What standards must a 360 Painting franchisee maintain in the operation of their business?

Franchisee recognizes the mutual benefit to Franchisee, Franchisor and other franchisees of the System of the consistency of the appearance, services, products and advertising of the System and acknowledges and agrees that such consistencies are necessary for the protection and successful operation of 360 Painting Businesses. Franchisee covenants and warrants with respect to the operation of the Business that Franchisee and its employees and agents will comply with all of the requirements of the System and the Brand Standards Manual and will throughout the term of this Agreement:

Franchisor may update and change the Brand Standards Manual periodically to reflect changes in the System and the operating requirements applicable to 360 Painting Businesses, and Franchisee expressly agrees to comply with each requirement within such reasonable time as Franchisor may require, or if no time is specified, within 30 days after receiving notification of the requirement. The cost of implementing changes, updates or modifications to the System as called for in the Brand Standards Manual shall be borne exclusively by Franchisee regardless of the financial or other impact on Franchisee or the Business. Franchisee shall at all times ensure that its copy of the Brand Standards Manual and any other confidential materials supplied by Franchisor to Franchisee are kept current and up to date. Franchisee must keep any printed Brand Standards Manual in a secure location at the Business, and must restrict employee access to the Brand Standards Manual on a need to know basis, and take reasonable steps to prevent unauthorized disclosure or copying of any information in any printed or computerized Brand Standards Manual. If Franchisor and Franchisee have any disagreement about the most current contents of the Brand Standards Manual, Franchisor's master copy of the Brand Standards Manual will control. Upon the expiration or termination of this Agreement for any reason, Franchisee must return all copies of the Brand Standards Manual to Franchisor, and upon Franchisor's request, certify to Franchisor that Franchisee has not kept any copies in any medium.

• 9.20 Responsibility for Contractors. Franchisee agrees to cause any third party subcontractors engaged by Franchisee to perform work on behalf of Franchisee in respect of the Business to comply with all applicable requirements of this Section 9, including but not limited to the quality and performance standards required of Franchisee, as well as the insurance requirements set forth in Section 16.2 herein.

• 9.21 Contact Center. Franchisor maintains a contact center for the purpose of providing centralized customer service and scheduling for all businesses operating under the System and the Marks.

Franchisee must utilize this contact center exclusively, comply with any rules and regulations adopted by Franchisor (in the Brand Standards Manual or otherwise) governing the contact center and pay the fees described in Section 4.6, above.

• 13.3 Training of Employees. Franchisee shall implement a training program approved by Franchisor for employees of the Business and shall be responsible for the proper training of its employees. Franchisee agrees not to employ any person who fails or refuses to complete Franchisee's training program or is unqualified to perform his or her duties at the Business in accordance with the requirements established for the operation of a 360 Painting Business.

• 13.4 Additional Training. Franchisee may have additional representatives attend Franchisor's initial training program, provided space is available and that reasonable notice is provided to Franchisor and that all travel, living, and related expenses incurred by Franchisee's representative during such training shall be at Franchisee's sole cost and expense. In addition, Franchisee and its Managers and employees shall attend and conduct such additional training programs as Franchisor may from time to time reasonably require relating to the operation of the Business and the System. Franchisee also may be required to purchase training videos or other instructional materials as specified by Franchisor from time to time in the Brand Standards Manual or otherwise.

• 13.5 Annual Convention. Franchisor shall require Franchisee and/or one or more of the operating managers of the Business to attend an annual convention. Franchisee will be responsible for the travel and living expenses of such persons, and Franchisor may charge a reasonable fee sufficient to cover the costs and expenses of the convention. Attendance at the annual convention shall be mandatory and the annual convention fee (currently $1,000 per attendee) shall apply whether or not Franchisee attends the convention. The annual convention fee shall be the amount stated in the annual convention notice from Franchisor, or if Franchisee does not attend the conference, $2,000 (or such then current amount set forth in the Brand Standards Manual).

• 9.11 Trade Dress. Prominently display on the Vehicles or on any real property owned or leased by Franchisee in connection with the Business the name "360 Painting" using signs, decals or paint patterns, of such nature, form, color, number, location and size, and containing such material as Franchisor may from time to time reasonably direct or approve in writing; and not display on the Vehicles or in the Business or elsewhere any sign, decal or advertising media of any kind to which Franchisor reasonably objects.

Franchisee shall, at its own cost and expense, maintain the Vehicles in good order and repair, and make the Vehicles available for inspection by Franchisor at any place within the Protected Territory as the parties may reasonably agree.

Franchisee agrees to open only one (1) Business within the Protected Territory, and further agrees not to relocate the Business within the Protected Territory without prior written consent from Franchisor.

In all cases, Franchisee must operate the Business only in the Protected Territory and only from a home office (or other approved office space) and all Vehicles, and the home office (or other approved office space) and all Vehicles must be located in the Protected Territory at all times.

• 9.19 Customers Outside of Protected Territory. If a potential client outside the Protected Territory requests the services of Franchisee, Franchisee shall promptly refer such potential client to Franchisor or the 360 Painting franchisee that operates in the territory where such potential client's principal place of business is geographically located.

Unless otherwise required by Franchisor, or if Franchisor designates an exclusive designated supplier, Franchisee may purchase any and all products, supplies, Vehicles, equipment and tools from any available source, so long as such products, supplies, Vehicles, equipment and tools conform to the standards and specifications established by Franchisor.

Franchisee is responsible for verifying and ensuring the any products or services it uses in the operation of the Business comply with applicable law.

8.2 Modification by Franchisee. If Franchisee develops any new modification, concept, process, improvement or slogan in the operation or promotion of the Business or to the System, the same shall be deemed a work made for hire, and Franchisee shall promptly notify Franchisor of, and provide Franchisor with all necessary information, regarding such modification, concept, process, improvement or slogan. Franchisee acknowledges that any such modification, concept, process, improvement or slogan shall become Franchisor's sole and exclusive property and that Franchisor may use or allow other franchisees to use the same in connection with the System or the operation of 360 Painting Businesses, without providing any compensation to Franchisee, and Franchisee agrees to execute and deliver all such additional instruments and documents as Franchisor may request to evidence the assignment and Franchisor's ownership of the innovation or improvement.

Source: Item 21 — FINANCIAL STATEMENTS (FDD page 56)