What factors does Aerus consider when granting rights under the Franchise Agreement?

provisions of this Agreement.

A G R E E M E N T

NOW, THEREFORE, for and in consideration of the foregoing premises and the promises set forth below and other good and valuable consideration, the receipt, sufficiency and adequacy of which are hereby acknowledged and confirmed, the parties agree as follows:

1. Grant of Franchise Rights.

• A. Company hereby grants to Franchisee the right and license, and Franchisee hereby accepts the right and obligation, to establish and operate the Franchised Business (under the Associate Program) upon and subject to the terms, conditions and provisions of this Agreement. Franchisee agrees and acknowledges that Franchisee shall have the right to offer and sell the Products only to Approved Customers within the area identified as the Area of Responsibility in Schedule 1, attached hereto (the "Area of Responsibility"), all in accordance with the terms, conditions and provisions of this Agreement and the Manuals, including the Policies and Procedures. Except as otherwise provided herein, such offers and sales may only be made through the Approved Location or from in-home or in-person demonstrations conducted within the Area of Responsibility. Nothing herein shall be construed to grant the right to Franchisee to offer and sell the Beyond Products.
• B. Subject to Company's prior approval, the Franchised Business shall be identified and operated by Franchisee only under the assumed name (the "Approved Name") "Aerus"

(including such qualifiers and descriptions as may be set or approved by Company from time to time so as to geographically or otherwise distinguish one franchise from another), including the hanging of an approved exterior sign bearing such trade name; provided, that Company shall be permitted at any time and from time to time after the date of this Agreement, upon written notice, to alter or change the assumed name under which the Franchised Business shall be identified and operated. Franchisee shall, at its expense, make all county and state assumed name filings required by law (including any filings made necessary by a change in required trade names pursuant hereto) and provide evidence of such filing to Company.

C. The Franchised Business shall be operated from the Approved Location and from no other physical location, except as may be permitted by Company in writing at its sole option. Franchisee shall cause any premises lease covering the Approved Location to include a lease rider in a form substantially similar to the form attached hereto as Exhibit I.

D. Intentionally Omitted.

• E. Franchisee shall be permitted, at its own cost and expense, to hire and retain such employees, consultants and agents as Franchisee may deem necessary in establishing and operating the Franchised Business. Additionally, Franchisee shall be permitted to employ or engage, on forms reasonably acceptable to Company and which grant no greater rights and retain at least the same restrictions and limitations as this Agreement, Sales Representatives who shall operate in accordance with this Agreement and the Manuals, including the Policies and Procedures. Franchisee shall have sole authority and discretion regarding all employment matters, including without limitation, hiring, firing, discipline, compensation, benefits and scheduling. Notwithstanding the generality of the foregoing, Company may from time to time set minimum staffing requirements and hours of operation for Approved Locations in the Manuals.
• F. Except as provided in this Agreement, Company will not establish, permit or authorize any person or entity other than Franchisee to establish a physical location for the operation of any Aerus Business under any of the four Programs listed in Recital C within the area identified as the Protected Area in Schedule 1, attached hereto (the "Protected Area").
• G. Notwithstanding anything herein to the contrary, without Company's prior written approval, Franchisee shall not (1) conduct the Franchised Business under any actual or assumed name other than the Approved Name, (2) sell to any person or entity that is not an Approved Customer, (3) advertise, market or solicit sales outside of the Area of Responsibility, (4) sell to any person not residing within the Area of Responsibility, (5) conduct any aspect of the Franchised Business by, through, over or on the internet or world wide web, including without limitation, advertising, marketing and solicitation, unless or until Company establishes a Company sponsored program for such conduct by Franchisees and, then, only as part of and in accordance with such program, (6) use any trade name, trademark or service mark in connection with the Franchised Business other than the Marks (and then only in strict accordance with the terms and conditions of this Agreement, the Policies and Procedures, the Manuals and any specific guidelines imposed by Company), (7) advertise or sell any product or service from the Approved Location or through the Franchised Business bearing any trade name, trademark or service mark other than the Marks, (8) sell any product or service that is not a Product, or (9) permit any Product to be sold from any

physical location other than the Approved Location, by any Person other than an authorized representative of Franchisee or in a manner otherwise inconsistent with the System.

• H. Notwithstanding the foregoing and without limiting the generality of the provisions contained in this Section, Franchisee acknowledges that Company and its Affiliates and existing franchisees, distributors and licensees operate existing businesses and systems, and may in the future establish and operate new businesses and systems, including Aerus Businesses, under the same and other assumed names, trade names and trademarks as the Marks, which businesses and systems may offer or sell products and services similar or identical to the Products, and may do so (or grant licenses or franchises for third-parties to do so) within any part of the Area of Responsibility (except as limited by the rights granted hereunder). The right granted under this Agreement is only for the operation of the Franchised Business in accordance with this Agreement. Franchisee is granted no rights of any kind in and to any other business or system that may now or hereafter be owned, operated or licensed by Company or any of its Affiliates. Company and Company's Affiliates retain all rights not expressly granted herein. Company reserves the right to provide new products and services under the System, and to require or permit new products and services to be provided, marketed, promoted, distributed or sold hereunder by Franchisee through the Franchised Business, and may, in connection therewith, without limitation (1) require Franchisee to execute an additional or supplemental agreement and (2) require the payment of a royalty.
• I. If not an existing Aerus Business, Franchisee shall open the Franchised Business at the Approved Location not later than the Opening Date. Company will identify any modifications or improvements to the premises of the Franchised Business, if any, which Franchisee shall make, at Franchisee's expense, prior to the Opening Date, or within such time period ending after the Opening Date as Company may designate in writing.
• 1. Term. Unless sooner terminated as provided herein, the duration of the initial term (the "Initial Term") and the renewal term (the "Renewal Term"

Source: Item 23 — Receipts (FDD pages 74–305)