Can Basecamp Fitness affiliates be included as approved vendors?

r specifications and quality standards. We do not impose any fee for our consideration of an item not previously approved.

We may require you to purchase certain furniture, equipment, inventory, supplies, services and other products used or offered at your studio from vendors we approve, in which case we will provide you with a list of approved suppliers. These will include mandatory vendors (persons from whom you must purchase certain items or services), designated vendors (for items or services that must be purchased from vendors we approve), and preferred vendors (for vendors we have approved, but in categories where we do not require you obtain our approval of the vendor). These suppliers may pay vendor rebates to us and they may include our company and affiliates of ours. We may modify our mandatory, designated, and/or preferred vendor(s) at any time. We may require you to offer additional services or products and some of those products or services may require that you purchase additional equipment or training for your staff.

When we have a designated vendor (other than a mandatory vendor), if you want to purchase from other vendors the items or services for which that vendor has been designated, you must notify us in writing and obtain our approval. If you seek approval of a new supplier (or if the supplier applies directly to us for approval), we will require the supplier pay us a nonrefundable fee of $300 before we will consider approving their application. This fee is intended to defer our cost of reviewing the supplier. (We do not require you to pay any fee.) We may also require the supplier to sign a supplier agreement with us.

In reviewing prospective suppliers, we consider whether the product or service is consistent with our concept and brand; how they and/or their products or services would enhance our brand and make it more attractive to members and other customers or franchisees; how the product or service would improve the studio experience of a member; how the product or service would increase revenue of a franchisee's business; how the product or service would increase the efficiency of a franchisee; if the product or service is already available through other sources, would approval of another vendor enhance competition or dilute our ability to maximize pricing benefits for our franchisees; is the product of a commercial quality with a proven record of durability; does the supplier support our values; and other factors. In addition, we consider demand from franchisees, the need for the vendor based on business trends, and the ability of the vendor to serve franchisees throughout the United States. (The criteria is posted on our website for potential vendors and franchisees.) We will generally notify you and the supplier of our approval or disapproval within 2-12 months of our receipt of all the information and samples we request. If we revoke approval of any supplier or any item offered by a supplier, we will send you written notice of our revocation of an approved supplier or item.

As of the issuance date of this Disclosure Document, we have the following sole suppliers in our System:

• 1. We or a third party, depending upon the item, are currently the sole suppliers of certain items logo'd with our Marks, including any branded mobile applications, all retail products for re-sale, workout formats that you must use at your Basecamp Studio and all fitness programming. You must purchase the Build-Out Package from us. Additional items you will need to operate that are included in the Build-Out Package must be purchased from certain third parties who are the sole suppliers for these items. These items include signage, marketing materials, furniture, and fixtures.
• 1. ProVision, an affiliate of ours, is currently the sole supplier for certain fitness equipment, technology services, technology, network hardware, and security systems, including iPads, tablet devices, computers, lighting, audio and video systems, software and other related components including a point of sale system and certain cloud based technology included in the Technology & Fitness Equipment Package which you must purchase to operate your Basecamp Studio.
• 1. We have a sole supplier of studio management, billing, payment and scheduling software which you must use to operate your Basecamp Studio.

Supplies for your Basecamp Studio must be purchased from designated vendors. We are also currently a designated vendor for business supplies, and marketing materials, and we or our affiliates may be a mandatory, designated and/or preferred vendor for other items in the future. We do not currently, but we may implement a program that automatically ships supplies and/or marketing materials to your studio on a monthly basis based on your need and inventory levels at your cost.

Source: Item 8 — RESTRICTIONS ON SOURCES OF PRODUCTS AND SERVICES (FDD pages 28–32)