   Designated  Floral  Designer  during  such  training  periods,
including,   without  limitation,  the  uniform  application  of  the  costs  of
transportation, lodging, meals, wages, and worker's compensation insurance.

9.       FRANCHISEE'S DUTIES
         -------------------

         9.1  Importance  of  System  Details.  Attention  to  the  details  and
requirements of the System by the franchisees,  including Franchisee  hereunder,
is important to Franchisee,  Franchisor, and other Speaking Roses franchisees to
develop and maintain the high operating standards of the System, to increase the
demand for the services  and  products  (including  the  Products),  sold by all
franchisees and to protect Franchisor's reputation and goodwill and the goodwill
associated with the  Proprietary  Marks. To ensure the uniformity of the System,
Franchisee shall operate the Franchised  Business in strict  conformity with the
terms of this  Agreement  and such methods,  standards,  and  specifications  as
Franchisor  may from  time to time  prescribe  in the  Manual  or  otherwise  in
writing. Franchisee agrees:

              9.1.1 To  purchase  and  install,  at  Franchisee's  expense,  all
         fixtures,  furnishings,   equipment,  decor,  and  signs  specified  by
         Franchisor,  and  to  refrain  from  installing  (or  permitting  to be
         installed) on or about the Store premises,  without  Franchisor's prior
         written consent, any fixtures, furnishings, equipment, decor, signs, or
         other items not previously approved as meeting  Franchisor's  standards
         and specifications;

              9.1.2  Not to  install  or  permit  to be  installed  any  vending
         machine, game, or coin operated device, unless specifically approved in
         writing, in advance, by Franchisor; and

              9.1.3 To stock,  display and maintain an inventory of the Products
         and supplies, as prescribed by Franchisor in the Manual or otherwise in

                                       20
<PAGE>

         writing,  in  quantities  sufficient  to  meet  reasonably  anticipated
         customer demand,  and to comply with  Franchisor's  standards,  for the
         maintenance of such inventories.

         9.2 Responsibilities of Designated  Individual.  If Franchisee is other
than  an  individual,  prior  to the  opening  of the  Store,  Franchisee  shall
designate,  subject to  Franchisor's  reasonable  approval,  an individual  (the
"Designated  Individual"),  who shall be responsible  for general  oversight and
management of the operations of the Franchised Business on behalf of Franchisee.
Franchisor shall have the right to rely upon the Designated Individual as having
been given, by Franchisee,  the Franchisee's  responsibility and decision-making
authority regarding the Franchisee's  business,  operations and franchise rights
and, by executing  this  Agreement,  Franchisee  represents as to the Designated
Individual's authority with respect to such matters and that Franchisor may rely
on the Designated  Individual's  authority.  If the Designated  Individual dies,
becomes  incapacitated,  leaves  the  employ of  Franchisee,  transfers  his/her
interest in Franchisee,  or otherwise  ceases to supervise the operations of the
Franchised  Business,  Franchisee  shall  promptly  designate  a new  Designated
Individual, subject to Franchisor's reasonable approval.

         9.3  Responsibilities  of Store Manager.  Prior to beginning  training,
Franchisee  shall inform  Franchisor,  in writing,  whether  Franchisee  (or, if
Franchisee is other than an individual,  the Designated  Individual) will assume
full-time  responsibility  for the  supervision  and operation of the Franchised
Business.  If not,  Franchisee shall employ a full-time unit manager (the "Store
Manager")  whose  qualifications  shall be  reasonably  acceptable to Franchisor
(including,  but not limited to, the requirement  that such  individual  possess
sufficient experience for the management of a Store, as determined by Franchisor
in its sole discretion) to assume full-time  responsibility  for the supervision
and operation of the Franchised Business.

         9.4 Responsibilities of General Manager and other Support Personnel. If
Franchisee and/or a Franchisee Affiliate enter, or have entered,  into franchise
agreements with  Franchisor for the operation of more than one Store  (including
the Store governed by this Agreement), Franchisor may require that, on or before
the opening of the Store governed hereunder:

              9.4.1 Franchisee hire and thereafter  continue to employ a general
         manager,   whose  qualifications  shall  be  reasonably  acceptable  to
         Franchisor to act as the  supervisor of the operation of the Franchised
         Business  and  Franchisee's  Stores  ("General  Manager").  The General
         Manager may serve as the Store Manager for one  Franchised  Business of
         Franchisee or a Franchisee  Affiliate.  The General Manager shall serve
         as  Franchisor's  primary  contact  person  for  coordinating  services
         assistance  to be  provided by  Franchisor  under this  Agreement.  Any
         General Manager of Franchisee must attend and successfully complete, to
         Franchisor's  satisfaction,  the initial  training  program  offered by
         Franchisor, as described in Section 8 above.

              9.4.2  Franchisee  employ   additional   persons  to  provide  the
         infrastructure  and support  services for the  oversight of  franchised
         operations  consisting  of  two  (2) or  more  Stores,  which  services
         include,   but  are  not  limited  to,  training  of  Store  personnel,

                                       21
<PAGE>

         consulting and on-premises  assistance to Store Managers and employees.
         Franchisee  shall  employ such  support  personnel  in a manner that is
         consistent with sound business practices, and in a manner that complies
         with the Manual and any other policies or instructions  that Franchisor
         may provide from time to time (which may include,  without  limitation,
         specific requirements as to the number of persons to be employed or the
         qualifications and experience of such persons).  Franchisor may require
         that  Franchisee's  support staff attend and complete,  to Franchisor's
         satisfaction, some or all of Franchisor's training programs.

         9.5 Responsibilities of Certified Floral Designer. Franchise shall hire
and thereafter continue to employ a floral designer that has been certified by a
nationally  recognized floral design school or certification  program acceptable
to Franchisor  to act as the in-Store  supervisor  of the  Franchised  Business'
floral design,  display and arrangement  services ("Certified Floral Designer").
The Certified  Floral  Designer may also be the Store  manager,  the  Designated
Individual or, if the store employs a General Manager, the General Manager.

         9.6 Store  Operations.  Franchisee  shall use the Store premises solely
for the  operation  of the  Franchised  Business  hereunder  and shall  keep the
business open and in normal  operation for such hours and days as Franchisor may
from time to time specify in the Manual or as Franchisor  may otherwise  approve
in writing and shall refrain from using or permitting the use of the premises of
the Store for any other purpose or activity at any time without first  obtaining
the written consent of Franchisor.

         9.7  Staffing.  Franchisee  shall  retain  and  maintain  a  competent,
conscientious,  trained  staff  (who  shall  have  been  adequately  trained  by
Franchisor  (as provided in Sections 9.3 through 9.5) or  Franchisee) in numbers
that are sufficient to service Store customers promptly and properly,  including
at least a trained manager (who may be the Store Manager or, as appropriate, the
General Manager) (or other trained  supervisory  employee in accordance with the
Manual) on duty at all times at which the Store is open (including  during daily
Store  opening  and  closing  procedures),  and  shall  take  such  steps as are
necessary to ensure that its  employees  preserve  good  customer  relations and
comply with the provisions of the Manual.

         9.8 Annual Convention.  The Franchisee (or, if Franchisee is other than
an individual, the Designated Individual),  and the Store Manager and/or General
Manager shall, at Franchisee's sole cost and expense, attend Franchisor's annual
System-wide conventions and meetings of franchisees of the System.

         9.9  Inspections.  Franchisee  shall  meet  and  maintain  the  highest
standards and ratings  applicable to the operation of the  Franchised  Business.
Franchisee  shall  furnish to  Franchisor,  within  five (5) days after  receipt
thereof, a copy of all inspection reports,  warnings,  citations,  certificates,
and/or ratings  resulting from  inspections  conducted by any federal,  state or
municipal agency having jurisdiction over the Store.

         9.10 Store Order and Repair. Franchisee shall at all times maintain the
Store in a high degree of cleanliness,  repair, and condition, and in connection

                                       22
<PAGE>

therewith shall make such additions,  alterations,  repairs, and replacements to
the Store as may be required by Franchisor for that purpose, including,  without
limitation,   such  periodic   repainting  or  replacement  of  obsolete  signs,
furnishings, fixtures, equipment, and decor as Franchisor may reasonably direct.

         9.11  Product  List.  To  maintain  the high  standards  of quality and
uniformity associated with the System, Franchisee shall offer, maintain adequate
reserves in inventory of, and sell, all Products that Franchisor  specifies from
time to time.  Franchisee is prohibited from offering or selling any services or
products from or through the Franchised  Business that have not previously  been
authorized by Franchisor.

         9.12  Equipment  and Product  Purchases  and Leases.  Franchisee  shall
purchase all supplies,  services, and products (including the Products) required
for the operation of the Franchised Business from  manufacturers,  distributors,
and  suppliers,  and shall  purchase (or, as permitted by Franchisor in writing)
lease all equipment (including the embossing and engraving equipment utilized in
connection with the Technology)  designated by Franchisor.  Franchisor  reserves
the right to designate,  at any time and for any reason,  a single  supplier for
any equipment,  supplies,  services, or products (including any Products) and to
require Franchisee to purchase exclusively from such designated  supplier,  (and
such  exclusive  designated  supplier  may  be  Franchisor  or an  affiliate  of
Franchisor.)  Franchisor  and its  affiliates  may  receive  payments  or  other
compensation  from  suppliers  as a  result  of such  suppliers'  dealings  with
Franchisee and other franchisees, and Franchisor may use all amounts so received
for any purpose Franchisor and its affiliates deem appropriate. For all Products
that  Franchisee  purchases  from  Franchisor  or any  affiliate of  Franchisor,
Franchisee  shall make payments for such Products by electronic  funds  transfer
(or such other  means as  Franchisor  may  specify  from time to time) to a bank
account  designated by Franchisor  and/or  Franchisor's  affiliate(s) from which
Franchisee shall purchase Products. Upon Franchisor's request,  Franchisee shall
execute  and  maintain as active  Franchisor's  current  form of  "Authorization
Agreement for Prearranged Payments (Direct Debits)," a copy of which is attached
to this  Agreement  as Appendix D, in favor of  Franchisor  and/or  Franchisor's
affiliate(s) from which Franchisee shall purchase Products.

         9.13  Approval of  Equipment  and  Product  Selections.  If  Franchisee
desires to purchase any equipment,  supplies,  services,  or products (including
any Products) from  manufacturers,  distributors,  or suppliers other than those
designated  by  Franchisor,  Franchisee  shall  first make a written  request to
Franchisor,  requesting authorization to purchase such items. In connection with
such  request  for  approval,   Franchisee   shall  submit  to  Franchisor  such
information  and samples as  Franchisor  requests and as a condition to any such
approval,  Franchisor  shall have the right,  from time to time,  to inspect any
manufacturer's,  distributor's,  or supplier's facilities and products to assure
proper  production,  refrigeration,  handling,  storage,  and  transportation of
equipment,   supplies,   services,   or  products  to  be  purchased   from  the
manufacturer,  distributor,  or  supplier  by  Franchisee.  Permission  for such
inspection  shall be a condition  of the initial  and/or  continued  approval by
Franchisor of such  manufacturer,  distributor,  or supplier.  Franchisee  shall
reimburse Franchisor for its costs and expenses of reviewing and evaluating such
requests.

                                       23
<PAGE>


         9.14  Pricing.   Franchisor  shall  be  permitted  to  establish  price
ceilings,  or maximum  allowable  prices,  on the  Products  offered and sold by
Franchisee.  Except as specified in Sections 5 and 6,  Franchisee  may determine
the  prices at which  Franchisee  sells the  Products,  as well as the terms and
conditions of sale for such Products. Franchisor may, from time to time, suggest
prices  to  Franchisee  for the sale of  Products,  but  Franchisee  will not be
required at any time to sell at or above such suggested prices.

         9.15  Proprietary  Marks on Products  and Other  Materials.  Franchisee
shall ensure that all advertising and promotional materials, signs, decorations,
embossings, paper goods (including wrapping and containers for products, and all
forms and stationery used in connection with the Franchised Business), Products,
and other items specified by Franchisor bear the Proprietary  Marks in the form,
color, location, and manner prescribed by Franchisor in the Manual, or otherwise
in writing by  Franchisor.  All signs and displays used in, at, or in connection
with the operation of, the Franchised Business shall comply in all respects with
Franchisor's  instructions  and policies as set forth in the Manual or otherwise
in writing,  which may include a prohibition  on all hand-made and  hand-written
signs and displays.

         9.16  Acquisition  and  Maintenance of  Communications  and Information
Systems.  To ensure the efficient  management  and  operation of the  Franchised
Business and the transmission of data to and from Franchisor, Franchisee, at its
own expense,  shall install,  prior to opening the Store, and shall maintain and
utilize  during the term of this Agreement in conformity  with the Manual,  this
Agreement and the writing of Franchisor,  such  communications  and  information
systems as Franchisor may  periodically  specify in the Manual or in writing for
use by Stores that operate under the System  and/or for use in  connection  with
any Alternative Sales activities.

              9.16.1 As used in this  Agreement,  the term  "communications  and
         information  systems"  shall  mean:  (i)  hardware  (including  without
         limitation  one or more  computers,  a POS System (as  defined  below),
         and/or other computer  components);  (ii)  proprietary or  commercially
         available  software  designed for the  management  and operation of the
         Franchised Business, and for reporting and sharing information with the
         Franchisor;   and  (iii)   communication   systems  (including  without
         limitation  digital and analog  modems,  satellite,  cable,  high-speed
         internet access products and other systems).

              9.16.2 The term "POS  System"  shall mean a system to be specified
         by Franchisor that includes  functionality  to automate some or all, in
         whole  or in part  of the  following  activities  and  procedures:  (i)
         tracking, evaluating,  transferring and accounting for individual sales
         transactions,  (ii) human resource management issues, (iii) maintaining
         and generating production,  supplier,  employee,  order, production and
         processing  schedules,  (iv) vendor  orders,  (v) Product and inventory
         ordering (including just-in-time functionality) and lists, (vi) product
         cost  analyses,   (vii)  accounting,   finance,   payroll  and  account
         reconciliation,  and (viii)  other  collections  of data related to the
         operation of the Franchised Business.

              9.16.3  Franchisee shall lease and/or purchase its  communications
         and information systems only from such vendor or vendors or supplier or
         suppliers  as  Franchisor  has  approved  in  writing,  pursuant to the

                                       24
<PAGE>

         provisions  of Section  9.12 above and shall,  in addition to any other
         amounts payable to Franchisor  hereunder pay to Franchisor such monthly
         communications  and  information   systems  fees  as  Franchisor  shall
         establish  from time to time  (the  "Communications  Fee").  Franchisee
         shall pay the  Communications Fee to Franchisor in accordance with such
         procedures  and  at  such  time  as it  set  forth  in  the  Manual  or
         Franchisor's other writings. Franchisee shall not install, or permit to
         be installed,  any devices,  software or other programs not approved by
         Franchisor for use with the  communications  and  information  systems.
         Franchisee shall not hire a third party or outside vendors not approved
         by Franchisor to perform any services or obligations in connection with
         the   communications   and  information   systems,   or  any  other  of
         Franchisee's  obligations  without  Franchisor's prior written approval
         therefor.   Franchisor's  consideration  of  any  proposed  outsourcing
         vendor(s) may be conditioned upon, among other things, such third party
         or  outside  vendor's  entry  into  a  confidentiality  agreement  with
         Franchisor and Franchisee in a form that is provided by Franchisor.

              9.16.4  Franchisor  may from  time to time  develop  or  authorize
         others  to  develop  software  programs  for use in the  System,  which
         Franchisee  may be  required to purchase  and/or  license,  and use, in
         connection  with the Franchised  Business  ("Proprietary  Program(s)").
         Franchisee  agrees that it shall  execute any license,  sublicense,  or
         maintenance  agreement  required by  Franchisor  or any other  approved
         licensor or approved vendor of such Proprietary Program.

              9.16.5 If  required by  Franchisor,  Franchisee  shall  obtain and
         maintain a contract  with a vendor  that  Franchisor  has  approved  in
         writing for software  maintenance,  support,  and upgrade  services for
         Franchisee's communications and information systems and for the purpose
         of  providing   Franchisee  with  such  assistance  as  Franchisee  and
         Franchisee's  employees  may  require.   Franchisee  acknowledges  that
         Franchisor  may be one  of,  or the  only,  approved  vendor  for  such
         services,  and if Franchisee  obtains these  services from  Franchisor,
         then Franchisee  agrees that it shall pay to Franchisor any maintenance
         fee and help  desk  fee  specified  by  Franchisor  for such  services.
         Franchisor's rights under this Section 9.16.5 shall not be construed so
         as to obligate  Franchisor  to provide any such services or support for
         the hardware or software  used in the  communications  and  information
         systems.

              9.16.6 Franchisee shall upgrade and update its  communications and
         information systems in the manner, and when, specified by Franchisor in
         the Manual or otherwise in writing.

              9.16.7 Franchisee shall have the sole and complete  responsibility
         for the manner in which  Franchisee's  communications  and  information
         systems  interfaces  with other systems  (including  security  systems,
         telephone  systems and other  electronic  systems),  including those of
         Franchisor and other third parties, as well as any and all consequences
         that may arise if Franchisee's  communications and information  systems
         are not properly operated,  maintained, and upgraded.  Franchisee shall

                                       25
<PAGE>

         utilize no system which would have the reasonably foreseeable effect of
         frustrating,  circumventing or altering the purposes, functions or data
         maintained,   gathered  or  manipulated  by  the   communications   and
         information systems.

              9.16.8  Franchisee  shall: (i) promptly employ its  communications
         and information  systems,  and maintain,  all  information  required by
         Franchisor  to be entered  and  maintained  therein and  thereon;  (ii)
         provide to Franchisor such reports as Franchisor may reasonably request
         from the data so collected and maintained;  and (iii) permit Franchisor
         to access  Franchisee's  communications and information  systems at all
         times via modem or other means  specified  by  Franchisor  from time to
         time. Franchisee shall cooperate with Franchisor, and shall execute all
         documents  required  by  Franchisor  to permit  access to  Franchisee's
         communications and information  systems and the data contained therein.
         The  reporting  requirements  set  forth  in this  Section  shall be in
         addition  to and not in lieu of the  reporting  requirements  set forth
         under Section 13.5 below. Additionally:

                     9.16.8.1  Franchisee  shall  abide by all  applicable  laws
              pertaining  to  privacy of  information  collected  or  maintained
              regarding customers or other individuals ("Privacy").

                     9.16.8.2   Franchisee   shall   comply  with   Franchisor's
              standards  and policies  pertaining to Privacy as set forth in the
              Manual or as set forth in writing from time to time by Franchisor.
              If there is a conflict between Franchisor's standards and policies
              pertaining to Privacy and applicable law,  Franchisee  shall:  (i)
              comply with the  requirements of applicable law; (ii)  immediately
              give  Franchisor  written  notice  of  such  conflict;  and  (iii)
              promptly and fully  cooperate  with  Franchisor  and  Franchisor's
              counsel so that  Franchisor  may determine the most effective way,
              if any, to meet Franchisor's  standards and policies pertaining to
              Privacy within the bounds of applicable law.

                     9.16.8.3  Franchisee  shall neither publish nor implement a
              data privacy policy without  Franchisor's prior written consent as
              to such policy.

                     9.16.9  Any  and  all  data   collected   or   provided  by
              Franchisee,   downloaded  from  Franchisee's   communications  and
              information  systems,  and otherwise  collected from  Franchisee's
              system by Franchisor and/or provided to Franchisor is and shall be
              owned  exclusively  by Franchisor,  and Franchisor  shall have the
              right to use such  data in any  manner  and for such  purposes  as
              Franchisor deems appropriate  without  compensation to Franchisee;
              provided,  however,  Franchisee  is hereby  licensed  (without any
              additional  fee)  to use  such  data  solely  for the  purpose  of
              operating  the  Franchised   Business,   and  such  license  shall
              automatically   and   irrevocably   expire  when  this   Agreement
              terminates,   without   additional   notice   from  or  action  by
              Franchisor.

                     9.16.10  Franchisor  shall  have  the  right,  but  not the
              obligation,  to  establish  a Website or other  electronic  system
              providing  private and secure  communications  (e.g., an extranet)

                                       26
<PAGE>

              between Franchisor,  Franchisee, other franchisees, and other such
              persons and  entities as  determined  by  Franchisor,  in its sole
              discretion. If required by Franchisor,  Franchisee shall establish
              and  maintain  access to the  extranet in the manner  specified by
              Franchisor,  and shall from time to time execute  such  agreements
              and/or  acknowledge  and  agree  to  comply  with,  such  policies
              concerning  the use of the extranet as Franchisor may prepare from
              time to time.

         9.17 Refurbishing Requirements. At the request of Franchisor, which may
be made once during the initial term of this Agreement (excluding any periods of
renewal of the  franchise  rights,  for which  additional  refurbishment  may be
required) and only after the fifth  anniversary  of this  Agreement,  Franchisee
shall  refurbish  the Store at its own  expense to  conform to the trade  dress,
color schemes,  and presentation of the Proprietary Marks in a manner consistent
with  the  image  then  in  effect  for  new  Stores  under  the  System.   Such
refurbishment may include structural changes,  installation of new equipment and
signs,  remodeling,  redecoration,  and modifications to existing  improvements.
Franchisee shall complete the  refurbishing  within the time period specified by
Franchisor,  provided that if Franchisor  estimates that refurbishing costs will
exceed Ten Thousand Dollars  ($10,000),  Franchisor shall permit  Franchisee six
(6)  months,  from the date  when  Franchisee  is  provided  with  notice of the
specifications therefor by Franchisor to complete the refurbishment.  Franchisor
shall not require Franchisee to expend monies that Franchisor determines, in its
sole discretion,  exceed the amount that Franchisee can reasonably amortize over
the remaining term of this Agreement, unless Franchisor extends the term of this
Agreement for a period sufficient, in Franchisor's sole determination,  to allow
Franchisee to amortize the costs of the required refurbishment.

         9.18 Right of Entry.  Franchisee  grants  Franchisor and its agents, at
Franchisor's  expense,  the right to enter upon the premises of the Store at any
time for the  purpose of  conducting  inspections  of the  Franchised  Business,
equipment  relating to the practice of the Technology,  the  communications  and
information  system  and such  other  matters  as  Franchisor  shall  reasonably
determine.  Franchisee shall cooperate with Franchisor's representatives in such
inspections;  and,  upon  notice  from  Franchisor  or its agents  (and  without
limiting Franchisor's other rights under this Agreement),  Franchisee shall take
such steps as may be deemed  necessary by Franchisor to correct  immediately any
deficiencies detected during any such inspection.

         9.19 Accounts  Payable  Requirements.  Franchisee must at all times pay
its distributors,  lessors, contractors,  suppliers, trade creditors,  employees
and other  creditors  promptly as  Franchisee's  debts and  obligations  to such
persons  for the  Franchised  Business  become  due,  and failure to do so shall
constitute a breach of this Agreement.  If Franchisee shall fail to pay any such
obligations  promptly  as the debts to such  persons  or  entities  become  due,
Franchisor  shall, in addition to its other remedies provided in this Agreement,
have the right,  at its  election and without  being  obligated to do so, to pay
such  obligations,  and the amount or  amounts  paid  therefor  shall be paid by
Franchisee to Franchisor with the next succeeding  payment due Franchisor  under
this  Agreement  (together  with  interest at the rate of one  percent  (1%) per
month, or the maximum rate permitted by law,  whichever is less, for all amounts
so advanced by Franchisor for Franchisee's benefit).

                                       27
<PAGE>

         9.20 Entity  Information.  If Franchisee  is other than an  individual,
Franchisee,  prior to the  execution  of this  Agreement,  shall  have  provided
Franchisor with written information as to each shareholder, member or partner of
Franchisee,  and the interest of each. Franchisor,  in its sole discretion,  may
designate  any  person or entity  which  owns (or has the right to  acquire)  an
interest in  Franchisee  as a  "Principal,"  as identified in Appendix B hereto,
which may be amended  automatically  upon  notice  thereof to  Franchisee.  Such
Principals as Franchisor may request shall execute a guarantee, indemnification,
and acknowledgment of Franchisee's  obligations under this Agreement in the form
attached hereto as Appendix C. Additionally:

              9.20.1 If Franchisee is a corporation,  the following requirements
         shall apply to Franchisee:

                     9.20.1.1  Franchisee  shall  be  newly  organized  and  its
              charter  shall  at all  times  provide  that  its  activities  are
              confined exclusively to operating the business franchised herein.

                     9.20.1.2 Copies of Franchisee's  Articles of Incorporation,
              Bylaws,  other governing  documents,  and any amendments  thereto,
              including the  resolutions  of the Board of Directors  authorizing
              entry  into  this  Agreement,   shall  be  promptly  furnished  to
              Franchisor prior to the execution hereof.

                     9.20.1.3    Franchisee    shall   maintain    stop-transfer
              instructions  against  the  transfer  on its records of any voting
              securities;  and shall issue no voting securities upon the face of
              which the a printed  legend in  substantially  the following  form
              does not legibly and conspicuously appear:

                       The transfer of the securities represented by this
                       certificate is subject to the terms and conditions of a
                       Franchise Agreement with Speaking Roses Development
                       Corporation, dated ______ Reference is made to the
                       provisions of the Franchise Agreement and to the Articles
                       and Bylaws of this Corporation.

                     9.20.1.4  Franchisee  shall  maintain a current list of all
              owners of record  and all  beneficial  owners  of all  classes  of
              voting  securities  of  Franchisee  and shall  furnish the list to
              Franchisor upon request.

              9.20.2 Except as otherwise  approved in writing by Franchisor,  if
         Franchisee is a partnership or a limited liability partnership it shall
         comply  with the  following  requirements  throughout  the term of this
         Agreement:

                     9.20.2.1  Franchisee shall furnish to Franchisor  copies of
              its partnership or LLP agreement (as amended to date, and upon any
              amendment  thereto,  a copy of such amendment within five (5) days
              of such  amendment) as well as such other  documents as Franchisor

                                       28
<PAGE>

              may  reasonably  request  prior to the execution  hereof,  and any
              amendments thereto,  which shall contain a restriction on transfer
              of any partnership  interest  without the prior written consent of
              Franchisor.

                     9.20.2.2   Franchisee   shall   prepare   and   furnish  to
              Franchisor,  upon  request,  a list  of all  general  and  limited
              partners of Franchisee.

              9.20.3 Except as provided in Sections  9.20.1 and 9.20.2 above, if
         Franchisee is a limited liability company or any other form of judicial
         entity, the following requirements shall also apply to Franchisee:

                     9.20.3.1  Franchisee  shall  be  newly  organized  and  its
              articles of organization and/or other governing documents shall at
              all times provide that its activities are confined  exclusively to
              operating the business franchised herein.

                     9.20.3.2  Copies of  Franchisee's  articles of organization
              and/or its  bylaws,  and any other  governing  documents,  and any
              amendments  thereto,  shall be promptly  furnished  to  Franchisor
              prior to the execution of this Agreement.

                     9.20.3.3    Franchisee    shall   maintain    stop-transfer
              instructions  against  the  transfer  on its records of any equity
              ownership  interests,  and shall issue no securities upon the face
              of which the a printed legend in substantially  the following form
              does not legibly and conspicuously appear:

                    The transfer of the [interest] represented by this
                    certificate is subject to the terms and conditions of a
                    Franchise Agreement with Speaking Roses Development
                    Corporation, dated ______.  Reference is made to the
                    provisions of the Franchise Agreement and to the articles of
                    organization of said entity.

                     9.20.3.4  Franchisee  shall  maintain a current list of all
              owners of record and all beneficial  owners of any class of voting
              interests of  Franchisee  and shall furnish the list to Franchisor
              upon request.

10.      PROPRIETARY MARKS AND TECHNOLOGY
         --------------------------------

         10.1 Franchisor Representations.  Franchisor represents with respect to
the Proprietary Marks that:

              10.1.1 Speaking Roses International, Inc., which is the sole owner
         of  Franchisor  ("Parent"),  is the  owner  of all  right,  title,  and
         interest in and to the Proprietary Marks and the Technology.  Through a
         license or other agreements with Parent,  Franchisor holds a license or
         rights  to  use,  and to  license  or  authorize  others  to  use,  the
         Proprietary  Marks and  Technology in the manner  contemplated  by this
         Agreement.

                                       29
<PAGE>

              10.1.2 Parent and/or Franchisor have taken and will take all steps
         reasonably necessary to preserve and protect the ownership and validity
         in, and of, the Proprietary Marks and the Technology.

         10.2 Franchisee  Obligations.  With respect to Franchisee's  use of the
Proprietary Marks and Technology, Franchisee acknowledges and covenants that:

              10.2.1  Franchisee shall use only the Proprietary Marks designated
         by Franchisor, and shall use them and the Technology only in the manner
         authorized and permitted by Franchisor as set forth in the Manual or in
         other writings of Franchisor.

              10.2.2  Franchisee's  rights to use the Proprietary  Marks and the
         Technology  are  limited  to such  uses as are  authorized  under  this
         Agreement, shall terminate automatically and fully revert to Franchisor
         upon  any  termination  of this  Agreement,  and any  unauthorized  use
         thereof shall constitute an infringement of Franchisor's rights.

              10.2.3   Franchisee  shall  use  the  Proprietary  Marks  and  the
         Technology  only for the operation of the Franchised  Business and only
         at the Approved  Location,  in the case of the  Proprietary  Marks,  in
         advertising  and promotional  materials  approved by Franchisor for the
         business conducted at or from that location.

              10.2.4  Unless  otherwise  authorized  or required by  Franchisor,
         Franchisee  shall operate and advertise  the  Franchised  Business only
         under  the  name   "Speaking   Roses,"   without   prefix  or   suffix.
         Additionally, Franchisee shall not use the Proprietary Marks as part of
         its  corporate,  partnership,  or  other  legal  name,  or to  identify
         Franchisee or the  Franchised  Business in any other legal or financial
         capacity,  or as part of any  e-mail  address,  domain  name,  or other
         identification  of  Franchisee  or  the  Franchised   Business  in  any
         electronic  medium,  unless  agreed to in advance,  and in writing,  by
         Franchisor.

              10.2.5 During the term of this  Agreement and any renewal  hereof,
         Franchisee shall identify itself (in a manner reasonably  acceptable to
         Franchisor) as the owner of the Franchised Business in conjunction with
         any use of the Proprietary Marks,  including,  but not limited to, uses
         on  invoices,  order forms,  receipts,  and  contracts,  as well as the
         display  of a  notice  in such  content  and  form  and at  conspicuous
         locations on the premises of the Store as  Franchisor  may designate in
         writing.

              10.2.6  Franchisee  shall  not use the  Proprietary  Marks  or the
         Technology  to incur  any  obligation  or  indebtedness  on  behalf  of
         Franchisor  and shall not grant (and shall not be entitled to grant) to
         any lender or third party any interest in Franchisee's  right of use of
         the Proprietary Marks and/or the Technology.

              10.2.7  Franchisee shall execute any documents deemed necessary by
         Franchisor  or its  counsel to obtain  protection  for the  Proprietary
         Marks or the  Technology  or to maintain  their  continued  protection,

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<PAGE>

         validity and  enforceability;  provided that any documents  required by
         Franchisor  in  connection  with  litigation  shall be  governed by the
         requirements of Section 10.2.8 hereof.

              10.2.8  With  respect to  litigation  or  disputes  involving  the
         Proprietary Marks and/or the Technology:

                     10.2.8.1 Franchisee shall promptly notify Franchisor of any
              suspected or actual  infringement of the Proprietary  Marks or the
              Technology,  any known or  suspected  challenge to the validity of
              the Proprietary Marks or the Technology, or any known or suspected
              challenge to Parent's ownership of,  Franchisor's right to license
              or authorize the use of, or Franchisee's right to use, all, any or
              some  of  the  Proprietary   Marks  or  the  Technology   licensed
              hereunder. Franchisee acknowledges that, as between Franchisor and
              Franchisee,  Franchisor  shall  have the sole  right,  but not the
              obligation,  to initiate,  direct,  and control any administrative
              proceeding or litigation  involving the  Proprietary  Marks or the
              Technology,  including any  settlement  thereof or right to obtain
              specific  performance or injunctive  relief. As between Franchisor
              and Franchisee, Franchisor also shall have the sole right, but not
              the  obligation,  to take action  against  uses by others that may
              constitute   infringement   of  the   Proprietary   Marks  or  the
              Technology.

                     10.2.8.2  Subject to  Franchisee's  use of the  Proprietary
              Marks and Technology in accordance with this Agreement, Franchisor
              will  defend  Franchisee  at  Franchisor's   expense  against  any
              third-party claim, suit, or demand involving the Proprietary Marks
              or Technology  arising out of such use. If Franchisee has not used
              the  Proprietary  Marks or the Technology in accordance  with this
              Agreement,  Franchisor  is entitled,  but not  obligated to defend
              Franchisee,  at  Franchisee's  sole cost and  expense  (including,
              without  limitation,  the costs and expenses of counsel),  against
              such third-party claims,  suits, or demands.  Franchisee shall pay
              all such costs and expenses upon demand by Franchisor.  Franchisor
              may make demand for such  payment as such costs and  expenses  are
              incurred.

                     10.2.8.3   If   Franchisor   undertakes   the   defense  or
              prosecution of any litigation relating to the Proprietary Marks or
              the Technology, Franchisee shall execute any and all documents and
              do such acts and things as may,  in the  opinion  of  counsel  for
              Franchisor, be necessary to carry out such defense or prosecution,
              including,  but not  limited to,  becoming a nominal  party to any
              legal  action.  Except to the extent that such  litigation  is the
              result  of  Franchisee's  use  of  the  Proprietary  Marks  or the
              Technology  in a  manner  inconsistent  with  the  terms  of  this
              Agreement,  Franchisor  agrees  to  reimburse  Franchisee  for its
              reasonable  out of pocket  costs in doing  such  acts and  things,
              except  that  Franchisee  shall  bear  the  salary  costs  of  its
              employees,  and Franchisor shall bear the costs of any judgment or
              settlement.  To the extent that such  litigation  is the result of

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<PAGE>

              Franchisee's  use of the Proprietary  Marks or the Technology in a
              manner  inconsistent with the terms of this Agreement,  Franchisee
              shall  reimburse  Franchisor  for the  cost  of  such  litigation,
              including without limitation  attorney's fees, as well as the cost
              of any judgment or settlement.

         10.3  Franchisee   Representations   Regarding  Proprietary  Marks  and
Technology.  Franchisee  expressly  understands,  represents and acknowledges to
Franchisor and Parent that:

              10.3.1  Franchisee has no right,  title, or interest in and to the
         Proprietary  Marks and the goodwill  associated  with and symbolized by
         them  or  the  Technology,  other  than  as  is  expressly  granted  to
         Franchisee hereunder.

              10.3.2 Neither Franchisee, nor any officer or owner of Franchisee,
         shall directly or indirectly contest the validity or Parent's ownership
         of the Proprietary Marks or the Technology,  or Franchisor's  rights to
         use them under its agreements with Parent,  and neither  Franchisee nor
         any officer or owner of Franchisee,  directly or indirectly, shall seek
         to register,  enforce, limit, qualify, modify or affect the Proprietary
         Marks  or the  Technology  with  any  government  agency,  except  with
         Franchisor's express prior written consent.

              10.3.3  Franchisee's  license to the use of the Proprietary  Marks
         and  Technology  hereunder  does  not  give  Franchisee  any  ownership
         interest or other interest in or to such properties.

              10.3.4 Any and all goodwill  arising from  Franchisee's use of the
         Proprietary  Marks shall  inure  solely and  exclusively  to benefit of
         Parent and  Franchisor,  and upon  expiration  or  termination  of this
         Agreement and the licenses herein granted,  no monetary amount shall be
         assigned as attributable to any goodwill  associated with  Franchisee's
         use of or license to use the System or the Proprietary Marks.

              10.3.5 Franchisor reserves the right to substitute  different,  or
         change the  configuration  or mix of, the Proprietary  Marks for use in
         identifying the System and the businesses  operating  thereunder or the
         configuration  or mix of the Technology if Franchisor's  current rights
         in those rights or properties no longer can be used, or if  Franchisor,
         in its sole discretion,  determines that such substitution or change in
         those rights or properties will be beneficial to the System. Franchisee
         shall bear the costs of substituting or changing the Proprietary Marks,
         and the Technology used at and in connection with the operation of, the
         Franchised Business.

              10.3.6 Franchisee disclaims in favor of Franchisor (and assigns to
         Franchisor hereunder) any right, title or interest in any improvements,
         modifications,  enhancements or alterations of the Technology conceived
         or developed by Franchisee. Franchisee shall promptly notify Franchisor
         of any such improvements, modifications, enhancements or alterations.

11.      CONFIDENTIAL INFORMATION
         ------------------------

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<PAGE>


         11.1 Non-Disclosure Obligation. Subject to the limitations set forth in
Section 11.4 below,  Franchisee  shall not, during the term of this Agreement or
thereafter,  communicate,  divulge,  or use for the benefit of any other person,
partnership,  association,  corporation  or other entity  (each a "Person")  any
confidential  information  (including,  without limitation,  the contents of the
Manual), knowledge, or know-how concerning the operation,  finances, contractual
relationships,  Technology,  personnel  matters,  management or marketing of the
Franchised  Business or other Stores under the System which may be  communicated
to Franchisee or which  Franchisee may have disclosed to it by Franchisor or may
become  aware of by virtue  of  Franchisee's  operation  under the terms of this
Agreement. Subject to the provisions of Section 11.4, all such information shall
be deemed confidential information, and Franchisor hereby designates it as such.
Notwithstanding  the  generality  of the first  sentence of this  Section  11.1,
Franchisee may divulge such confidential information to such of its employees as
shall have a need to know such confidential information; provided, however, that
Franchisee shall require such employees to enter into confidentiality agreements
in a form acceptable to Franchisor and Franchisee.  shall be responsible for any
disclosure by those employees of any of such confidential information, knowledge
or know-how or  technique  in  violation of the terms of this Section 11 or such
confidentiality agreements.

         11.2  Disclosure  Injuries.  Franchisee's  failure  to comply  with the
requirements of this Section 11 will cause Franchisor  irreparable  injury,  and
Franchisee agrees to pay all court costs and reasonable attorney's fees incurred
by  Franchisor  in obtaining  specific  performance,  or an  injunction  against
violation, of Franchisee's  obligations under this Section 11. Franchisee hereby
specifically  waives and releases all  obligations on behalf of Franchisor  (and
rights in favor of  Franchisee)  to require  Franchisor  to post a bond or other
surety for such action.

         11.3 Any and all information, knowledge, know-how, and techniques which
Franchisor  designates as confidential  information shall be deemed confidential
for purposes of this  Agreement,  except (i)  information  which  Franchisee can
demonstrate  came to its  attention  prior to  disclosure  thereof by Franchisor
through parties not bound by a confidentiality  obligation;  or (ii) information
which,  at or after the time of  disclosure by  Franchisor  to  Franchisee,  had
become or later  becomes a part of the public  domain,  through  publication  or
communication by others.

         11.4 If Franchisee is requested or required by subpoena, administrative
action,  discovery  request  or action of a  judicial  or  governmental  body to
disclose any  information,  knowledge,  know-how or techniques  protected by the
terms of this Section 11, Franchisee shall immediately notify Franchisor of such
request  or  requirement  and  shall  cooperate  with  Franchisor  in  obtaining
appropriate  protective  orders or  similar  protections  for such  information,
knowledge, know-how or techniques.

12.      CONFIDENTIAL OPERATING MANUALS
         ------------------------------

         12.1 Franchisee  Compliance with Manual.  To protect the reputation and
goodwill of  Franchisor  and to maintain high  standards of operation  under the
System,  Franchisee shall conduct its business in accordance with and subject to
the  Manual,  which  Franchisee   acknowledges  having  received  on  loan  from
Franchisor  for the term of this  Agreement.  The Manual may consist of multiple
volumes of printed  text,  computer  disks,  other  electronically  stored data,

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<PAGE>

and/or  videotapes  or other  media of storage or  formatting,  and may  contain
information  related  to  formulas,  the  Technology,   Store  operations,   the
communications  and information  system,  the Proprietary  Marks, and Franchised
Business  management.  Franchisee  acknowledges  and agrees that  Franchisor may
provide a portion or all of the Manual (including  updates and amendments),  and
other  instructional  information  and materials in, or via,  electronic  media,
including  without  limitation,  through the Internet.  Franchisee  shall at all
times  use  reasonable  safeguards  to  insure  that  these  materials,  both in
electronic and other formats, are kept confidential and secure.

         12.2 No Duplications. Franchisee shall not at any time copy, duplicate,
record,  or otherwise  reproduce the foregoing  Manual, in whole or in part, nor
otherwise  make the same or any other  materials  provided by  Franchisor  under
Section 12.1 available to any unauthorized person.

         12.3 Manual Is Franchisor Property.  The Manual, and any other material
created for or approved  for use in the  operation of the  Franchised  Business,
shall be  deemed  confidential  information  for  purposes  of  Section  11 (and
Franchisor  hereby  designates  it as such),  shall at all times remain the sole
property of  Franchisor  and shall at all times be kept in a secure place on the
Store premises.

         12.4  Revision of Manual.  Franchisor  may from time to time revise the
contents of the Manual,  and Franchisee  expressly agrees to make  corresponding
revisions  to its  Manual  and to  comply  with  each new or  changed  standard.
Franchisor  shall promptly advise  Franchisee in writing of any revisions to the
Manual.

         12.5 Maintenance of Manual.  Franchisee shall ensure that the Manual is
kept  current and up to date.  In the event of any dispute as to the contents of
the Manual,  the terms of the master copy of the Manual maintained by Franchisor
at Franchisor's home office shall be controlling.

13.      ACCOUNTING AND RECORDS
         ----------------------

         13.1 Presentation of Records. Franchisee shall maintain during the term
of this  Agreement,  and shall  preserve  for at least  seven (7) years from the
dates of their preparation,  full,  complete,  and accurate books,  records, and
accounts for the Franchised  Business in accordance with United States generally
accepted  accounting  principles  and in  the  form  and  manner  prescribed  by
Franchisor  from time to time in the Manual or otherwise in writing.  Franchisee
shall also maintain during the term of this  Agreement,  and shall also preserve
for at least  seven  (7)  years  from the  date of their  preparation,  all cash
register tapes or electronic records from the Store.

         13.2 Monthly  Reports.  No later than the fifteenth  (15th) day of each
month,  or such other time as may correspond to the required  payment periods as
set forth in Sections  4.4 and 4.5,  Franchisee  shall  submit to  Franchisor  a
royalty  report  and Gross  Sales  report  for the prior  month,  and such other
reports as Franchisor specifies, all in the form prescribed by Franchisor.

                                       34
<PAGE>

         13.3  Quarterly  Reports.  No  later  than  the  fifteenth  (15th)  day
following the end of each quarter year (with the quarter  periods  concluding at
the end of March,  June,  September and  December),  Franchisee  shall submit to
Franchisor  a profit and loss  statement  reflecting  all Gross Sales during the
preceding  quarterly  period  and a  marketing  report  in forms  prescribed  or
approved by Franchisor. Franchisee shall prepare profit and loss statements on a
cash or accrual basis as approved by Franchisor and in accordance with generally
accepted accounting principles.

         13.4 Annual  Reports.  Franchisee  shall,  at its  expense,  provide to
Franchisor,  in such format as  Franchisor  shall  specify  from time to time, a
complete annual financial  statement  (prepared  according to generally accepted
accounting  principles),  on a compilation basis,  within ninety (90) days after
the end of each fiscal year of the Franchised  Business  during the term hereof,
showing the results of operations of the Franchised  Business  during the fiscal
year.

         13.5 Other Reports.  Franchisee shall submit to Franchisor,  for review
or auditing purposes, such other forms, reports,  records,  information and data
regarding the Franchised Business as Franchisor may reasonably designate, in the
form and at the times and places reasonably required by Franchisor, upon request
and as specified  from time to time in the Manual or  otherwise in writing.  The
reporting  requirements of this Section 13.5 shall be in addition to, and not in
lieu of, the electronic reporting requirement under Section 9 above.

         13.6 Right of  Inspection.  Franchisor or its  designated  agents shall
have the right at all  reasonable  times to examine  and copy,  at  Franchisor's
expense,  the books,  records,  and sales and income tax returns of  Franchisee.
Franchisor shall also have the right, at any time, to have an independent  audit
made of the books and records of Franchisee.  If an inspection  reveals that any
payments have been  understated  in any report to  Franchisor,  then  Franchisee
shall immediately pay Franchisor the amount understated upon demand, in addition
to interest  from the date such  amount was due until  paid,  at the rate of one
percent (1%) per month, or the maximum rate permitted by law, whichever is less.
If an inspection discloses an understatement in any report of three percent (3%)
or more,  Franchisee  shall, in addition to payment of the  understated  amounts
with  interest,  reimburse  Franchisor  for any and all  costs and  expenses  of
Franchisor connected with the inspection (including, without limitation, travel,
lodging,  expenses, and reasonable accounting and legal costs). Franchisor shall
be entitled to conduct the inspections and audits described in this Section 13.6
on no more than two occasions  during any twelve (12) month  period,  unless the
inspection  or audit  reveals an  understatement  in any report of three percent
(3%) or more, in which case Franchisor  shall not be limited as to the frequency
of its inspection and audit rights. If an audit or inspection discloses an under
payment by Franchisee  of three percent (3%) or more for any report,  Franchisor
shall be entitled to inspect  and audit  Franchisee's  books and records for all
prior periods. The foregoing remedies shall be in addition to any other remedies
Franchisor may have. If an inspection  discloses an  overstatement in any report
and an over payment by Franchisee, then Franchisor shall notify Franchisee as to
the amount of such  overpayment,  and shall  permit  Franchisee  to credit  such
amount against  monies,  if any, owing to  Franchisor,  or against  Franchisee's
subsequent payment of royalties.

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<PAGE>

14.      ADVERTISING
         -----------

         Advertising  and  the  standardization  of  advertising   programs  are
essential to the furtherance of the goodwill and public image of the System, and
the parties therefore covenant as follows:

         14.1 Fund.  Franchisor  shall  have the right,  at any time in its sole
discretion to establish a fund for system-wide  advertising and promotion of the
System (the "National  Fund"),  which shall operate as described in Section 14.4
below.

         14.2 Franchise Advertising  Obligations.  Franchisor reserves the right
to require  that  Franchisee,  during each month  (except for local  advertising
expenditures,  which shall be measured on an annual  basis and shall be governed
by Section 14.3 below),  expend or  contribute on  advertising  and promotion an
amount,  which, in the aggregate,  is equal (subject to adjustment by Franchisor
as set forth in Section 14.2.2) to four percent (4%) of Franchisee's Gross Sales
during the  preceding  month (or such greater  amount as is described in Section
14.2.4)  to  advertise  and to promote  the Store  (together,  the  "Advertising
Obligations").  The  Advertising  Obligations  shall be paid and/or  expended by
Franchisee in the following manner and proportions:

              14.2.1   Franchisee   shall  spend,  for  the  purpose  of  "local
         advertising  and  promotion",  for each  calendar  year (subject to the
         limited exception described below), such amounts as may be specified or
         approved by Franchisor  from time to time in the Manual or otherwise in
         writing,  which  amounts shall not be less than two percent (2%) of the
         estimated Gross Sales for the calendar year. The amount of each minimum
         annual  expenditure,  which may be an  estimated  amount (as  described
         above),  must be approved by  Franchisor  as  described in Section 14.3
         hereof,  and Franchisee's local advertising and promotion shall be made
         in  accordance  with  Section  14.3  hereof.  Franchisee  shall  not be
         required  to  comply  with  the  expenditure   requirements  for  local
         advertising and promotion until the beginning of the fourth (4th) month
         following the date on which the Store first opens for business.  If the
         Store to  which  this  Agreement  relates  is  either  (i) an  existing
         franchise  that is being  acquired by  Franchisor  from another  System
         franchisee,  or (ii) an existing  floral  and/or  floral and gift store
         which has not previously been a Store, the expenditure  requirements of
         this Section  14.2.1 shall apply the month  following the date on which
         the Store first opens for business.

              14.2.2  During such time as the  National  Fund (or any  successor
         entity  designated by  Franchisor)  is in existence,  Franchisee  shall
         contribute to the Fund an amount to be determined by Franchisor,  which
         amount  shall not exceed two percent (2%) of  Franchisee's  Gross Sales
         during the preceding month. As of the execution of this Agreement,  the
         required contribution rate is two percent (2%).

                                       36
<PAGE>

              14.2.3 The required  contributions  and  expenditures  are minimum
         requirements only (subject to Section 14.2.4),  and Franchisee may, and
         is  encouraged  by Franchisor  to,  expend  additional  funds for local
         advertising and promotion.

              14.2.4 Franchisee's  aggregate Advertising  Obligations may exceed
         four percent (4%) of  Franchisee's  Gross Sales,  if: (a) a majority of
         all Stores,  including  those operated by Franchisor and its affiliates
         and those  operated  by  franchisees  (which are not then in default of
         their  Franchise  Agreements),  approve,  in writing,  to increase  the
         Advertising Obligations.

         14.3 Local  Advertising  Obligations.  Franchisee shall comply with the
following  "local  advertising  and promotion"  obligations  with respect to the
Franchised Business:

              14.3.1  Throughout the term of this  Agreement,  Franchisee  shall
         conduct  advertising  and  promotion  in  accordance  with a  marketing
         proposal approved in advance by Franchisor.  Franchisee shall submit to
         Franchisor,  not later  than  sixty  (60) days prior to the end of each
         calendar  year, a marketing  proposal for the following  year,  setting
         forth  Franchisee's  proposed local advertising and marketing plans and
         proposed expenditures to satisfy Franchisee's  expenditure  obligations
         as under Section 14.2.1 above. For the first (or partial) calendar year
         of Franchisee's  operations under this Agreement,  however,  Franchisee
         shall submit such proposal,  relating to the remainder of such calendar
         year, to  Franchisor  not later than thirty (30) days prior to the date
         on which  Franchisee  is  scheduled  to commence  operating  the Store.
         Franchisor   shall  approve,   disapprove,   or  provide  comments  and
         suggestions  on  such  marketing   proposal  within  thirty  (30)  days
         following  receipt of the proposal from  Franchisee.  Franchisee  shall
         implement  any  changes  to  the  proposal   reasonably   requested  by
         Franchisor if Franchisor does not approve the proposal,  and Franchisee
         shall  not  implement  the  marketing   proposal   until   approved  by
         Franchisor.  Franchisor  may require use of specific  materials  and/or
         participation  in  certain  marketing  plans.  If,  by  the  end of any
         calendar year,  Franchisee has not expended  monies in accordance  with
         the approved marketing plan equal to the amount specified in the annual
         marketing plan approved by Franchisor for that year,  Franchisee  shall
         have  sixty  (60)  days in which  either to spend,  on  approved  local
         advertising  and  promotion,  or to contribute to the National Fund the
         difference between  Franchisee's  required  expenditures and its actual
         expenditures for the ending calendar year.

              14.3.2 All local advertising and promotion by Franchisee shall use
         such media and be of such type,  format and content as  Franchisor  may
         approve,  shall be  conducted  in a dignified  manner  consistent  with
         industry standards for the retail floral industry, and shall conform to
         such standards and  requirements as Franchisor may specify from time to
         time.  Franchisee  shall not conduct or participate in any  advertising
         and  promotional  activities  that are  directed  to, or which  target,
         potential  customers  located  outside  of the  Territory  unless  such
         advertising and promotional activities have been approved by Franchisor

                                       37
<PAGE>

         in advance of their use and such activities  comply with the Manual and
         Franchisor's   other  written   policies   regarding  such  activities.
         Franchisor  shall have the right to, among other  matters,  require any
         such  activities  either  to (i) not  promote  any  specific  franchise
         (including  Franchisee's  Store), or (ii) promote all franchises of the
         System  outside  of the  Territory  in which  potential  customers  are
         targeted. Franchisee shall not use any advertising or promotional plans
         or materials  unless and until Franchisee has received written approval
         from Franchisor.

              14.3.3  Franchisee  shall submit to  Franchisor  no later than the
         fifteenth (15th) day following the end of each quarter of each calendar
         year (unless Franchisor specifies a different reporting  schedule),  in
         accordance with the procedures set forth in Section 4.5 or as otherwise
         specified by  Franchisor,  detailed  reports  describing  the amount of
         money  expended on  advertising,  marketing  and  promotion  during the
         previous  quarter year (or other time period  specified by Franchisor).
         At the  request of  Franchisor,  or as  Franchisor  may  specify in the
         Manual,  Franchisee shall submit bills, statements,  invoices, or other
         documentation  satisfactory  to  Franchisor  to  evidence  Franchisee's
         advertising or marketing activities.

              14.3.4  The term  "local  advertising  and  promotion"  refers  to
         advertising and promotion related directly to the Franchised  Business,
         and, unless otherwise  specified,  consists only of the direct costs of
         purchasing  advertising  materials  (including,  but  not  limited  to,
         camera-ready advertising and point of sale materials),  media (space or
         time),  promotion,  direct  out-of-pocket  expenses related to costs of
         advertising  and  sales  promotion  (including,  but  not  limited  to,
         advertising  agency fees and expenses,  cash and "in-kind"  promotional
         payments to landlords, postage, shipping, telephone, and photocopying),
         costs  of  products  used  for  marketing   giveaways  and  such  other
         activities  and expenses as  Franchisor,  in its sole  discretion,  may
         specify or approve.  Franchisor  may provide to Franchisee  information
         and other materials specifying the types of advertising and promotional
         activities and costs which shall not qualify as "local  advertising and
         promotion,"  including,   without  limitation,   the  coupon  value  of
         advertising  coupons, and the costs of products provided for free or at
         a reduced charge for charities or other donative events or causes.

         14.4  Operation of National Fund. The National Fund shall be maintained
and administered by Franchisor or its designee, as follows:

              14.4.1  Franchisor  or its designee  shall direct all  advertising
         programs, with sole discretion over the concepts,  materials, and media
         used in  such  programs  and  the  placement  and  allocation  thereof.
         Franchisee  acknowledges that the National Fund is intended to maximize
         general public recognition, acceptance, and use of the System, and that
         while Franchisor has the current intention of making  expenditures from
         the National  Fund in the area where its funds are  generated,  neither
         Franchisor nor its designee are obligated,  in administering  the Fund,
         to make  expenditures  for, on behalf or for the benefit of, Franchisee
         which are equivalent or proportionate  to Franchisee's  contribution to
         the Fund, or to ensure that any particular franchisee benefits directly
         or pro rata from expenditures by the Fund.

                                       38
<PAGE>

              14.4.2  The Fund,  all  contributions  thereto,  and any  earnings
         thereon,  shall  be used  exclusively  to meet  any  and all  costs  of
         maintaining,   administering,   directing,  conducting,  and  preparing
         advertising,  marketing,  public relations and/or promotional  programs
         and  materials,  Websites (as such term is defined in Section 14.9) and
         any other activities  Franchisor believes will enhance the image of the
         System,  including,  among other things, (i) the costs of preparing and
         conducting media advertising  campaigns,  (ii) direct mail advertising;
         (iii) marketing  surveys and other public  relations  activities,  (iv)
         employing  advertising  and/or  public  relations  agencies  to  assist
         therein, (v) purchasing promotional items, conducting and administering
         visual merchandising,  point of sale, and other merchandising programs,
         and (viii)  providing  promotional  and other  marketing  materials and
         services to the Speaking Roses franchise operated under the System. The
         National Fund may also be used to provide rebates or  reimbursements to
         franchisees   for  local   expenditures  on  products,   services,   or
         improvements that are approved in advance by Franchisor,  including for
         products,  services,  or improvements  Franchisor believes, in its sole
         discretion,  will promote  general  public  awareness of and  favorable
         support for the System.

              14.4.3  Franchisee  shall  contribute  to  the  National  Fund  by
         electronic funds transfer in accordance with Franchisor's requirements,
         unless otherwise  specified in writing by Franchisor.  All sums paid by
         Franchisee  to the  National  Fund  shall be  maintained  in an account
         separate from the other monies of  Franchisor  and shall not be used to
         defray any of Franchisor's  expenses,  except for such reasonable costs
         and overhead,  if any, as Franchisor may incur in activities reasonably
         related to the  administration,  direction,  and  implementation of the
         National Fund and  advertising  programs for franchisees and the System
         to be conducted  through such  National  Fund,  including,  among other
         things,  costs of personnel for creating and implementing  advertising,
         merchandising,    promotional   and   marketing   programs,    or   the
         administration of the National Fund. The National Fund and its earnings
         shall  not  otherwise  inure to the  benefit  of  Franchisor  or to any
         Franchisee and the  contributions  to and earnings of the National Fund
         are not and shall not be an asset of Franchisor.  The National Fund may
         lend money and incur debt in the furtherance of its general purposes.

              14.4.4  If the  National  Fund is used to  produce  point  of sale
         materials, employee uniforms, or other samples or promotional materials
         for distribution to customers (e.g.. customer gift-with-purchase items,
         discounted  customer  purchase-with-purchase  items,  etc.), such items
         shall be sold to franchisees in the System at a reasonable  price.  Any
         proceeds  from  the sale of items or  materials  produced  through  the
         National Fund shall be contributed to the National Fund.

              14.4.5 All  contributions  to and  earnings of the  National  Fund
         shall be expended for advertising  and/or  promotional  purposes during
         the taxable  year  within  which the  contributions  and  earnings  are
         received,  If,  however,  excess amounts remain in the National Fund at
         the end of such taxable year, all expenditures in the following taxable
         year(s) shall be made first out of  accumulated  earnings from previous
         years,  next out of  earnings  in the current  year,  and finally  from
         contributions.

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<PAGE>

              14.4.6   Franchisor  or  its  designee  shall  maintain   separate
         bookkeeping  accounts  for  the  National  Fund.  A  statement  of  the
         operations  of the  National  Fund as shown on the books of  Franchisor
         shall be prepared  annually by Franchisor  and shall be made  available
         for  inspection  by  Franchisee,  upon written  request of  Franchisee.
         Franchisor  shall not be obligated to have the books and records of the
         National Fund audited by any independent public accountant.

              14.4.7  Although the National  Fund is intended to be of perpetual
         duration,  Franchisor  maintains  the right to  terminate  the National
         Fund;  provided that Franchisor shall use any unexpended  monies in the
         National  Fund for  advertising  and/or  promotional  purposes  for the
         System.

         14.5 Franchisor Promotional Materials.  Franchisor shall make available
to  Franchisee,  from  time  to time  and at  Franchisee's  expense,  for use in
Franchisee's local advertising and promotion,  advertising plans and promotional
materials,  which may include newspaper mats, coupons,  merchandising materials,
sales  aids,  point-of-purchase  materials,  special  promotions,   direct  mail
materials, community relations programs, and similar advertising and promotional
materials.  No use by Franchisee of any such materials shall preclude Franchisor
from using those materials at a national, regional or local level.

         14.6 Samples.  Franchisee  shall submit samples of all  advertising and
promotional  plans and materials to Franchisor (by means described in Section 23
hereof),  for Franchisor's prior written approval (except with respect to prices
to be charged), if such plans and materials have not been prepared or previously
approved  by  Franchisor.  Franchisor  shall  retain  the  right to  revoke  any
previously  approved  advertising  materials  by  providing  written  notice  to
Franchisee,  upon receipt of which  Franchisee  shall cease to use the materials
and take such other actions as Franchisor may reasonably request.

         14.7 Telephone Directory Listings. Franchisee shall, at its expense and
as part of its expenditures for local advertising and promotion, obtain listings
in local  telephone  directories.  Franchisee  shall  comply  with  Franchisor's
specifications  concerning  such  listings,  including the form and size of such
listings, and the number of directories in which such listings shall be placed.

         14.8  Coupons  and  Discounts.  Franchisee  shall  honor  all  coupons,
discounts, and gift certificates specified by Franchisor, and shall process them
in accordance with procedures specified by Franchisor in the Manual or otherwise
in writing.

         14.9 Website Advertising. Franchisee specifically acknowledges that any
interactive  electronic  document,  series of  symbols,  or  otherwise,  that is
contained  in  a  network  of  computers   and/or   other   devices   linked  by
communications software, including without limitation home pages on the Internet
or World Wide Web (a "website" and, with respect to the website(s) maintained by
or for the benefit of  Franchisor,  "Website(s)")  will be deemed  "advertising"
under this Agreement,  and will be subject to (among other things)  Franchisor's
approval  under this Section 14. In  connection  with any use by Franchisee of a
website, Franchisee agrees to the following:

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<PAGE>

              14.9.1  Franchisor  shall have the  unlimited  right,  but not the
         obligation,  to establish and maintain one or more Websites, which may,
         without  limitation,  promote the Proprietary  Marks, any or all of the
         Products,  Stores, the franchising of Speaking Roses franchise,  and/or
         the System. Franchisor shall have the sole right to control all aspects
         of such Websites,  including without limitation their design,  content,
         functionality,  links to the websites of third parties,  legal notices,
         and policies and terms of usage.  Franchisor  shall also have the right
         to discontinue operation of all, any or any portion, or any funding of,
         such Websites.

              14.9.2  Franchisee  shall not  establish a separate  website  with
         respect to the Franchised Business.

              14.9.3 Provided  Franchisor  maintains web pages on one or more of
         the Websites,  Franchisee shall have the right, but not the obligation,
         to  utilize  one or  more  web  page(s)  to  describe  Franchisee,  the
         Franchised  Business,  and/or  the Store,  with such web  page(s) to be
         located within Franchisor's Website. Franchisor shall have the right to
         require   Franchisee  to  contract  with  third  parties  (or,  in  the
         alternative and at  Franchisor's  election,  provide  Franchisee with a
         template)  for  the  development  and  maintenance  of  such  webpages.
         Franchisee shall comply with Franchisor's  policies with respect to the
         creation, maintenance, and content of any such webpages, and Franchisor
         shall have the right to limit  and/or  discontinue  the content  and/or
         operation of such Websites and webpages.

              14.9.4  Franchisor  shall have the unilateral  right to modify the
         provisions  of this Section  14.9  relating to websites and Websites in
         such manner as  Franchisor  shall  solely  determine  is  necessary  or
         appropriate for the best interests of the System.

         14.10 Ownership of Copyrights. All copyrights in and to advertising and
promotional  materials  developed by or on behalf of  Franchisee  which bear the
Proprietary  Marks shall be the sole  property  of  Franchisor,  and  Franchisee
agrees to execute such  documents  (and, if necessary,  require its  independent
contractors to execute such documents) as may be deemed reasonably  necessary by
Franchisor to verify,  transfer or perfect  Franchisor's  rights  therein and to
give effect to this provision. Any advertising,  marketing,  promotional, public
relations, or sales concepts, plans, programs, activities, or materials proposed
or  developed  by  Franchisee  for the  Franchised  Business  or the  System and
approved  by  Franchisor  may be used by  Franchisor  and other  franchisees  of
Franchisor without any compensation to Franchisee.

15.      INSURANCE
         ---------

         15.1  Procurement  and  Maintenance  of  Insurance.   Franchisee  shall
procure,  prior to the  commencement  of  construction  or any operations of the
Franchised  Business under this Agreement,  and shall maintain in full force and

                                       41
<PAGE>

effect at all times during the term of this Agreement,  at Franchisee's expense,
an  insurance  policy or  policies  protecting  Franchisee,  Franchisor  and its
affiliates,  and their respective  officers,  directors,  partners,  agents, and
employees against any demand or claim with respect to personal injury, death, or
property  damage,  or any loss,  liability,  or  expense  whatsoever  arising or
occurring upon or in connection with the Franchised  Business (the "Insurance").
The  Insurance  shall  include  the  coverage  specified  in the Manual or other
written  instructions of Franchisor,  and shall include,  but not be limited to,
(i) comprehensive general liability insurance,  including products liability and
personal and advertising  injury, with minimum limits not less than five hundred
thousand dollars ($500,000) per occurrence,  one million dollars ($1,000,000) in
the aggregate,  three hundred thousand dollars  ($300,000) Fire Damage Liability
and five thousand  dollars  ($5,000)  Medical  Expense  Limit;  (ii)  automobile
liability  insurance  (covering both owned,  non-owned and hired  vehicles) with
minimum  limits of five hundred  thousand  dollars  ($500,000);  (iii)  property
insurance covering tenant's  improvements and betterments and business property,
before and after its installation  into the Store,  equal to one hundred percent
(100%)  of its  replacement  value;  and (iv)  statutory  workers'  compensation
insurance.  The Insurance  shall also include  coverage for spoilage of products
resulting  from  mechanical  or  electrical  breakdown  of  refrigeration.  Such
policies  shall be written by a  responsible  carrier or carriers  acceptable to
Franchisor, and shall name Franchisor and its affiliates as additional insureds.

         15.2 Effect of Franchisor Insurance.  Franchisee's obligation to obtain
and maintain the policy or policies in the amounts specified herein shall not be
limited  in any way by  reason  of any  insurance  which  may be  maintained  by
Franchisor,  nor shall Franchisee's performance of that obligation relieve it of
liability  under  the  indemnity  provisions  set  forth in  Section  21 of this
Agreement.

         15.3  Certificates  of  Insurance.  Prior  to the  commencement  of any
operations  under this  Agreement,  and thereafter as specified in the Manual or
upon Franchisor's request,  Franchisee shall deliver to Franchisor  certificates
of insurance  evidencing the proper types and minimum amounts of coverage of the
Insurance.  Franchisee shall also maintain  certificates of insurance evidencing
the proper  types and  minimum  amounts of  coverage at the Store and furnish to
Franchisor a copy. All  certificates  shall expressly  provide that no less than
thirty (30) days' prior written notice shall be given to Franchisor in the event
of material  alteration to or  cancellation  of the coverages  evidenced by such
certificates  and  shall  name  Franchisor  and  its  affiliates  as  additional
insureds.

         15.4 Failure to Procure or Maintain Insurance.  Should Franchisee,  for
any  reason,  fail  to  procure  or  maintain  the  Insurance  required  by this
Agreement,  as such  requirements  may be revised by Franchisor in the Manual or
otherwise in writing, Franchisor shall have the right and authority (but not the
obligation)  to  procure  such  Insurance  and to charge  the costs  thereof  to
Franchisee,  which  charges,  together with a reasonable fee for the expenses of
Franchisor in so acting, shall be payable by Franchisee immediately upon notice.
The foregoing remedies shall be in addition to any other remedies Franchisor may
have.

         15.5 Changes in Insurance  Requirements.  Franchisor  may, from time to
time, and in its sole discretion, make such changes in the minimum policy limits
and endorsements of the Insurance as it may determine;  provided,  however, that

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<PAGE>

all changes  shall apply to all  franchisees  of  Franchisor  who are  similarly
situated.

16.      TRANSFERS OF INTERESTS
         ----------------------

         16.1  Transfer  by  Franchisor.  Franchisor  shall  have  the  right to
transfer  or assign  all or any part of its  rights or  obligations  under  this
Agreement to any Person.  With respect to any  assignment  which  results in the
obligation by the assignee to  subsequently  perform all or any of  Franchisor's
obligations  under this  Agreement,  the assignee  shall (as a condition to such
assignment)  expressly assume and agree to perform such  obligations,  and shall
become solely responsible for all assigned  obligations of Franchisor under this
Agreement from the date of assignment.  In addition,  and without  limitation to
the foregoing,  Franchisee  expressly affirms and agrees that Franchisor (i) may
sell its assets,  its rights in the Proprietary  Marks, or its System,  (ii) may
sell its securities in a public  offering or in a private  placement,  (iii) may
merge, acquire other corporations,  or be acquired by another  corporation,  and
(iv) may undertake a refinancing, recapitalization,  leveraged buy-out, or other
economic or financial restructuring.

         16.2 Transfer by Franchisee:

              16.2.1 Franchisee understands and acknowledges that Franchisor has
         granted  Franchisor  the rights  hereunder  in reliance on the business
         skill,  financial capacity, and personal character of Franchisee or the
         Principals of Franchisee  if Franchisee is not an  individual.  Neither
         Franchisee,  nor any Principal shall sell, assign, transfer, convey, or
         give away (each, a "Transfer")  any direct or indirect  interest in the
         Franchisee  (including  any direct or  indirect  interest  in a limited
         liability company or partnership,  if Franchisee is such an entity), or
         in all or substantially  all of the assets of the Franchised  Business,
         without the prior written consent of Franchisor.

              16.2.2 Franchisor shall not unreasonably withhold its consent to a
         Transfer;  provided,  that if a Transfer,  alone or together with other
         previous,  simultaneous,  or  proposed  Transfers,  (i) would  have the
         effect of changing control of the Franchisee,  (ii) would result in the
         assignment  of the  rights and  obligations  of  Franchisee  under this
         Agreement,   or  (iii)  would   transfer  the  ownership   interest  in
         substantially all of the assets of the Franchised Business,  Franchisor
         may, in its sole  discretion,  require any or all of the  following  as
         conditions of its approval:

                     16.2.2.1 All of Franchisee's  accrued monetary  obligations
              and  all  other  outstanding  obligations  to  Franchisor  and its
              affiliates shall have been satisfied.

                     16.2.2.2   Franchisee  shall  not  be  in  default  of  any
              provision of this  Agreement,  any  amendment  hereto or successor
              hereto, or any other agreement  between  Franchisee and Franchisor
              or its affiliates.

                     16.2.2.3 Each transferor  (and, if the transferor is not an
              individual,  the  transferor and such other owners of a beneficial
              interest in the  transferor as Franchisor  may request) shall have

                                       43
<PAGE>

              executed a general release,  in a form satisfactory to Franchisor,
              of  any  and  all  claims  against   Franchisor  and  Franchisor's
              affiliates, and each of their officers,  directors,  shareholders,
              and  employees,  in their  corporate  and  individual  capacities,
              including,  without  limitation,  claims  arising  under  federal,
              state, and local laws, rules, and ordinances.

                     16.2.2.4   Any   assignment   agreement   executed  by  the
              transferor  and  transferee  shall  be in a form  satisfactory  to
              Franchisor,  and shall provide for the  assignee's  assumption and
              agreement to discharge all of the transferor's  obligations  under
              this Agreement or any guarantee  executed in connection  with this
              Agreement.

                     16.2.2.5 The transferee  shall  demonstrate to Franchisor's
              satisfaction  that the terms of the proposed Transfer do not place
              an unreasonable financial or operational burden on the transferee,
              and  that  the   transferee   and/or  its   Principals   (i)  meet
              Franchisor's standards for educational,  managerial,  and business
              standards;   (ii)  possess  a  good  moral   character,   business
              reputation, and credit rating; (iii) have the aptitude and ability
              to conduct the  Franchised  Business (as may be evidenced by prior
              related   business   experience  or  otherwise)   and  absence  of
              conflicting interests;  and (iv) have adequate financial resources
              and capital to operate the business.

                     16.2.2.6 The transferee shall execute, for a term ending on
              the  expiration  date of this  Agreement  and with such  remaining
              renewal terms as may be provided by this  Agreement,  the standard
              form  franchise   agreement  then  being  offered  to  new  System
              franchisees, and such other ancillary agreements as Franchisor may
              require  for  the  Franchised  Business,  which  agreements  shall
              supersede and replace this Agreement in all respects and the terms
              of which  agreements may differ from the terms of this  Agreement,
              including,  without limitation, with respect to higher advertising
              contributions,   and  other,   substantive,   economic  terms  and
              conditions;  provided,  however,  that the transferee shall not be
              required  to pay a higher  percentage  royalty  rate or to pay any
              initial  franchise  fee  to  Franchisor  in  connection  with  the
              Transfer.

                     16.2.2.7 The transferee  and/or such owners of a beneficial
              interest  in the  transferee  as  Franchisor  may  request,  shall
              execute a guarantee,  indemnification,  and  acknowledgment in the
              form appended hereto as Appendix C.

                     16.2.2.8 If so requested by Franchisor,  the transferee, at
              its   expense,   shall   upgrade  the  Store  to  conform  to  the
              then-current  standards and  specifications of System stores,  and
              shall  complete the  upgrading and other  requirements  within the
              time specified by Franchisor.

                                       44
<PAGE>

                     16.2.2.9 The  transferee  or, if the  transferee  is not an
              individual, such owners and managerial personnel of the transferee
              as  Franchisor  may  require,   shall  successfully  complete  any
              training  programs  then in effect for  franchisees  of Franchisor
              upon such  terms  and  conditions  as  Franchisor  may  reasonably
              require,  and transferee shall, in connection  therewith,  pay the
              then-current  training  fee,  if  any.  Transferee  shall  also be
              responsible  for  all  expenses  incurred  during  such  training,
              including,   without  limitation,  the  costs  of  transportation,
              lodging, meals, wages, and worker's compensation insurance.

                     16.2.2.10  Franchisor  may  require  Franchisee  to  pay to
              Franchisor a transfer fee equivalent to fifty percent (50%) of the
              then-current  initial  franchise  fee,  plus  amounts  as  may  be
              necessary  to  reimburse  Franchisor  for any  legal,  accounting,
              administrative,  and other related expenses  Franchisor  incurs in
              connection with the Transfer.

                     16.2.2.11  Franchisee shall agree in writing to comply with
              the covenants set forth in Section 19 below.

                     16.2.2.12  Franchisee  shall  remain  liable for all of its
              obligations  to Franchisor  that arose prior to the effective date
              of the  Transfer,  and shall  execute and  deliver  any  documents
              reasonably  requested by Franchisor  to evidence  such  continuing
              liability.

              16.2.3 For any  Transfer  not  included  in Section  16.2.2,  each
         transferee   shall,   in  addition  to  the  requirement  of  obtaining
         Franchisor's  consent as provided in Section 16.2.1,  be subject to the
         requirements of Sections 16.2.2.3 and 16.2.2.7 above.

              16.2.4  Neither  Franchisee  nor any  Principal  shall  grant  any
         security  interest  in, or  otherwise  encumber,  any of the  assets or
         securities  of  the   Franchisee   unless   Franchisee   satisfies  the
         requirements  of  Franchisor,  which may include,  without  limitation,
         execution  of an  inter-creditor  agreement by  Franchisor,  Franchisee
         and/or such  Principal,  and any secured  creditor of Franchisee,  in a
         form   satisfactory  to  Franchisor,   acknowledging   such  creditor's
         obligations to be bound by the terms of this Section 16.

         16.3 Offer of  Securities  of  Franchisee.  All  materials  required by
federal  or state law for any  offer or sale of  securities  of the  Franchisee,
whether  by  Franchisee  or any  owner  of  Franchisee,  shall be  submitted  to
Franchisor  for  review  and  consent  prior to (i) their  being  filed with any
government  agency if the  offering  is subject to review or comment by any such
agency as a result of the offering being  registered under the Securities Act of
1933  or  otherwise;  and  (ii)  their  use  in any  offering  exempt  from  the
registration  of  federal  and  state  securities  law  (including  by reason of
Regulation D promulgated  under the Securities Act of 1933 and any corresponding

                                       45
<PAGE>

state law) shall be  submitted  to  Franchisor  for review and consent  prior to
their use. No such offering or review and consent by Franchiser  shall imply (by
use of the Proprietary  Marks or otherwise) that Franchisor is  participating as
an underwriter,  issuer, or offeror of Franchisee's or Franchisor's  securities,
or that  Franchisor  has  undertaken  due  diligence  to  verify  the  accuracy,
sufficiency or materiality of the statements in the offering  materials,  except
solely  with  respect  to the  description  of  Franchisee's  relationship  with
Franchisor.  Any review of the offering  materials  and consent by Franchisor to
conduct the offering shall be for  Franchisor's  sole benefit,  and not intended
for the benefit of any other party,  including,  but not limited to, the offeror
or any prospective investor. At its option,  Franchisor may require the offering
materials to contain written statements or disclaimers  prescribed by Franchisor
including,  but, not limited to, any limitations stated above in this paragraph.
Franchisee  and the other  participants  in the offering  shall fully  indemnify
Franchisor and  Franchisor's  affiliates in connection with the offering and for
each proposed offering,  Franchisee shall pay Franchisor a non-refundable fee of
Ten  Thousand  Dollars  ($10,000)  in  order  to  reimburse  Franchisor  for its
reasonable costs and expenses  associated with reviewing the proposed  offering,
including,  without  limitation,  legal and accounting  fees.  Franchisee  shall
provide Franchisor with written notice of any such offering at least thirty (30)
days prior to the date of  commencement  of any  offering  or other  transaction
covered by this Section 16.3.

         16.4 Right of First Offer.

              16.4.1  If (a)  Franchisee  wishes to sell,  pledge  or  otherwise
         transfer  any,  all  or  substantially  all  of  its  interest  in  the
         franchise,  or in this Agreement, or in all or substantially all of the
         assets of the Franchised Business, or (b) any Principal wishes to sell,
         pledge or otherwise  transfer any interest or all or substantially  all
         of its interest in the Franchised  Business,  or (c) if any third party
         attempts to enforce or effect an involuntary transfer of a Franchisee's
         interest in the  Franchise,  or this  Agreement or in the assets of the
         Franchised  Business (such as, by example and without limitation of the
         scope of this clause (c), as a result of foreclosure,  enforcement of a
         judgment  ,  or  transfer   under  a  divorce  or  marital   separation
         agreement)(the  term "seller" shall refer to such Selling,  pledging or
         transferring  Franchisee and/or any such described  Principal,  and the
         term "interest"  shall apply to the interest or asset to be transferred
         whether by  Franchisee  or such other  person or entity),  seller shall
         first offer, in writing,  to sell such interest or assets to Franchisor
         or its designee,  at Franchisor's option, on such terms and conditions,
         net  of  any   applicable   real  estate  and/or   business   brokerage
         commissions,  as set forth  therein.  Franchisor or its designee  shall
         have the right and  option,  exercisable  within  sixty (60) days after
         receipt of such offer,  to send  written  notice to the seller  stating
         that the Franchisor  intends to accept such offer. If Franchisor elects
         to  purchase  the  interest  or assets  offered,  the  closing  on such
         purchase shall occur within ninety (90) days from the date of notice to
         the seller of Franchisor's  election to purchase by Franchisor,  or, if
         longer, on the same timetable as contained in the offer.

              16.4.2 If  Franchisor  does not  elect to  purchase  the  seller's
         interest in such time period,  seller may sell, pledge or transfer such
         interest to a bona fide third party; provided that

                     16.4.2.1 The sale is made within ninety (90) days after the
              expiration of, or rejection by, Franchisor of the offer;

                                       46
<PAGE>

                     16.4.2.2  The sale is made at a net  price  and on terms no
              more favorable than those offered in writing to Franchisor.

                     16.4.2.3 All applicable  requirements  of Section 16 hereof
              are met, and in connection  with such sale or transfer,  the Store
              continues to be operated pursuant to the System.

              The  Franchisor's  failure to exercise the right of offer afforded
         by this  subsection  16.4  shall not  constitute  a waiver of any other
         provision of this Agreement, including all requirements of this Section
         16, with respect to a proposed  transfer.  However,  if the sale to the
         third party does not take place, then Franchisor's right of first offer
         will apply to each and every proposed sale of an interest.

              16.4.3 If the consideration, terms, and/or conditions offered by a
         third party are such that  Franchisor may not reasonably be required to
         furnish  the  same   consideration,   terms  and/or  conditions,   then
         Franchisor  may  purchase  the  interest  proposed  to be sold  for the
         reasonable  equivalent  in cash.  If the parties can not agree within a
         reasonable  time on the cash  consideration,  an independent  appraiser
         shall be designated by Franchisor,  and the  appraiser's  determination
         shall be binding.

         16.5 Transfers Upon Death or Permanent Disability.

              16.5.1 Upon the death of a Principal,  the personal representative
         of the deceased's  estate shall  transfer the deceased's  interest to a
         third party  approved  by  Franchisor  within six (6) months  after the
         death. If no personal  representative is designated or appointed, or no
         probate  proceedings  are  instituted  with  respect to the  deceased's
         estate,  then the  distributee  of such  interest  must be  approved by
         Franchisor. If the distributee is not approved by Franchisor,  then the
         distributee  shall  transfer the  deceased's  interest to a third party
         approved  by  Franchisor  within  six (6) months  after the  deceased's
         death.

              16.5.2 Upon the Permanent Disability of any Principal,  Franchisor
         may, in its sole discretion, require such interest to be transferred to
         a third party  designated by  Franchisee  and approved by Franchisor in
         accordance  with,  and subject  to, the  conditions  described  in this
         Section 16 within six (6) months after notice to Franchisee. "Permanent
         Disability"  shall  mean any  physical,  emotional,  or mental  injury,
         illness,  or incapacity  that would prevent a person from performing or
         effectively  directing the  obligations set forth in this Agreement for
         at least six (6) consecutive  months and from which condition  recovery
         within six (6)  consecutive  months from the date of  determination  of
         disability is unlikely.  Permanent  Disability shall be determined by a
         licensed  practicing  physician selected by Franchisor upon examination
         of such person or, if such  person  refuses to be  examined,  then such
         person  shall   automatically   be  deemed  to  suffer  from  Permanent
         Disability  for the purposes of this  Section  16.5.2 as of the date of
         refusal. Franchisor shall pay the cost of any required examination.

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<PAGE>

              16.5.3 Upon the death or Permanent Disability of Franchisee or any
         Principal of  Franchisee,  such person or such person's  representative
         shall  promptly  notify  Franchisor of such death or claim of Permanent
         Disability.  Any Transfer upon death or Permanent  Disability  shall be
         subject to the same terms and  conditions  as any inter vivos  Transfer
         hereunder. If the interest is not disposed of within a reasonable time,
         Franchisor may terminate this Agreement.

         16.6 Limited  Exceptions.  Notwithstanding  anything to the contrary in
this Section 16:

              16.6.1  Franchisee  shall not be required to pay the  transfer fee
         due under Section 16.2.2.10 above, if the transferee:  (a) is a spouse,
         domestic  partner,  parent,  or direct lineal  descendant or sibling of
         Franchisee  or of a Principal of  Franchisee  (or more than one of such
         persons);  (b) is a Principal of Franchisee;  (c) is an existing System
         franchisee that has operated a Store for at least a one (1) year period
         prior  to the  effective  date  of the  Transfer;  (d) is a  Franchisee
         Affiliate;  (e) has  worked as a manager  of an  existing  Store for at
         least  the one (1)  year  period  prior  to the  effective  date of the
         Transfer; or (f) is a transferee under Section 16.5 above.

              16.6.2 If Franchisee  is an individual  and seeks to transfer this
         Agreement to a corporation,  partnership,  limited liability company or
         trust  formed for the  convenience  of  ownership,  the  conditions  of
         Sections 16.2.2.3,  16.2.2.6,  16.2.2.8, and 16.2.2.10 shall not apply,
         and Franchisee may undertake  such transfer,  provided that  Franchisee
         owns  one  hundred  percent  (100%)  of  the  equity  interest  in  the
         transferee entity (and, in the case of a transfer to a trust, the trust
         is revocable and the  Franchise  acts as both the grantor and trustee),
         and  the  individual  personally  guarantees,  in  a  written  guaranty
         satisfactory  to Franchisor,  the performance of the obligations of the
         transferee Franchisee under the Franchise Agreement.

         16.7  Non-Waiver  of  Claims.  Franchisor's  consent  to  any  transfer
pursuant to this  Section 16 shall not  constitute a waiver of any claims it may
have  against  the  transferring  party,  nor  shall it be  deemed  a waiver  of
Franchisor's  right to  demand  exact  compliance  with any of the terms of this
Agreement by the transferee.

         16.8  Bankruptcy.  If  Franchisee  or any person  holding any  interest
(direct or indirect) in  Franchisee  becomes a debtor in a proceeding  under the
U.S.  Bankruptcy  Code or any similar law in the U.S.  or  elsewhere,  it is the
parties'  understanding  and  agreement  that any  transfer of the  ownership of
Franchisee, Franchisee's obligations and/or rights hereunder and/or any material
assets of Franchisee, shall be subject to all of the terms of this Section 16.

17.      DEFAULT AND TERMINATION
         -----------------------

         17.1 Franchisee  Default.  Franchisee  shall be deemed to be in default
under  this  Agreement,  and  all  rights  granted  herein  shall  automatically
terminate without notice to Franchisee, if (i) Franchisee shall become insolvent
or shall  make a general  assignment  for the  benefit of  creditors;  or (ii) a

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<PAGE>

petition  in  bankruptcy  is filed by  Franchisee  or such a  petition  is filed
against and not opposed by Franchisee  and/or is not  extinguished  within sixty
(60) days; or (iii) Franchisee is adjudicated a bankrupt or insolvent; or (iv) a
bill in  equity  or  other  proceeding  for the  appointment  of a  receiver  of
Franchisee or other custodian for  Franchisee's  business or assets is filed and
consented to by Franchisee;  or (v) a receiver or other custodian  (permanent or
temporary) of Franchisee's assets or property, or any part thereof, is appointed
by any court of competent  jurisdiction;  or (vi)  proceedings for a composition
with creditors under any state or federal law should be instituted by or against
Franchisee;  or (vii) a final  judgment  remains  unsatisfied  or of record  for
thirty (30) days or longer (unless appealed or a supersede as bond is filed); or
(viii) Franchisee is dissolved; or (ix) execution is levied against Franchisee's
business or property;  or (x) suit to foreclose any lien or mortgage against the
Store premises or equipment is instituted  against  Franchisee and not dismissed
within sixty (60) days;  or (xi) the real or personal  property of  Franchisee's
Store shall be sold after levy thereupon by any sheriff, marshal, or constable.

         17.2 Default  Events.  Franchisee  shall be deemed to be in default and
Franchisor  may, at its option,  terminate this Agreement and all rights granted
hereunder,  without  affording  Franchisee any  opportunity to cure the default,
effective  immediately  upon the  delivery of written  notice to  Franchisee  by
Franchisor  (in the manner set forth in Section 23 hereof),  upon the occurrence
of any of the following events:

              17.2.1  If  Franchisee  fails  to (a)  locate  and  secure  a site
         approved by Franchisor in accordance with the terms hereof, or (b) open
         the Store  within  the time  limits  provided  in  Section  7.3 of this
         Agreement,  or if Franchisor determines,  in its sole discretion,  that
         Franchisee  is not  acting  diligently  to  obtain  the  approvals  and
         consents  necessary  for the  opening of the Store  within one  hundred
         eighty (180) days of the Commencement Date.

              17.2.2 If  Franchisee  at any time ceases to operate the Store for
         three (3) consecutive  calendar days, or otherwise  abandons the Store,
         or loses the right to possession of the premises, or otherwise forfeits
         the right to do or  transact  business  in the  jurisdiction  where the
         Store is located, unless such default results from circumstances beyond
         the  control of  Franchisee  and do not arise from any action  taken or
         failure to act by Franchisee or Franchisee's failure to cure or correct
         the circumstances that led to such default.  Additionally,  if, through
         no fault of  Franchisee,  the  premises  are damaged or destroyed by an
         event such that repairs or  reconstruction  cannot be completed  within
         ninety (90) days thereafter, or if the premises are acquired pursuant a
         governmental taking of property, then Franchisee shall have thirty (30)
         days after such event in which to apply for  Franchisor's  approval  to
         relocate the premises  and/or  reconstruct  the Store,  which  approval
         shall not be unreasonably withheld.

              17.2.3 If (i) Franchisee or any officer, director, or Principal of
         Franchisee is convicted of a felony, a crime involving moral turpitude,
         or any other crime that  Franchisor  believes is  reasonably  likely to
         have an adverse  effect on the System or the  Proprietary  Marks or the
         goodwill associated therewith or Franchisor's interest therein; or (ii)

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<PAGE>

         Franchisee or any officer, director, or Principal of Franchisee commits
         any  acts or  engages  in any  behavior  that  Franchisor  believes  is
         reasonably  likely  to have an  adverse  effect  on the  System  or the
         Proprietary Marks or the goodwill associated  therewith or Franchisor's
         interest therein.

              17.2.4 If a threat or  danger to public  health or safety  results
         from the  construction,  maintenance,  or operation  of the Store,  and
         Franchisee has not immediately commenced actions to cure the problem or
         has not promptly  cured or corrected  the problem or activity that gave
         rise to the threat or danger.

              17.2.5 If  Franchisee  or any  Principal  purports to transfer any
         rights  or  obligations   under  this  Agreement  or  any  interest  in
         Franchisee or assets of the franchised business to any third party in a
         manner that violates the terms of Section 16 of this Agreement.

              17.2.6 If Franchisee fails to comply with the covenants in Section
         19.2 hereof

              17.2.7  If,  contrary  to the terms of  Sections  11 or 12 hereof,
         Franchisee  discloses  or divulges  the contents of the Manual or other
         confidential information provided to Franchisee by Franchisor.

              17.2.8 If Franchisee  knowingly  maintains false books or records,
         or  submits  any  false  reports   (including,   but  not  limited  to,
         information  provided  as part of  Franchisee's  application  for  this
         franchise) to Franchisor.

              17.2.9 If  Franchisee,  after  curing a default  pursuant  to this
         Section 17,  commits the same  default  again  within an eighteen  (18)
         month  period of the  previous  default,  whether  or not  cured  after
         notice.

              17.2.10 If Franchisee is in breach of this  Agreement for the same
         or different  default under this Agreement,  three or more times within
         any eighteen (18) month period, whether or not cured after notice.

              17.2.11  If  Franchisee  has  under-reported  its  sales  by three
         percent (3%) or more in any report to Franchisor; or has under-reported
         its sales by two percent  (2%) or more in any three (3) reports made to
         Franchisor during an eighteen (18) month period.

              17.2.12 If  Franchisee  fails to  complete  all  initial  training
         obligations  required by  Franchisor  in  accordance  with  Section 8.1
         above,  or if Franchisor  determines,  pursuant to Section 8.1.3 above,
         that  Franchise  is  unable  to  satisfactorily  complete  the  initial
         training obligations of Section 8.1.

              17.2.13 If  Franchisee  breaches  any  material  provision of this
         Agreement which breach is not susceptible to cure.

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<PAGE>

         17.3 Default Rights.  Except as otherwise provided in Sections 17.1 and
17.2 of this  Agreement,  upon any other  material  breach of this  Agreement by
Franchisee,  Franchisor  may terminate  this  Agreement  only by giving  written
notice of termination  to  Franchisee,  in the manner set forth under Section 23
hereof,  stating the nature of such default,  at least thirty (30) days prior to
the effective date of termination set forth in such notice;  provided,  however,
that Franchisee may avoid  termination by curing to  Franchisor's  satisfaction,
and by promptly providing proof thereof to Franchisor within the thirty (30) day
period;  provided,  further,  that for a failure  or refusal  of  Franchisee  to
promptly pay when due any monies owing to Franchisor,  Franchisor's  affiliates,
or any lender that is providing  financing to Franchisee  based on  Franchisee's
status  as a  franchisee,  then  Franchisor  may  terminate  this  Agreement  by
providing the written  notice of  termination  described  above to Franchisee at
least five (5) business days prior to the  effective  date of  termination,  and
Franchisee's  period to cure such default  under this Section 17.3 shall be five
(5)  business  days.  If any default  covered by this  Section 17.3 is not cured
within the specified  time, or such longer period as applicable law may require,
this Agreement shall terminate  without further notice to Franchisee,  effective
immediately  upon the  expiration  of the  specified  time period or such longer
period as applicable law may require.

18.      OBLIGATIONS UPON TERMINATION OR EXPIRATION
         ------------------------------------------

         Upon  termination or expiration of this  Agreement,  all rights granted
hereunder to Franchisee shall forthwith terminate, and:

         18.1 Franchise Operations. Franchisee shall immediately close the Store
and cease to operate the Franchised Business, and shall not thereafter, directly
or indirectly, represent to the public or hold itself out as a present or former
franchisee of Franchisor.

         18.2 System Methods and Proprietary Marks. Franchisee shall immediately
and  permanently  cease  to use,  in any  manner  whatsoever,  any  confidential
methods,  procedures and techniques  associated with the System, the Proprietary
Marks, and all other distinctive forms,  slogans,  signs,  symbols,  and devices
associated  with the  System.  In  particular,  Franchisee  shall  cease to use,
without limitation, all signs, advertising and promotional materials,  displays,
stationery,   forms,   packaging  and  any  other  articles  which  display  the
Proprietary  Marks,  and shall  promptly take such action as may be specified by
Franchisor in the Manual or otherwise in writing to de-identify the Store, which
may include,  without limitation,  (i) removing all signs,  displays,  and decor
that use or include the Proprietary  Marks, (ii) removing the wallpaper and wall
murals  or  signs  that  display  any  of  the  Proprietary  Marks;  copyrighted
characters,  other  intellectual  property of  Franchisor,  and (iii)  removing,
repainting,   or  replacing  signs,  furniture,   fixtures  or  other  items  to
distinguish and disassociate the Store from the System,  the Proprietary  Marks,
and Franchisor.

         18.3  Assumed  Names.  Franchisee  shall  take  such  action  as may be
necessary to cancel any assumed name or equivalent  registration  which contains
the mark "Speaking Roses" or any other  Proprietary  Marks, and Franchisee shall
furnish  Franchisor with evidence  satisfactory to Franchisor of compliance with
this obligation within fifteen (15) days after termination or expiration of this
Agreement.

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<PAGE>

         18.4  Assignment  of  Lease.   Franchisee   shall,  at  the  option  of
Franchisor,  assign to Franchisor any interest which Franchisee has in any lease
or  sublease  for the  premises  of the  Store.  If  Franchisee  fails to do so,
Franchisor  shall have the right, for which purpose  Franchisee  hereby appoints
Franchisor  as its attorney in fact,  to make such  assignment  on  Franchisee's
behalf. If Franchisor does not elect to exercise the option to acquire the lease
or sublease,  Franchisee  shall make such  modifications  or  alterations to the
premises  of the  Store  as are  described  in  Section  18.2  immediately  upon
termination  or  expiration  of  this  Agreement  and as may  be  necessary  and
requested by Franchisor for that purpose  (including,  without  limitation,  the
changing of the Store's  telephone  number) and may not conduct any  business on
the premises until such modifications and alterations are complete.

         18.5 Entry by Franchisor. If Franchisee fails or refuses to comply with
the  requirements of this Section 18,  Franchisor  shall have the right to enter
upon the premises of the Store,  without  being deemed guilty of trespass or any
other tort,  for the purpose of making or causing to be made such changes as may
be required,  at the expense of Franchisee,  which expense  Franchisee agrees to
pay upon  demand.  Additionally,  if  Franchisor  does not elect to exercise the
option to acquire the lease or sublease, Franchisee shall not, for two (2) years
from the date of expiration or termination of this Agreement, sublease or assign
any interest  which  Franchisee has in any lease or sublease for the premises of
the Store to a family member  (including  spouse,  domestic  partner,  parent or
child  or  sibling)  of  a  Principal  of  Franchisee  for  the  operation  of a
Competitive Business, as defined in Section 19.3 of this Agreement.

         18.6 No Descriptive or Confusing  Operations.  Franchisee agrees, if it
continues to operate or subsequently  begins to operate any other business,  not
to use any  reproduction,  counterfeit,  copy,  deceptively  similar  version or
colorable  imitation  of the  Proprietary  Marks or the  Technology,  either  in
connection with such other business or the promotion thereof, which is likely to
cause  confusion,   mistake,  or  deception,   or  which  is  likely  to  dilute
Franchisor's  rights  in and to the  Proprietary  Marks or the  Technology,  and
further agrees not to utilize any designation of origin, description, trademark,
service mark, or  representation  which suggests or represents a present or past
association or connection with Franchisor, the System, or the Proprietary Marks.

         18.7 Payment of Sums Due.  Franchisee shall promptly pay all sums owing
to Franchisor, Franchisor's affiliates, and suppliers of Products to Franchisee.
Upon  termination  for any default of  Franchisee,  such sums shall  include all
damages, costs, and expenses,  including reasonable attorneys' fees, incurred by
Franchisor as a result of such default.

         18.8  Transfer of  Telephone  Listings.  Franchisee  shall  transfer to
Franchisor or a party  designated by Franchisor  any listing in local  telephone
directories or online directories related to the Franchised Business;  provided,
however, that if transfer of such listing is not possible, Franchisee shall take
such steps as may be  necessary  to cancel and have  removed any such  listings.
Franchisee shall furnish Franchisor with evidence  satisfactory to Franchisor of
compliance  with this obligation  within fifteen (15) days after  termination or
expiration of this Agreement.

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<PAGE>

         18.9  Post-Termination  Covenants.   Franchisee  (and  the  individuals
required  under  Section  19.5) shall  comply with the  covenants  contained  in
Section 19 of this Agreement.

         18.10  Return  of  Manual.  Franchisee  shall  immediately  deliver  to
Franchisor the Manual,  and all other  supplements,  records,  and  instructions
containing  confidential  information  relating to the System,  the  Proprietary
Marks or the  Technology,  and software  provided  and/or licensed by Franchisor
(including without limitation any copies thereof,  even if such copies were made
in  violation  of this  Agreement),  all of  which  are  acknowledged  to be the
property of the Franchisor.

         18.11 Equipment, Inventory and Related Materials. Franchisor shall have
the  option,  to be  exercised  within  thirty (30) days after  termination,  to
purchase  from  Franchisee  any or all of  the  furnishings,  equipment,  signs,
fixtures,  supplies,  or inventory of Franchisee related to the operation of the
Franchised  Business,  at a value equal to Franchisee's  depreciated  book value
thereof.  Pending  Franchisor's  exercise or rejection of the options Franchisee
shall  take such  actions as  Franchisor  shall  request  to insure,  warehouse,
segregate  or move to a more  secure  location  such  equipment,  inventory  and
related  materials,  and,  without  limiting the  generality  of the  foregoing,
Franchisor  shall be  entitled  to enter the  premises  (and  Franchisee  hereby
consent to such entry) for the purpose of removing  all  equipment  and supplies
relating to the use of the technology to a location  controlled or authorized by
Franchisor.

         18.12 Execution of Documents. Franchisee shall execute and deliver such
agreements as Franchisor  reasonably requests related to the termination of this
Agreement,  which may include  releases by Franchisee  and its Principals of any
and all claims  against  Franchisor  and its  affiliates,  officers,  directors,
agents,  and employees.  Franchisee  acknowledges  and agrees that  Franchisor's
request that  Franchisee  execute and deliver such releases  shall be reasonable
under  the  circumstance  of  Franchisor's  termination  of this  Agreement  for
Franchisee's breach.

         18.13 Payment of Costs and Damages. Franchisee shall pay Franchisor all
damages, costs, and expenses,  including reasonable attorneys' fees, incurred by
Franchisor  subsequent to the  termination  or  expiration of this  Agreement in
obtaining  injunctive or other relief for the  enforcement  of any provisions of
this Section 18. Franchisor shall be entitled,  without notice to Franchisee, to
offset any amounts it owes  Franchisee  (pursuant to Section 18.11 or otherwise)
hereunder  against  Franchisee's  monetary  obligations to Franchisor under this
Section 18.12.

19.      COVENANTS
         ---------

         19.1 Best Efforts.  Franchisee  covenants  that during the term of this
Agreement,  except as otherwise  approved in writing by Franchisor,  Franchisee,
the Designated Individual,  or the Store Manager (or as applicable,  the General
Manager) shall devote full time,  energy, and best efforts to the management and
operation of the Franchised Business.

         19.2 Operation of Business.  Franchisee specifically acknowledges that,
pursuant  to  this  Agreement,  Franchisee  will  receive  valuable  specialized
training  and   confidential   information,   including,   without   limitation,

                                       53
<PAGE>

information  regarding  the  operational,  sales,  advertising  and  promotional
methods and techniques  (including with respect to the Technology) of Franchisor
and the System.  Franchisee  covenants  that during the term of this  Agreement,
except as otherwise  approved in writing by  Franchisor,  Franchisee  shall not,
either  directly  or  indirectly,  for itself,  or through,  on behalf of, or in
conjunction with any person, persons, partnership, or corporation:

              19.2.1 Divert or attempt to divert any business or customer of the
         Franchised  Business  or of any Store to any  competitor,  by direct or
         indirect  inducement  or  otherwise,  or do  or  perform,  directly  or
         indirectly, any other act that is or could reasonably be foreseen to be
         injurious  or   prejudicial  to  the  goodwill   associated   with  the
         Proprietary Marks, the System or the Products.

              19.2.2 Unless released in writing by the employer,  employ or seek
         to employ any person who is at that time  employed by  Franchisor or by
         any other franchisee of Franchisor, or otherwise directly or indirectly
         induce such person to leave his or her employment.

         19.3  Competitive  Activities.  Franchisee  covenants  that,  except as
otherwise approved in writing by Franchisor:

              19.3.1  Franchisee  shall not,  during the term of this Agreement,
         either directly or indirectly, for itself, or through, on behalf of, or
         in conjunction with any person, persons,  partnership,  or corporation,
         own, maintain, operate, engage in, or have any interest in any business
         which is the same as or similar to the Franchised Business, or of which
         ten percent  (10%) or more of its gross sales in any month are from the
         retail sale of floral or gift products (a "Competitive Business").

              19.3.2  Franchisee  shall not for two (2) years  from the date of:
         (i) a transfer permitted under Section 16, above; or (ii) expiration or
         termination   of  this   Agreement   (regardless   of  the   cause  for
         termination), either directly or indirectly, for itself, or through, on
         behalf of, or in conjunction with any person, partnership, corporation,
         or  other  entity,  own,  maintain,  operate,  engage  in,  or have any
         interest in any  Competitive  Business,  which is, or is intended to be
         (a) located at the  Approved  Location,  or (b) makes  offers and sales
         into the  Territory;  or (c) located  within a radius of five (5) miles
         from any Store operating under the System. If, however, any arbitration
         or litigation  occurs,  within the two (2) year period described above,
         with  respect  to the  enforcement  of  this  Section  19.3,  then  the
         obligations  of this section shall continue in effect for two (2) years
         from the date of a final order of a duly authorized  arbitrator,  panel
         of arbitrators, or a court of competent jurisdiction (after all appeals
         have been taken).

              19.3.3  Franchisee  shall not for two (2)  years  from the date of
         expiration  or  termination  of  this  Agreement   sublease  or  assign
         Franchisee's  interest in any lease or sublease for the premises of the
         Store to a family member (including spouse, domestic partner, parent or
         child or sibling) of a Principal of  Franchisee  for the operation of a
         Competitive Business.

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<PAGE>

         19.4 Exception. Section 19.3 hereof shall not apply to the ownership by
Franchisee  of  less  than  a  one  percent  (1%)  beneficial  interest  in  the
outstanding equity securities of any publicly-held corporation.  As used in this
Agreement,  the term  "publicly-held  corporation" means a corporation which has
outstanding  securities  that have been  registered  under the Securities Act of
1933,  as amended,  or which files  periodic  reports  with the  Securities  and
Exchange commission pursuant to the provisions of the Securities Exchange Act of
1934, as amended.

         19.5 Affiliate and Management Competitive Activities.  Franchisee shall
obtain (and deliver to Franchisor) executed covenants similar to those set forth
in Sections 10.3.3, 11, 16, and 18, and this Section 19 (as modified to apply to
an  individual)  from  any or  all of the  following  persons  as  specified  by
Franchisor:  (i) the Designated Individual;  (ii) Franchisee's Store Manager and
General Manager; and (iii) Franchisee's officers,  directors, and Principals who
have received training, who have had access to confidential information,  or who
are  or  may be  involved  in the  management  or  operation  of the  Franchised
Business.  Every  covenant  required  by this  Section  19.5  shall be in a form
satisfactory   to   Franchisor,    including,   without   limitation,   specific
identification of Franchisor as a third-party beneficiary of such covenants with
the independent right to enforce them.  Franchisee's failure to obtain execution
of a covenant  required  by this  Section  19.5,  and to deliver  such  executed
covenant to Franchisor within sixty (60) days of Franchisor's request therefore,
shall constitute a default under this Agreement.

         19.6  Independent  Covenants.  The  parties  agree  that  each  of  the
foregoing  covenants of this section 19 shall be construed as independent of any
other  covenant  or  provision  of this  Agreement.  If all or any  portion of a
covenant in this Section 19 is held  unreasonable or unenforceable by a court or
agency  having  valid  jurisdiction  in an  unappealed  final  decision to which
Franchisor  is a party,  Franchisee  expressly  agrees to be bound by any lesser
covenant  subsumed  within the terms of such  covenant  that imposes the maximum
duty permitted by law, as if the resulting  covenant were separately  stated in,
and made a part of, this Section 19.

         19.7 Franchisor's Rights Regarding  Covenants.  Franchisee  understands
and  acknowledges  that Franchisor shall have the right, in its sole discretion,
to reduce the scope of any covenant set forth in Sections  19.2 and 19.3 in this
Agreement,  or any portion  thereof,  without  Franchisee's  consent,  effective
immediately upon receipt by Franchisee of written notice thereof; and Franchisee
agrees that it shall comply  forthwith  with any covenant as so modified,  which
shall be fully enforceable notwithstanding the provisions of Section 22 hereof.

         19.8 No Defense to Enforcement.  Franchisee  expressly  agrees that the
existence of any claims it may have against  Franchisor,  whether or not arising
from this  Agreement,  shall not  constitute  a defense  to the  enforcement  by
Franchisor  of the  covenants in this Section 19.  Franchisee  agrees to pay all
costs and expenses (including reasonable attorneys' fees) incurred by Franchisor
in connection with Franchisor's enforcement of this Section 19.

         19.9 Anti-Terrorism Laws. Franchisee and its Principals agree to comply
with and/or to assist  Franchisor to the fullest extent possible in Franchisor's
efforts to comply with  Anti-Terrorism  Laws (as defined  below).  In connection

                                       55
<PAGE>

with such  compliance,  Franchisee and its Principals  certify,  represent,  and
warrant that none of the property or interests of Franchisee  or its  Principals
is  subject to being  "blocked"  under any of the  Anti-Terrorism  Laws and that
Franchisee  and its  Principals  are not  otherwise  in  violation of any of the
Anti-Terrorism Laws.

              19.9.1 For the  purposes  of this  Section  19.9,  "Anti-Terrorism
         Laws" means Executive Order 13224 issued by the President of the United
         States, the Terrorism Sanctions  Regulations (Title 31, Part 595 of the
         U.S. Code of Federal Regulations),  the Foreign Terrorist Organizations
         Sanctions  Regulations  (Title 31, Part 597 of the U.S. Code of Federal
         Regulations),  the Cuban Assets Control Regulations (Title 31, Part 515
         of the U.S. Code of Federal Regulations),  the USA PATRIOT Act, and all
         other  present and future  federal,  state and local laws,  ordinances,
         regulations,   policies,  lists  and  any  other  requirements  of  any
         Governmental  Authority  (including,  without  limitation,  the  United
         States  Department  of  Treasury  Office  of  Foreign  Assets  Control)
         addressing or in any way relating to terrorist acts and acts of war.

              19.9.2  Franchisee  and its  Principals  certify  that none of its
         employees,  or anyone  associated with Franchisee or its Principals are
         listed in the Annex to  Executive  Order  13224,  which is available at
         hup://www.treasury.gov/offices/enforcement/
         ofac/sanctions/terrorism.html. Franchisee shall not hire any individual
         listed in the Annex.

              19.9.3  Franchisee  certifies that  Franchisee has no knowledge or
         information that, if generally known,  would result in Franchisee,  its
         Principals,  its employees,  or anyone associated with Franchisee to be
         listed in the Annex to Executive Order 13224.

              19.9.4  Franchisee  shall be solely  responsible for  ascertaining
         what  actions  must  be  taken  by   Franchisee   to  comply  with  the
         Anti-Terrorism  Laws,  and  Franchisee  specifically  acknowledges  and
         agrees that Franchisee's indemnification  responsibilities set forth in
         Section  21.4 of this  Agreement  pertain to  Franchisee's  obligations
         under this Section 19.9.

              19.9.5 Any misrepresentation by Franchisee under this Section 19.9
         or  any  violation  of  the  Anti-Terrorism  Laws  by  Franchisee,  its
         Principals,  or  Franchisee's  employees shall  constitute  grounds for
         immediate  termination  of  this  Agreement  and  any  other  Agreement
         Franchisee  has  entered  into  with  Franchisor  or  an  affiliate  of
         Franchisor,  in  accordance  with  the  terms of  Section  17.2 of this
         Agreement.

         19.10  Irreparable  Injury.  Franchisee  acknowledges that Franchisee's
violation of the terms of this Section 19 would result in irreparable  injury to
Franchisor for which no adequate remedy at law may be available,  and Franchisee
accordingly consents to the issuance of an injunction prohibiting any conduct by
Franchisee in violation of the terms of this Section 19.

20.      TAXES, PERMITS, AND INDEBTEDNESS
         --------------------------------

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<PAGE>


         20.1 Payment when Due. Franchisee shall promptly pay when due all taxes
levied or assessed, including, without limitation, unemployment and sales taxes,
and all accounts and other  indebtedness of every kind incurred by Franchisee in
the  operation  of the  Franchised  Business.  Franchisee  shall pay  Franchisor
(within five (5) business  days of  Franchisor's  written  demand  therefore) an
amount equal to any sales tax,  gross  receipts  tax, or similar tax (other than
income tax) imposed on  Franchisor  with  respect to any payments to  Franchisor
required  under this  Agreement,  unless the tax is credited  against income tax
otherwise payable by Franchisor.

         20.2 Bona  Fide  Dispute  Exception.  If any bona  fide  dispute  as to
Franchisee's   liability  for  taxes  assessed  or  other  indebtedness  exists,
Franchisee may contest the validity or the amount of the tax or  indebtedness in
accordance with procedures of the taxing  authority or applicable law;  however,
in no event shall  Franchisee  permit a tax sale or seizure by levy of execution
or similar writ or warrant,  or attachment  by a creditor,  to occur against the
premises of the Store, or any improvements thereon including,  specifically, any
equipment relating to the Technology.

         20.3  Compliance with Laws.  Franchisee  shall comply with all federal,
state, and local laws,  rules, and regulations,  and shall timely obtain any and
all permits, certificates, or licenses necessary for the full and proper conduct
of the Franchised Business under this Agreement,  including, without limitation,
licenses to do business,  health  certificates,  fictitious name  registrations,
sales tax permits,  and fire clearances.  To the extent the requirements of such
laws are in conflict  with the terms of this  Agreement,  the  Manual,  or other
instructions  of  Franchisor,  Franchisee  shall comply with such laws and shall
immediately provide written notice of such conflict to Franchisor.

         20.4 Notice of Suit.  Franchisee  shall  notify  Franchisor  in writing
within five (5) days of the commencement of any action, suit, or proceeding, and
of the issuance of any order, writ, injunction,  award, or decree, of any court,
agency, or other  governmental  instrumentality,  which may adversely affect the
operation  of  the  Franchised  Business  or  the  financial  condition  of  the
Franchisee.

21.      INDEPENDENT CONTRACTOR AND INDEMNIFICATION
         ------------------------------------------

         21.1 No  Fiduciary  Relationship.  This  Agreement  does  not  create a
fiduciary  relationship  between the parties hereto,  Franchisee shall be deemed
for all purposes to be, and is, an independent  contractor of  Franchisor,  and,
that nothing in this Agreement is intended to constitute  either party an agent,
legal representative,  subsidiary, joint venturer, partner, employee, or servant
of the other for any purpose.

         21.2  Independent  Contractor  Status.  At all times during the term of
this Agreement and any extensions  hereof,  Franchisee  shall hold itself out to
the  public as an  independent  contractor  operating  the  Franchised  Business
pursuant to a franchise agreement from Franchisor.  Franchisee shall such action
as may be necessary to accomplish that result,  including,  without  limitation,
exhibiting a notice of its independent  contractor status in a conspicuous place
at the Approved  Location,  the content,  size and location of which  Franchisor
reserves the right to specify.

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<PAGE>

         21.3 No Franchisor  Obligations.  Nothing in this Agreement  authorizes
Franchisee to make any  contract,  agreement,  warranty,  or  representation  on
Franchisor's  behalf,  or to incur any debt or other  obligation in Franchisor's
name, and Franchisor shall in no event assume liability for, or be deemed liable
hereunder as a result of, any such  action,  nor shall  Franchisor  be liable by
reason of any act or omission  of  Franchisee  in its conduct of the  Franchised
Business or for any claim or judgment arising  therefrom  against  Franchisee or
Franchisor.

         21.4  Indemnification.  Franchisee  shall indemnify  Franchisor and its
affiliates, and their respective officers, directors, employees, and agents for,
and hold those parties harmless against,  any and all claims arising directly or
indirectly from, as a result of, or in connection with Franchisee's operation of
the Franchised Business (including without limitation operation of any Delivery,
Special Occasions,  National Account and Alternative Sales activities),  as well
as the costs, including attorneys' fees, of defending against them.

22.      APPROVALS AND WAIVERS
         ---------------------

         22.1  Franchisor  Approvals  and  Consents.   Whenever  this  Agreement
requires the prior  approval or consent of Franchisor,  Franchisee  shall make a
timely written request to Franchisor therefor,  and such approval or consent, if
granted, shall be evidenced only by a writing from Franchisor.  Franchisor shall
respond  to  Franchisee's  timely  requests  in a  reasonably  timely and prompt
manner.

         22.2 No Liability for Waiver or Consent. Franchisor makes no warranties
or  guarantees  upon which  Franchisee  may rely,  and assumes no  liability  or
obligation  to  Franchisee,  by  providing  any waiver,  approval,  consent,  or
suggestion to Franchisee in connection with this Agreement,  or by reason of any
neglect, delay, or denial of any request therefor.

         22.3 No Waiver by  Implication.  Franchisor's  failure to exercise  any
power reserved to it by this Agreement,  or to insist upon strict  compliance by
Franchisee with any obligation of Franchisee or condition  imposed on Franchisee
hereunder shall constitute a waiver of Franchisor's  right to exercise any power
or to demand exact compliance with any of the terms of this Agreement. No custom
or practice  of  Franchisee  or  Franchisor  at variance  with the terms of this
Agreement,  including  any practice or action of Franchisor in its dealings with
any other party, shall constitute a waiver of Franchisor's right to exercise any
power or to demand  exact  compliance  with any of the terms of this  Agreement.
Waiver by Franchisor of any particular default of Franchisee shall not affect or
impair  Franchisor's  rights with respect to any subsequent default of the same,
similar, or different nature; nor shall any delay,  forbearance,  or omission of
Franchisor  to exercise any power or right  arising out of any breach or default
by Franchisee affect or impair Franchisor's rights with respect to such default,
or  Franchisor's  right to  declare  any  subsequent  breach or  default  and to
terminate  this  Agreement  prior  to the  expiration  of its  term.  Subsequent
acceptance by Franchisor of any payments due to it hereunder shall not be deemed
to be a waiver by Franchisor of any preceding breach by Franchisee of any terms,
provisions, covenants, or conditions of this Agreement.

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<PAGE>

23.      NOTICES
         -------

         Any and all notices required or permitted under this Agreement shall be
in writing and shall be (i) personally delivered,  (ii) sent by registered mail,
(iii) sent by a recognized  overnight  delivery  service,  or (iv)  delivered by
other  means  which  affords the sender  evidence  of  delivery,  or of rejected
delivery,  to the respective  party at the addresses shown on Appendix A of this
Agreement.  Either party may designate a different  address for notice hereunder
by written  notice to the other party.  Any notice by a means which  affords the
sender evidence of delivery, or rejected delivery,  shall be deemed to have been
given at the date and time of receipt or rejected delivery.

24.      ENTIRE AGREEMENT AND AMENDMENT
         ------------------------------

         This  Agreement and the  documents  referred to herein  constitute  the
entire,   full,  and  complete   Agreement  between  Franchisor  and  Franchisee
concerning  the subject matter hereof,  and supersede all prior  agreements.  No
other representations have induced Franchisee to execute this Agreement.  Except
for those changes permitted to be made unilaterally by Franchisor hereunder,  no
amendment,  change,  or variance from this Agreement  shall be binding on either
party unless mutually agreed to by the parties and executed by their  authorized
officers or agents in writing.

25.      SEVERABILITY AND CONSTRUCTION
         -----------------------------

         25.1  Severability.  If any of the  provisions of this Agreement may be
construed in more than one way, one of which would render the provision  illegal
or otherwise  voidable or  unenforceable,  such provision shall have the meaning
which renders it valid and  enforceable.  The language of all provisions of this
Agreement  shall be  construed  according  to its fair  meaning and not strictly
against any party.  If any court or other  government  authority shall determine
any provision in this Agreement is not enforceable as written, the parties agree
that the  provision  shall be amended so that it is  enforceable  to the fullest
extent  permissible  under the laws and public  policies of the  jurisdiction in
which  enforcement  is sought and affords the parties the same basic  rights and
obligations and has the same economic effect. If any provision in this Agreement
is held  invalid or  otherwise  unenforceable  by any court or other  government
authority or in any arbitration  proceeding,  such findings shall not invalidate
the remainder of the agreement  unless in the  reasonable  opinion of Franchisor
the effect of such  determination  has the effect of frustrating  the purpose of
this Agreement,  whereupon  Franchisor shall have the right by notice in writing
to the other party to immediately terminate this Agreement.

         25.2 No Benefits.  Except as expressly provided to the contrary herein,
nothing in this Agreement is intended,  nor shall be deemed,  to confer upon any
person or legal entity other than Franchisee, Franchisor, Franchisor's officers,
directors,  and employees,  and such of Franchisee's and Franchisor's respective
successors and assigns as may be contemplated (and, as to Franchisee, permitted)
by  Section  16  hereof,  any  rights  or  remedies  under or by  reason of this
Agreement.

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<PAGE>

         25.3 Stricken  Provisions.  Franchisee  expressly agrees to be bound by
any promise or covenant  imposing  the maximum  duty  permitted  by law which is
subsumed within the terms of any provision  hereof, as though it were separately
articulated in and made a part of this Agreement,  that may result from striking
from any of the provisions hereof any portion or portions which a court may hold
to be  unenforceable in a final decision to which Franchisor is a party, or from
reducing  the scope of any promise or covenant to the extent  required to comply
with such a court order.

         25.4 Captions.  All captions in this Agreement are intended  solely for
the  convenience of the parties,  and none shall be deemed to affect the meaning
or construction of any provision hereof.

         25.5 Survival.  All provisions of this Agreement  which, by their terms
or intent,  are  designed  to survive  the  expiration  or  termination  of this
Agreement, shall so survive the expiration and/or termination of this Agreement,
including Sections 11, 18, 19, and 26 hereof.

26.      APPLICABLE LAW AND DISPUTE RESOLUTION
         -------------------------------------

         26.1  Applicable  Law. This Agreement  takes effect upon its acceptance
and  execution by  Franchisor in Utah,  and shall be  interpreted  and construed
under the laws of the State of Utah.  In the event of any  conflict of law,  the
laws of Utah shall prevail, without regard to, and without giving effect to, the
application of Utah conflict of law rules.  If,  however,  any provision of this
Agreement  would not be enforceable  under the laws of Utah, and if the Store is
located outside of Utah and such provision  would be enforceable  under the laws
of the  state in which  the  Store is  located,  then  such  provision  shall be
interpreted and construed under the laws of that state.  Nothing in this Section
26.1 is intended by the parties to subject this  Agreement  to any  franchise or
similar law,  rule,  or regulation of the Utah or of any other state to which it
would not otherwise be subject.

         26.2 Mediation.  Except as otherwise  provided in this  Agreement,  all
controversies,  disputes,  and  claims  arising  out of or  related  to (a) this
Agreement (including, but not limited to, any claim that the Agreement or any of
its provisions is invalid,  illegal, or otherwise voidable or void and any claim
relating to events  before the  Agreement was  executed),  (b) the  relationship
between Franchisee and Franchisor (or Franchisor's affiliates), (c) Franchisee's
operation  of the Store shall  first be subject to  non-binding  mediation.  All
controversies,  disputes,  and claims not  resolved  by, or not  subject to, the
mediation process shall be resolved in accordance with the provisions in Section
26.3. The parties acknowledge and agree that the following terms, conditions and
limitations shall apply to mediation under this Agreement:

              26.2.1 If Franchisee or Franchisor (or Franchisor's  affiliate) is
         more than  forty  five (45) days past due in any  payment to the other,
         the party to whom payment is due shall be free to commence or to pursue
         litigation  at any time  without  engaging in this  mediation  process.
         Mediation   shall  not  be  required  with  respect  to  any  claim  or

                                       60
<PAGE>

         controversy  that  involves:  (a) actual or  threatened  disclosure  or
         misuse of Franchisor's  confidential  information or trade secrets; (b)
         the  ownership,  validity,  or  use  of the  Proprietary  Marks  or the
         Technology;  (c) any action concerning the enforcement of the covenants
         set  forth  in  Section  19 of  this  Agreement;  or  (d)  Franchisor's
         entitlement to any remedies  available to Franchisor for the failure or
         refusal of  Franchisee  to  promptly  pay when due any monies  owing to
         Franchisor,  Franchisor's  affiliates,  or any lender that is providing
         financing  to  Franchisee  based  on  Franchisee's  status  as a System
         franchisee.  Mediation under this Section 26.2 is not intended to alter
         or  suspend  the  rights  or  obligations  of the  parties  under  this
         Agreement  or to determine  the validity or effect of any  provision of
         this  Agreement,  but is intended to furnish the parties an opportunity
         to resolve  disputes  amicably,  expeditiously  and in a cost-effective
         manner on  mutually  acceptable  terms.  Additionally,  nothing in this
         Section  26 shall  bar the  right of  either  party to seek and  obtain
         injunctive relief from a court of competent  jurisdiction in accordance
         with applicable law against  threatened conduct that will cause loss or
         damage,  including,  but not  limited  to,  violations  of the terms of
         Sections 10, 11, 12, 16, and 19, pending completion of the mediation.

              26.2.2 The non-binding  mediation  provided for hereunder shall be
         commenced  by  the  party  requesting  mediation  (the  "complainant"),
         providing  written notice of the request for mediation (the  "request")
         to the party with whom  mediation  is sought  (the  "respondent").  The
         request  shall  specify  with  reasonable  particularity  the matter or
         matters on which nonbinding  mediation is sought. A copy of the request
         shall be given  by the  complainant  simultaneously  to  Franchisor  if
         Franchisor is not a complainant or respondent.

              26.2.3 Non-binding  mediation  hereunder shall be conducted by one
         (1)  mediator.  If the parties  cannot,  within thirty (30) days of the
         date on which the request was first provided to the  respondent,  agree
         in  writing  upon  the  selection  of an  individual  to  serve  as the
         mediator,  then Franchisor  shall select and designate an individual to
         serve as the mediator. In such event,  Franchisor shall send Franchisee
         written notice of its  designation of the mediator  within  thirty-five
         (35) days of the date on which the  request  was first  provided to the
         respondent.

              26.2.4 Non-binding  mediation  hereunder shall be concluded within
         sixty (60) days of the issuance of the request or such longer period as
         may  be  agreed  upon  by  the  parties  in  writing  (the   "mediation
         termination  date").  All  aspects of the  mediation  process  shall be
         treated as  confidential,  shall not be disclosed to others,  and shall
         not be offered or  admissible  in any other  proceeding or legal action
         whatsoever. Complainant and respondent shall each bear its own costs of
         mediation,  and each shall bear  one-half  the cost of the  mediator or
         mediation service.

         26.3  Arbitration.  During  the term of this  Agreement,  any  claim or
controversy  arising  out of or related to this  Agreement  (including,  but not
limited to, any claim that the  Agreement or any of its  provisions  is invalid,
illegal,  or otherwise  voidable or void and any claim relating to events before
the Agreement was executed), the relationship between Franchisee and Franchisor,
(and Franchisor's  affiliates),  or Franchisee's operation of the Store shall be

                                       61
<PAGE>

submitted to binding  arbitration  pursuant to this Section  26.3.  This section
shall not apply,  however, if the claim or controversy  involves:  (a) actual or
threatened  disclosure or misuse of  Franchisor's  confidential  information  or
trade secrets; (b) the ownership, validity, or use of the Proprietary Marks; (c)
any action  concerning the  enforcement of the covenants set forth in Section 19
of this Agreement; or (d) Franchisor's  entitlement to any remedies available to
Franchisor for the failure or refusal of Franchisee to pay promptly when due any
monies  owing to  Franchisor,  Franchisor's  affiliates,  or any lender  that is
providing  financing  to  Franchisee  based on  Franchisee's  status as a System
franchisee.  Additionally, nothing in this section shall bar the right of either
party  to  seek  and  obtain   injunctive  relief  from  a  court  of  competent
jurisdiction in accordance with applicable law against  threatened  conduct that
will cause loss or damage,  including,  but not  limited to,  violations  of the
terms of Sections 10, 11, 12, 16, and 19, pending completion of the arbitration.
The parties  acknowledge  and agree that any  arbitration  under this  Agreement
shall be conducted in accordance with the JAMS Endispute  Arbitration  Rules and
Procedures for commercial  disputes,  which are in effect at the time the demand
for arbitration is served (the "JAMS Procedures"), and the terms, conditions and
limitations set forth below in this Agreement. In the event of any inconsistency
between the JAMS  Procedures and the terms set forth below,  the terms set forth
in this Agreement shall control.

              26.3.1 All  arbitration  proceedings  shall be  conducted in Utah,
         within the county in which Franchisor's  principal place of business is
         located at the time the demand for arbitration is served.  In rendering
         the award, the arbitrator shall determine the rights and obligations of
         the parties  according to the  substantive and procedural laws of Utah,
         as set forth in  accordance  with  Section 26.1 above.  This  provision
         might not be enforceable under certain state laws; however,  Franchisor
         and Franchisee  acknowledge and agree that they fully intend to enforce
         the provisions of the arbitration  section contained in this Agreement,
         including, but not limited to, the venue and choice of law clauses. The
         parties believe that the Federal Arbitration Act preempts any state law
         purporting to limit arbitration.

                     26.3.1.1 The parties  agree that the  arbitration  shall be
              conducted by one (1)  arbitrator,  who shall be a retired  federal
              court judge.  The arbitrator  shall be selected in accordance with
              the JAMS Procedures.

              26.3.2 The parties shall be entitled to conduct  discovery  (i.e.,
         investigation of facts through depositions or other means), which shall
         be  governed  by the Federal  Rules of Civil  Procedure  (the "Rule" or
         "Rules")  then in effect.  However,  the  parties  need not comply with
         obviously  inapplicable  Rules (e.g.,  Rule 16). The response  time set
         forth in the  Rules  for all  written  discovery  or  motions  shall be
         reduced by one-half and the parties shall complete all discovery within
         one hundred  (100) days from the date the claimant  filed her,  his, or
         its initial arbitration demand; provided,  however, that the arbitrator
         shall have the  authority,  in its  discretion,  to extend or otherwise

                                       62
<PAGE>

         modify the applicable time periods. The arbitrator shall have all power
         and authority to order discovery,  to modify the specific  requirements
         and  limitations of the Rules for good cause,  to make and enter orders
         with  regard to  motions,  and to enter a final and  binding  judgment.
         Rules  12  and 56 of the  Rules  shall  apply  to all  motion  practice
         conducted in the arbitration. The parties further acknowledge and agree
         that the following  terms,  conditions and  limitations  shall apply to
         motions practices and discovery  conducted as part of arbitration under
         this Agreement:

                     26.3.2.1 Any demand for arbitration, answer, counterclaims,
              and reply to  counterclaims  shall be prepared in accordance  with
              the Rules.

                     26.3.2.2 The arbitrator  shall have the  authority,  in its
              discretion,  to increase the number of depositions  allowed by the
              parties beyond the limits set forth in the Rules.

                     26.3.2.3  Depositions  of any person,  including  an expert
              witness, who is not a party to the arbitration shall be limited to
              seven (7) hours in  duration.  There  shall not be a time limit on
              depositions of parties to the arbitration.

              26.3.3 The arbitrator  shall have the right to award or include in
         an award relief in the form of compensatory damages, injunctive relief,
         specific  performance,  attorneys' fees and costs. The parties waive to
         the  fullest  extent  permitted  by law any  right to or claim  for any
         punitive or  exemplary  damages  against  the other in any  arbitration
         proceeding,  except for punitive or  exemplary  damages  authorized  by
         applicable  federal law, in which case, the  arbitrator  shall have the
         right to award punitive or exemplary damages.

              26.3.4 The arbitrator shall produce a written opinion.

              26.3.5  Judgment  upon the  award may be  entered  in any court of
         competent jurisdiction.  The arbitrator shall be required to follow and
         apply  the  applicable  law in  reaching  his/her  decision,  including
         applying the provisions of any  applicable  limitation on the period of
         time in which claims must be brought.

              26.3.6 In  connection  with any  arbitration  proceeding  required
         under this  Agreement,  each party shall  submit or file any claim that
         would  constitute a compulsory  counterclaim  (as defined by Rule 13 of
         the Rules) within the same proceeding as the claim to which it relates.
         Any  compulsory  counterclaim  which is not  submitted or filed in such
         proceeding shall be barred.

              26.3.7  Arbitration  shall be  conducted on an  individual,  not a
         class-wide,  basis. No party hereto shall be entitled to  consolidation
         of  arbitration  proceedings  involving  such parties with those of any
         third  party,  nor shall the  arbitrator  or any court be  empowered to
         order such consolidation.

              26.3.8 Except as otherwise  required by law, neither party nor the
         arbitrator  may disclose (to anyone not party to the  arbitration)  the

                                       63
<PAGE>

         existence, content, or results of any arbitration hereunder,  including
         the  record of the  arbitration  hearing,  without  the  prior  written
         consent of all the parties to the arbitration.

              26.3.9  Except as may be provided  for to the contrary in the JAMS
         Procedures  with  respect  to  the  costs  of   transcriptions  of  the
         arbitration  hearing, all free and expenses of the arbitration shall be
         borne by the parties equally.  Each party shall bear the expense of its
         own counsel,  experts,  witnesses,  and preparation and presentation of
         proofs;   provided,   however,  that  the  arbitrator  shall  have  the
         authority, in its discretion,  at the conclusion of the proceeding,  to
         award costs and attorneys' fees to the prevailing party.

              26.3.10 Any offer of  settlement  or  compromise  by either party,
         whether made before or during the  proceeding,  shall not be admissible
         in the arbitration.

              26.3.11  The  arbitration   shall  be  conducted  in  the  English
         language.

              26.3.12 This  arbitration  provision  shall continue in full force
         and  effect  subsequent  to  and   notwithstanding  the  expiration  or
         termination of this Agreement.

              26.3.13 The process set forth under the JAMS Procedures for appeal
         of the  arbitrator's  final  ruling  shall be  available if the parties
         elect,  under the JAMS  Procedures,  to adopt such additional  process;
         provided,   however,  that  the  parties  agree  that,  notwithstanding
         anything to the  contrary in the JAMS  Procedures,  any appeal shall be
         heard by a single arbitrator.

         26.4 Additional  Terms.  The parties  further  acknowledge and agree as
follows:

              26.4.1 Any legal action brought in any court by either party under
         this Agreement,  shall be brought only within the judicial  district in
         which  Franchisor  has its principal  place of business at the time the
         action or proceeding  is initiated.  The parties waive all questions of
         personal  jurisdiction  and venue for  purposes  of  carrying  out this
         provision.

              26.4.2 No right or remedy conferred upon or reserved to Franchisor
         or Franchisee by this Agreement is intended to be, nor shall be deemed,
         exclusive  of any other right or remedy  provided  herein or  permitted
         bylaw or equity,  but each shall be  cumulative of every other right or
         remedy.

              26.4.3  Franchisor and Franchisee  irrevocably waive trial by jury
         in  any  action,  proceeding,  or  counterclaim,  whether  at law or in
         equity, brought by either of them against the other. Any and all claims
         and  actions  arising  out  of  or  relating  to  this  Agreement,  the
         relationship of Franchisee and Franchisor (or Franchisor's affiliates),
         or Franchisee's operation of the Franchised Business, brought by either
         party hereto  against the other,  whether in  arbitration  or in court,
         shall be  commenced  within  two (2) years from the  occurrence  of the
         facts  giving  rise to such  claim or  action,  or such claim or action
         shall be barred.

                                       64
<PAGE>

              26.4.4  Franchisor  and  Franchisee  hereby waive,  to the fullest
         extent  permitted  by law,  the right to or claim for any  punitive  or
         exemplary  damages against the other,  except for punitive or exemplary
         damages authorized by applicable federal law.

         26.5 No Waiver of Injunctive Relief. Nothing contained herein shall bar
the right of either party to seek and obtain  injunctive  relief from a court of
competent  jurisdiction  in accordance  with  applicable law against  threatened
conduct  that  will  cause  loss  or  damage,  including,  but not  limited  to,
violations  of the terms of  Sections  10, 11, 12, 16, and 19 hereof,  under the
usual equity rules,  including the  applicable  rules for obtaining  restraining
orders and  injunctions.  In any instance where Franchisor shall seek the remedy
of  injunctive  relief,  Franchisor  shall not be  required  to post any bond or
surety therefor, and Franchisee hereby waives any right to seek requirement.

27.      ACKNOWLEDGMENTS
         ---------------

         27.1 Independent  Investigation.  Franchisee  acknowledges  that it has
conducted an independent  investigation  of the business  franchised  hereunder,
recognizes that the business  venture  contemplated  by this Agreement  involves
business risks, and that its success will be largely  dependent upon the ability
of  Franchisee  (and  if  a  corporation,  a  limited  liability  company,  or a
partnership,   its  Principals)  as  independent   businesspersons.   Franchisor
expressly  disclaims the making of, and Franchisee  acknowledges that it has not
received,  any warranty or  guarantee,  express or implied,  as to the potential
volume,  profits,  or  success  of the  business  venture  contemplated  by this
Agreement.  If Franchisee was referred to Franchisor  through the services of an
area developer ("Area Developer"), such Area Developer is identified on Appendix
A hereto.  The Area  Developer  did not make any  representations  or warranties
regarding  the potential  volume,  profits,  or success of the business  venture
contemplated  by this  Agreement and did not accept on behalf of Franchisor  any
amounts due Franchisor hereunder.

         27.2 Copies of Documents.  Franchisee acknowledges that it has received
a copy of this Agreement,  the Appendix(ices)  hereto,  and agreements  relating
hereto, if any, with all of the blank lines therein filled in, at least five (5)
business days prior to the date on which this Agreement was executed. Franchisee
further  acknowledges  that it received the disclosure  document required by the
Trade  Regulation  Rule of the Federal  Trade  Commission  entitled  "Disclosure
Requirements and Prohibitions  Concerning  Franchising and Business  Opportunity
Ventures"  at  least  ten (10)  business  days  prior to the date on which  this
Agreement was executed.

         27.3 Franchisee  Understandings.  Franchisee  acknowledges  that it has
read and  understood  this  Agreement,  the  appendices  hereto,  and agreements
relating thereto, if any, and that Franchisor has accorded Franchisee ample time
and opportunity to consult with advisors of Franchisee's  own choosing about the
potential benefits and risks of entering into this Agreement.

                                       65
<PAGE>

         IN WITNESS WHEREOF, the parties hereto have duly executed and delivered
this Agreement in duplicate on the day and year first above written.

Franchisee:                               Franchisor:
[IF AN ENTITY]
                                          Speaking Roses Development Corporation
---------------------------------------
Name of Entity

By:                                       By:
      ---------------------------------       ----------------------------------

Name:                                     Name:
          -----------------------------            -----------------------------

Title:                                    Title:
            ---------------------------              ---------------------------


[IF AN ENTITY]


--------------------------------------------------------
Signature


--------------------------------------------------------
Printed Name

                                       66
<PAGE>


                                   APPENDIX A
                                       to
                     Speaking Roses Development Corporation
                               Franchise Agreement



1.       The  Approved   Location  for  the  Store  shall  be  at  _____________
         _______________________________________________.(Section 1.1)

2.       The   Territory   shall   be   ________________________________________
         _______________________________________________ (Section 1.4)

3.       The initial  franchise  fee (Section  4.1) shall be  $___________.  The
         initial  franchise  fee is  payable  upon  execution  of the  Franchise
         Agreement.

4.       The initial  designated  addressees for notices under Section 23 of the
         Franchise Agreement shall be as follows:

Notices to Franchisee:                           Notices to Franchisor:
----------------------                           ----------------------
                                          Speaking Roses Development Corporation
                                          545 West 500 South, Suite 270
                                          Bountiful, UT 84010
Attention:                                Attention:    Chief Executive Officer
          -------------------------------
Fax:                                      Fax:
         --------------------------------         ------------------------------
Initial:        Date:                     Initial                Date:
          ------           --------------           -------------      ---------


5.       The Area Developer for the Franchise is _________________ (Section 27).

                                      A-1

<PAGE>

                                   APPENDIX B
                                       to
                     Speaking Roses Development Corporation
                               Franchise Agreement

                             FRANCHISEE'S PRINCIPALS

--------------------- ----------------------------------------- ----------------
Name of                                                         Interest (%)
Shareholder/Member/         Address, telephone number,          (with
Partner                         and e-mail address              description)
--------------------- ----------------------------------------- ----------------

--------------------- ----------------------------------------- ----------------

--------------------- ----------------------------------------- ----------------

--------------------- ----------------------------------------- ----------------

--------------------- ----------------------------------------- ----------------

--------------------- ----------------------------------------- ----------------

--------------------- ----------------------------------------- ----------------

--------------------- ----------------------------------------- ----------------

--------------------- ----------------------------------------- ----------------

--------------------- ----------------------------------------- ----------------

--------------------- ----------------------------------------- ----------------



                                      B-1


<PAGE>
                                   APPENDIX C
                                       to
                     Speaking Roses Development Corporation
                               Franchise Agreement



                 GUARANTEE, INDEMNIFICATION, AND ACKNOWLEDGMENT
                 ----------------------------------------------

As an inducement to SPEAKING ROSES  DEVELOPMENT  CORPORATION  ("Franchisor")  to
execute the FRANCHISE  AGREEMENT  between  Franchisor  and  ____________________
("Franchisee") dated _________ (the "Agreement"),  the undersigned,  jointly and
severally,  hereby  unconditionally  guarantee to Franchisor and to Franchisor's
successors and assigns that all of Franchisee's  monetary  obligations under the
Agreement  will  be  punctually  paid  and  performed.  The  obligations  of the
undersigned  under this  guarantee  are  absolute and  unconditional,  and are a
guaranty   of  payment  and   performance,   regardless   of  the   validity  or
enforceability of the Agreement.

Upon demand by Franchisor,  the undersigned  will  immediately make each payment
required of Franchisee  under the Agreement.  The  undersigned  hereby waive any
right to require  Franchisor to: (a) proceed against  Franchisee for any payment
required under the Agreement;  (b) proceed  against or exhaust any security from
Franchisee;  or (c)  pursue  or  exhaust  any  remedy,  including  any  legal or
equitable relief,  against Franchisee.  Without affecting the obligations of the
undersigned  under  this  guarantee,  Franchisor  may,  without  notice  to  the
undersigned,  extend,  modify,  or release any  indebtedness  or  obligation  of
Franchisee, or settle, adjust, or compromise any claims against Franchisee.  The
undersigned  waive notice of amendment of the Agreement and notice of demand for
payment by Franchisee,  and agree to be bound by any and all such amendments and
changes to the Agreement  that have been agreed to by  Franchisee  or which,  as
authorized by the Franchise  Agreement,  Franchisor shall have unilaterally made
prior to any notice of demand hereunder.

The undersigned hereby agree to defend,  indemnify and hold Franchisor  harmless
against  any  and  all  losses,  damages,   liabilities,   costs,  and  expenses
(including,  but not limited to, reasonable attorney's fees, reasonable costs of
investigation,  court costs, and arbitration fees and expenses)  resulting from,
consisting  of, or  arising  out of or in  connection  with (i) any  failure  by
Franchisee  to perform any  obligation of Franchisee  under the  Agreement,  any
amendment  thereto,  or any other agreement  executed by Franchisee  referred to
therein and (ii) any failure by the  undersigned  to perform  their  obligations
under  this  guarantee.  The  undersigned  acknowledge  that  their  obligations
hereunder are independent of the  obligations of Franchisee  under the Agreement
or any other  guarantor  (including any guarantor  hereunder).  The  undersigned
hereby waives any defense or disability of the Franchisee in the  performance of
their obligations  hereunder,  and agree that their obligations  hereunder shall
not be affected by the insolvency,  bankruptcy,  liquidation,  reorganization or
winding up of the Franchisee or any change in the ownership of the Franchisee.



                                      C-1


<PAGE>

The  undersigned  further  hereby  acknowledge  the  terms  of and  agree  to be
individually  bound by all of the duties and obligations of Franchisee set forth
in Sections 10, 11, 16, 18, and 19 of the Agreement as if the  undersigned  were
the "Franchisee"  thereunder (except that the undersigned shall have no right to
exercise Franchisee's powers or rights under the Agreement).

This  Guarantee  shall  terminate  upon the  termination  or  expiration  of the
Agreement,  except that all obligations and liabilities of the undersigned which
arose  from  events  which  occurred  on or before  the  effective  date of such
termination  shall remain in full force and effect until satisfied or discharged
by the  undersigned,  and all covenants  which by their terms  continue in force
after the  expiration  or  termination  of the  Agreement  shall remain in force
according to their terms. Upon the death of an individual guarantor,  the estate
of such guarantor  shall be bound by this  Guarantee,  but only for defaults and
obligations  hereunder existing at the time of death; and the obligations of the
other guarantors will continue in full force and effect.

Unless  specifically  stated  otherwise,  the terms used in this guarantee shall
have the  same  meaning  as in the  Agreement,  and  shall  be  interpreted  and
construed in accordance  with Section 25 of the Agreement.  This Guarantee shall
be interpreted  and construed  under the laws of the State of Utah. In the event
of any  conflict of law,  the laws of the State of Utah shall  prevail  (without
regard to, and without giving effect to, the application of Utah conflict of law
rules).

The  undersigned  hereby make the following  representations  and  warranties to
Franchisor, each of which shall survive the execution,  delivery and performance
of this guarantee until each of the obligations of the undersigned  hereunder is
satisfied in full:

         (i) the undersigned have made no agreements or  representations  of any
kind that would limit or qualify the terms of this guarantee;

         (ii) this guarantee is executed at the undersigneds' request and not at
the request of Franchisor;

         (iii)  Franchisor has made no  representation  to the undersigned as to
the credit worthiness of Franchisee, and

         (iv) this guarantee constitutes the legal, valid and binding obligation
of the undersigned.

Except  as  specifically  permitted  by  this  guarantee  or  with  the  written
permission of Franchisor,  the  undersigned  will not sell,  dispose of, assign,
pledge, mortgage,  hypothecate or otherwise encumber or transfer any property of
any kind owned by the undersigned if such encumbrance or transfer (i) relates to
property of such monetary value as to be deemed "material" to this guarantee, or
(ii) would materially and adversely affect the undersigned's financial condition
or (iii) would materially impair Franchisor's ability to enforce this guarantee.
Each of the undersigned shall notify Franchisor in writing in the event there is
any change in his or her financial condition.

                                       C-2
<PAGE>

The undersigned  hereby waives,  to the fullest extent  permissible and possible
under applicable law:

         (i) any defense based upon the doctrine or marshaling of assets or upon
any  election of remedies  by  Franchisee,  including,  without  limitation,  an
election to precede by  non-judicial  rather than  judicial  foreclosure,  which
election destroys or otherwise impairs the segregation rights of the undersigned
or the right of the undersigned to precede against Franchisee for reimbursement,
or both;

         (ii) any defense based on any statue or rule of law which provides that
the obligation of the  undersigned  must be neither a larger amount nor in other
respects, more onerous then that of the Franchisee;

         (iii) any duty on the part of Franchisor to disclose to the undersigned
any facts  Franchisor may now or hereafter know about  Franchisee  regardless of
whether Franchisor has reason to believe that any such facts materially increase
the risk of the  undersigneds'  performance  beyond  that which the  undersigned
intends to assume or has reason to  believe  that such facts are  unknown to the
undersigned,  the undersigned being fully responsible for being kept informed of
the financial  condition of Franchisee and of all  circumstances  bearing on the
risk of breach of any Franchisee's obligation under the Agreement; and

         (iv)  any  defense  arising  out of  the  election,  at  any  preceding
instituted  under the federal  bankruptcy  code, of the  application  of Section
111(b)(2) of the federal bankruptcy code, as amended or supplemented.

Franchisor may deal with  Franchisee in the same manner and as freely as if this
guarantee did not exist, and Franchisor shall be entitled, without notice to the
undersigned,  among other  things,  to grant to  Franchisee  such  extension  or
extensions  of  time  to  perform  any act or  acts  as may  seem  advisable  to
Franchisor at any time and from time to time without  terminating,  affecting or
impairing the validity or enforceability of this guarantee or the obligations of
the undersigned hereunder.

Franchisor  may  proceed,  either  in  its  own  name  or in  the  name  of  the
undersigned,  or  otherwise,  to protect  and  enforce any and all of its rights
under  this  guarantee  by suit in  equity,  action at law or other  appropriate
proceedings, or to take any action authorized or permitted under applicable law,
and shall be entitled to require  and  enforce the  performance  of all acts and
things required to be performed hereby by the undersigned. Each and every remedy
of Franchisor  shall be cumulative  and shall be an addition to any other remedy
given hereunder or now or hereafter existing in equity.

IN WITNESS WHEREOF,  each of the undersigned has signed this Guarantee effective
as of the date of the Agreement.

                                       C-3
<PAGE>

                       GUARANTOR(S):


                       Signed:__________________________________________________
                                         (In his/her individual capacity)

                       Printed Name:____________________________________________

                       Address:_________________________________________________



                       Signed:__________________________________________________
                                         (In his/her individual capacity)

                       Printed Name:____________________________________________

                       Address:_________________________________________________



                       Signed:__________________________________________________
                                         (In his/her individual capacity)

                       Printed Name:____________________________________________

                       Address:_________________________________________________



                                       C-4


<PAGE>
                                   APPENDIX D
                                       to
                     Speaking Roses Development Corporation
                               Franchise Agreement


                AUTHORIZATION AGREEMENT FOR PREARRANGED PAYMENTS
                ------------------------------------------------

___________________________________________ (Name of Person or Legal Entity)
_____________________________________________________________ (ID Number)

The  undersigned  depositor   ("Depositor")  hereby  authorizes  Speaking  Roses
Development  Corporation  ("Franchisor") to initiate debit entries and/or credit
correction  entries to the  undersigned's  checking  and/or  savings  account(s)
indicated below and the depository  designated below ("Depository")  ("Bank") to
debit or credit such account(s) pursuant to Franchisor's instructions.


----------------------------------- --------------------------------------------
Depository                          Branch

----------------------------------- ----------------------   -------------------
City                                State                         Zip Code

----------------------------------- --------------------------------------------
Bank Transit/ABA Number             Account Number

--------------------------------------------------------------------------------


This  authorization  is to remain in full and force and effect  until sixty days
after  Franchisor  has received  written  notification  from  Franchisee  of its
termination.


-----------------------------------------------------
Depositor

By:
          -------------------------------------------
Name:
          -------------------------------------------
Title:
          -------------------------------------------
Date:
         --------------------------------------------



                                      D-1