What is the relationship between Alloy and its franchisees?

separate components, all of which we or our agents produce and which contain specifications, standards, policies, procedures and recommendations for your ALLOY Facility, all of which we may change from time to time.

• D. "Owner" means any person or entity who, now or hereafter, directly or indirectly owns an interest in the franchisee when the franchisee is a corporation, limited liability company, or a similar entity other than a partnership entity. If the franchisee is a partnership entity, then each general partner is an Owner, regardless of the percentage of ownership interest. If the franchisee is one or more individuals, each individual is an Owner of the franchisee. Your Owner(s) are identified on the Data Sheet. Every time there is a change in the persons who are your Owners, you must, within 10 days from the date of each such change, update the Data Sheet. As used in this Agreement, any reference to Owner includes all Owners. You must designate in the Data Sheet one of your Owners as your Operating Partner. Your Operating Partner will be our primary contact for your Business, and we may communicate with and rely on the decisions made by your Operating Partner.
• E. "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.
• F. "Trademarks" means the ALLOY Trademark that has been registered in the United States and elsewhere and the trademarks, service marks and trade names set forth in the Manual, as we may modify and change from time to time, and the trade dress and other commercial symbols used in the Facility. Trade dress includes the designs, color schemes and image we authorize you to use in the operation of the Facility from time to time.

GRANT OF LICENSE

• 1. The following provisions control with respect to the license granted hereunder:
• A. Facility. We grant to you the right and license to establish and operate a Facility identified by the ALLOY Trademarks or such other marks as we may direct, at the location identified on the Data Sheet, which location must be designated within 90 days from the date of this Agreement (the "Authorized Location"). The Authorized Location must be located within the area defined in the Data Sheet as the "Designated Area." When a location has been designated by you and approved by us, it will become part of this subparagraph 2.A as if originally stated. If a Facility is not "under control" within 180 days from the date of this Agreement (as defined in subparagraph 5.A), we may grant you an extension of time to locate a Facility or terminate this Agreement. You accept the license and undertake the obligation to operate the Facility using the Trademarks and the System in compliance with the terms and conditions of this Agreement.
• B. Opening. You agree that the Facility will be open and operating in accordance with the requirements of subparagraph 5.A within not later than six months after you sign a lease or 12 months after you sign this Agreement, whichever occurs first, unless we authorize in writing an extension of time.

You may not open your Facility for business until: (1) you have complied with all requirements regarding site selection and construction of the Facility; (2) we determine that your Facility has been constructed, decorated, furnished, equipped and stocked with equipment, materials and supplies in accordance with plans and specifications we have approved; (3) the initial training program we provided has been completed to our satisfaction by all required persons; (4) the initial franchise fee and all other amounts due to us have been paid; (5) you have furnished us

with all certificates of insurance required by this Agreement; (6) you have obtained all required governmental permits, licenses and authorizations necessary for the operation of your Business; (7) you are in full compliance with all the terms of this Agreement; and (8) you have 75 members who have joined during the pre-sale marketing campaign, including a signed membership agreement and a verified credit card on file.

C. Nonexclusivity; Our Reservation of Rights. The license is limited to the right to develop and operate one Facility at the Authorized Location only. During the term of this Agreement and provided that you are in compliance with the terms and conditions of this Agreement, including the Minimum Performance Standards (as described in the Data Sheet), we will not (i) modify the Territory without your written permission, or (ii) establish either a company-owned or franchised Facility with its actual, physical premises within the Designated Area.

The license granted to you does not include (i) any right to offer, sell or otherwise provide services or products outside the Facility, unless we authorize in writing, (ii) any right to offer, sell or otherwise provide services or products through any other channels or methods of distribution, including the Internet (or any other existing or future form of electronic commerce), (iii) any right to offer, sell or otherwise provide services or products identified by the Trademarks to any person or entity for resale or further distribution, or (iv) any right to exclude, control or impose conditions on our development of future franchised, company or affiliate owned facilities at any time or at any location regardless of the proximity to your Facility. As of the Effective Date, there are no restrictions or limitations from where client business may be generated, although you may not directly solicit customers outside your Designated Area. We may establish from time to time written guidelines regarding the territorial scope of your marketing activities. You agree to comply with any such guidelines.

We retain all rights that are not expressly granted to you under this Agreement. Further, we and our affiliates may, among other things, on any terms and conditions we deem advisable, without compensation to any franchisee, and without granting you any rights therein:

• (i) establish and/or license others to establish franchised or company-owned or affiliate-owned Facilities at any location, regardless of the proximity of such facilities to your Designated Area;
• (ii) merge with, acquire or become associated with ("Merger/Acquisition Activity") any businesses or facilities of any kind (including those in competition with ALLOY) under other systems and/or marks, which businesses and facilities may convert to or operate under the Trademarks and may offer or sell training services or related products that are the same as or similar to the services or products offered at or from the Facility, and which may be located anywhere;
• (iii) sell and distribute for ourselves and/or license others to sell and distribute through franchised businesses or any other method of distribution services and products the same as or different from the services or products offered under the System, and which are offered and distributed under marks different than the Trademarks; and
• (iv) develop or franchise Special Site locations, which by their nature are unique and separate in character from sites generally developed as ALLOY facilities ("Special Sites"), and include, but are not limited to the following locations regardless of their location and their proximity to your Facility: (i) military bases; (ii) public transportation facilities (including airports); (iii) business or industry locations (e.g.

manufacturing site, office building), or sports facilities; (iv) student unions or other similar buildings on college or university campuses; (v) malls or enclosed shopping centers; and (vi) community and special events.

We and our affiliates also have the right to offer, sell or distribute any services or products associated with the System (now or in the future) or identified by the Trademarks, or any other trademarks, service marks or trade names through any distribution channels or methods, without compensation to any franchisee. The distribution channels or methods ("Alternative Methods of Distribution") include, without limitation, the Internet (or any other existing or future form of electronic commerce).

TRADEMARK STANDARDS AND REQUIREMENTS

• 1. You acknowledge and agree that the Trademarks are our Affiliate's property and we have licensed the use of the Trademarks to you and others. You further acknowledge that your right to use the Trademarks is specifically conditioned upon the following:
  • A. Trademark Ownership. The Trademarks are our Affiliate's valuable property, and our Affiliate is the owner of all right, title and interest in and to the Trademarks and all past, present or future goodwill of the Facility and of the business conducted at the Facility that is associated with or attributable to the Trademarks. Your use of the Trademarks will inure to our Affiliate's benefit. You may not, during or after the term of this Agreement, engage in any conduct directly or indirectly that would infringe upon, harm or contest our rights in any of the Trademarks or the goodwill associated with the Trademarks, including any use of the Trademarks in a derogatory, negative, or other inappropriate manner in any media, including but not limited to print or electronic media.
  • B. Trademark Use.

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