What standards must an Amerispec Inspection Services franchisee adhere to in operating the franchised business?

ice. The Franchisee shall utilize its best efforts, skill, and diligence to ensure that the Franchisee and the Franchisee's employees establish and maintain high quality service to customers. At all times, the Franchisee shall conduct its business in a manner that will preserve and enhance the goodwill associated with the Names and Marks. The Franchisee will at all times be held responsible for the day-to-day management of the Franchised Business. The Franchisee agrees to comply with all reasonable requirements of the Company to measure Franchisee's customer satisfaction with the services provided by Franchisee under this Agreement, and to participate in all programs of the Company designed to review and improve the process of operating the Franchised Business including www.tellamerispec.com customer surveys.

• 9.3 Staffing. The office from which the Franchised Business is operated shall be staffed and open during regular business hours. The office telephone shall be answered by a live person during normal business hours. Minimally, the office telephone shall be answered by a machine or person at all times other than normal business hours identifying the business as an AmeriSpec Inspection business. The Company does not control, and does not have the right to control, decisions regarding the persons Franchisee hires, disciplines, or terminates as employees or agents. However, the Company may take any legal action necessary to enforce its rights under this Agreement. The Company also requires that Franchisee perform background checks and drug testing as allowed by law. These policies will not constitute the Company's representation of approval or disapproval of any prospective employees. In all cases Franchisee will remain solely responsible for decisions regarding hiring and maintaining Franchisee's employees, including determinations of whether the prospective employee meets Franchisee's hiring and performance standards or is suitable for the employment position.
• 9.4 Compliance with Rules. The Franchisee shall comply with all rules, regulations, and directives contained in this Agreement or in the confidential AmeriSpec manuals, as amended from time to time, and shall adopt and adhere to merchandising, promotion, and advertising policies of the Company. The Company specifically reserves the right to modify or change such policies, procedures, and directives including, but not by way of limitation, by changing or adding to the services to be offered by the Franchised Business. Additionally, the Franchisee shall comply with all federal, state, or local rules, regulations or directives that relate to the performance of services offered from the Franchised Business, including but not limited to those requiring licensing, registration or certification.
• 9.5 Inspection Documentation. All inspections conducted by the Franchised Business shall be documented on forms and in the manner as prescribed by the Company, and the Franchisee shall notify the Company of each inspection and source of revenue conducted by the Franchisee by providing such information with respect to each such inspection as, and in the manner, specified by the Company.
• 9.6 Qualified Inspectors. All inspections conducted by the Franchised Business shall be conducted by a qualified inspector meeting the standards prescribed by the Company or as required by local, state or

federal law. It is acknowledged this provision shall require that each such inspector shall be certified, and maintain certification, under any certification program that may be established or endorsed by the Company, or otherwise meet such standards as the Company, in its sole discretion, shall prescribe. In the absence of any certification program established or endorsed by the Company, each inspector shall be required to either successfully complete the inspector training program provided by the Company, or otherwise meet the standards prescribed by the Company.

• 9.7 Building Types. The Franchisee acknowledges that the AmeriSpec franchise program is designed for inspection of single family residences, multi-family dwellings designated for occupancy by up to four families, and commercial buildings. The Franchisee shall not, without the prior written consent of the Company, engage in the inspection of any other types of structures.

• 9.8 Use of Office. During the Term of the Franchise, the Franchisee shall use the office of the Franchised Business exclusively for the sale of goods and services associated with the Names and Marks and authorized by the Company. The Franchisee shall not permit the premises to be used for any other purpose, business, activity, use or function, unless approved in writing by the Company. If the Franchisee desires to operate any other type of business, and such business is not prohibited under the provisions of this Agreement, the Franchisee must operate that business from a separate office, unless approved in writing by the Company. If that office is adjacent to the office of the Franchised Business, there must be a separate entrance for that office and a separate telephone line for that business, and the Franchisee must take any other action required by the Company to assure customers do not believe there is any affiliation between that separate business and the Franchised Business.

• 9.9 Uniforms; Customer Service. All of Franchisee's inspection personnel shall wear uniforms specified by the Company while conducting business and shall at all times while on duty present a neat and clean appearance and render competent, sober, courteous and trustworthy service to the customers of the Franchised Business.

• 9.10 Payment for Products, Supplies and Services. The purchase price for products, supplies, and services purchased by the Franchisee from the Company shall be paid in advance of receipt by the Franchisee unless otherwise specified by the Company, in which case Company will provide an invoice therefor. Fees or charges for products, supplies, or services furnished by the Company and not paid in advance or within 10 days of receipt of an invoice therefor, as well as past-due Royalties and Advertising Contributions, shall bear interest from the due date at the maximum rate permitted by law, not to exceed 1.5% per month.

• 9.11 Right to Inspection. The Company and its designated representatives shall, during normal business hours, have the right to make physical inspections of the Franchised Business. If the Franchisee fails to perform its obligations specified in this paragraph, or if the Company reasonably determines that any actions taken by the Franchisee are injurious to the integrity and goodwill associated with the Names and Marks, the Company shall provide written notice to the Franchisee which shall contain a description of the Franchisee's failure to perform, and the reasonable corrective action to be taken by the Franchisee. Within 30 days after its receipt of the aforementioned notice, the Franchisee shall take the corrective action specified in the notice. If the Franchisee shall in any way fail to maintain the standards of quality or service established by the Company in the operation of the Franchised Business, the Company shall have the right to assign such person or persons that it deems necessary to provide additional training to the Franchisee (above and beyond ordinary training and support provided to most franchisees) to assure that such standards of quality and service are maintained. The Franchisee shall pay to the Company all of the Company's actual costs for such person so assigned, including wages, travel, and living expenses.

• 9.12 Software. Franchisee will use in the Franchised Business the software system, including business contact management software and inspection software, all other existing or future communication or data storage systems, hardware components thereof and associated service, which the Company has developed and/or selected for the System of Operation (the "Computer System"). As part of the Computer System, the Company may require Franchisee to obtain, update, and use specified computer hardware and/or software including, without limitation, a license to use proprietary software developed by us or others (the "Software"). Franchisee's Computer System must be compatible with the Company's computer systems, must be connected to the Company's facilities by high-speed Internet with minimum requirements specified by the Company, and must be updated, maintained, and used in compliance with the Company's specifications, including the Operations Manual. The Company may require Franchisee to electronically upload or transmit information on a periodic basis (including daily). The Company also has the right to independently access sales information and other data produced by the Computer System. The AIS (AmeriSpec Inspection Software) is a software program that allows home inspectors to collect data while performing a home inspection and generate a home inspection report. The Company will assist Franchisee with Level 1 inspection software support and assist vendors with major bug fixes for the AIS. Currently, the Company charges an initial license fee of $1,000 per license for the first year that is included in the Marketing and Technology Bundle. For each year thereafter, an annual service fee that varies per license per inspector must be paid to the Company's approved vendor, depending on the method of payment. Additional licenses for the Franchised Business may be purchased directly from the Company's approved vendor. Franchisee must sign the approved vendor's then-current software license agreement for the AIS. The AMS (AmeriSpec Management System) is an online business management tool that allows Franchisee to have all Franchisee's needed information and automated processes in one place. The AMS allows the Company to market, schedule, and communicate with Franchisee's customers. Franchisee must sign a license agreement with the Company for use of this software, the form of which is included as Exhibit G to this Agreement. Currently, the Company charges an initial license fee of $300 per license (which is included in the Marketing and Technology Bundle) and an annual renewal fee of $300 per year for this software. The fee will be pro-rated for your first year of operation. For each year thereafter, the fee will be payable on June 1. New releases of the Software may be provided at additional cost and may be contingent upon execution of a new software license agreement by Franchisee. The Company reserves the right to assign its rights, title and interest in the Software to a third party designated by the Company or to replace the Software. In such event, Franchisee may be required to enter into a separate computer software license agreement specified by AmeriSpec or the third-party supplier of the specific Software. The Company has the right to designate a single source from whom Franchisee must purchase the Computer System, any software or hardware components thereof or associated service, and the Company or its affiliates may be that single source. Upon 60 days written notice, Franchisee will be required to use and, at the Company's discretion, pay for all future updates, supplements, and modifications to the Computer System.

• 9.13 Service Vehicle. Franchisee will have at least one AmeriSpec identified service vehicle in the Franchised Business. The vehicle must be white, red or navy blue (any exceptions must be approved by the Company) and identified with AmeriSpec approved graphics in accordance with the AmeriSpec® Vehicle Identity Program.

• 9.14 Compliance with System of Operation. The Franchisee shall comply with all reasonable requirements of the Company to measure Franchisee's customer satisfaction with the services provided by Franchisee under this Agreement, and to participate in all programs of the Company designed to review and improve the process of operating the Franchised Business.

Source: Item 23 — Receipts (FDD pages 47–172)