What is the geographic scope of the development rights granted to the franchisee by Basecamp Fitness?

In consideration of the foregoing and the mutual covenants and consideration below, you and we agree as follows:

• 1. Grant of Development Rights. The following provisions control with respect to the rights granted hereunder:
• A. We grant to you, under the terms and conditions of this Agreement, the right to develop and operate the number of fitness studios identified in the Rider (the "Basecamp Studios"), using the Marks, operating within the nonexclusive area described in the Rider (the "Development Territory").
• B. You agree to be bound by the "Development Schedule" in the Rider. Time is of the essence for the development and operation of each Basecamp Studio in accordance with the Development Schedule.

Each Basecamp Studio must be developed and operated by you pursuant to a separate Franchise Agreement that you enter into with us.

• C.

Unless otherwise indicated in the Rider and except as set forth in Section D below, if you are in compliance with the Development Schedule set forth in the Rider, we will not develop or operate or grant anyone else a franchise to develop and operate a Basecamp Studio from any location in the Development Territory prior to the earlier of (i) the expiration or termination of this Agreement; (ii) the date on which your last Basecamp Studio must be open pursuant to the terms of the Development Schedule; or (iii) the date on which the Protected Territory for your final Basecamp Studio is determined; except that if the Development Territory covers more than one city, county or designated market area, the protection for each particular city, county or designated market area will expire upon the earliest of (1) any of the foregoing events or (2) the date when the Protected Territory for your final Basecamp Studio to be developed in such city, county or designated market area under this Agreement is determined.

Notwithstanding anything in this Agreement, upon the earliest occurrence of any of the foregoing events (i) the Development Territory will expire and (ii) we will be entitled to develop and operate, or to franchise others to develop and operate, Basecamp Studios from locations in the Development Territory, except as may be otherwise provided under any Franchise Agreement that has been signed between us and you and that has not been terminated.

• D.

You acknowledge and agree that (i) we and our affiliates have the right to grant other franchises or operate company or affiliate owned fitness studios/businesses (including Basecamp Studios) at locations outside the Development Territory even if they compete with your Basecamp Studios for customers or members; (ii) we and our affiliates have the right to grant other franchises or licenses and to operate company or affiliate-owned fitness studios/businesses (including Basecamp Studios) within private establishments located within the Development Territory, provided that access to those centers is limited to employees of the business, or transient guests of the business, in either case who would not have any reciprocity with any other Basecamp Studio as a result of their use or membership in this private studio; and (iii) we and our affiliates have the right to operate, and to grant franchises or licenses to others to operate fitness studios/businesses, or any other business within and outside the Development Territory under trademarks other than the Marks, all without compensation to you.

Source: Item 17 — RENEWAL, TERMINATION, TRANSFER, AND DISPUTE RESOLUTION (FDD pages 51–55)