What is the Alloy franchisee's obligation regarding modifications made to authorized training services and products?

• D. "System" means the ALLOY System, which consists of specific equipment, fixtures, furnishings, materials and supplies; methods, uniform standards, specifications and procedures for operations; procedures for management; training and assistance; and merchandising, advertising and promotional programs and other proprietary information, all of which we may change, improve and further develop. The System is identified by the Trademarks. The System includes a proprietary software application (the "Alloy App"). The Alloy App will provide a franchisee with tools to manage and communicate with coaches and clients through a personal profile.
• E. "Trademarks" means the ALLOY trademark and service mark that has been registered in the United States and elsewhere, and the other trademarks, service marks, trade names, the trade dress and other commercial symbols that we authorize you to use in the operation of the Facility from time to time, each as we may modify and update from time to time. Trade dress includes the designs, color schemes and image we authorize you to use from time to time.

YOUR DUTIES

• 1. You must perform the following obligations:
  • A. You must comply with all of the terms and conditions of each Franchise Agreement, including the operating requirements specified in each Franchise Agreement.
  • B. You and your Owners, officers, directors, shareholders, partners, members and managers (if any) acknowledge that your entire knowledge of the operation of an ALLOY Facility and the System, including the knowledge or know-how regarding the specifications, standards and operating procedures of the services and activities, is derived from information we disclose to you and that certain information is proprietary, confidential and constitutes our trade secrets. The term "trade secrets" refers to the whole or any portion of know-how, knowledge, methods, specifications, processes, procedures and/or improvements regarding the business that is valuable and secret in the sense that it is not generally known to our competitors and any proprietary information contained in the Manuals or otherwise communicated to you in writing, verbally or through the Internet or other online or computer communications, and any other knowledge or knowhow concerning the methods of operation of the Facilities. You and your Owners, officers, directors, shareholders, partners, members and managers (if any), jointly and severally, agree that at all times during and after the term of this Agreement, you will maintain the absolute confidentiality of all such proprietary information and will not disclose, copy, reproduce, sell or use any such information in any other business or in any manner not specifically authorized or approved in advance in writing by us. We may require that you obtain nondisclosure and confidentiality agreements in a form satisfactory to us from the individuals identified in the first sentence of this paragraph and other key employees.

E. Modernization or Replacement. From time to time as we require, you must modernize and/or replace the building interior, trade dress, equipment, fixtures and improvements as may be necessary for your Facility to conform to the standards for similarly situated new ALLOY facilities, although we will limit any such modernization or replacement during the first two years of the term of this Agreement to a maximum of $10,000. Furthermore, in addition to performing general continued maintenance and refreshing of the Facility premises whenever necessary as set forth in subparagraph 5.C, you must make any required expenditures for equipment or leasehold improvements necessary to offer new services.

Each and every transfer of any interest in this Agreement or your business governed by Paragraph 11 or any renewal agreement covered by Paragraph 4 is expressly conditioned upon your compliance with these modernization or replacement requirements at the time of transfer or renewal.

Source: Item 23 — RECEIPTS (FDD pages 69–245)