What is Basecamp Fitness granting to the franchisee in the Development Agreement?

we are entering into this Agreement with you based on your representation that you intend to personally develop all of the studios described in this Agreement, and not with a view to reselling your right to open these studios.

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.
• 1. Development Fee. You must pay us a Development Fee in the amount set forth in the Rider. This fee is nonrefundable and is payable in full when you sign this Agreement and is fully earned by us at that time. However, you will not be required to pay an Initial Franchise Fee for any of the Basecamp Studios you develop under this Agreement.
• A. You will sign the Franchise Agreement for your first Basecamp Studio concurrently with this Agreement. A separate Franchise Agreement must be signed, on our then-current form, for each such Basecamp Studio. Upon the execution of each Franchise Agreement, the terms and conditions of that Franchise Agreement control the establishment and operation of such Basecamp Studio.
• B. The Development Fee is consideration for this Agreement and not consideration for any Franchise Agreement.
• 1. Development Schedule. The following provisions control with respect to your development rights and obligations:
• A. You must comply with the Development Schedule requirements regarding: (i) the date of execution of the Franchise Agreements and site approval requests; (ii) the opening date for each Basecamp Studio; and (iii) the cumulative number of Basecamp Studios to be open and continuously operating for business in the Development Territory. You represent that you have conducted your own independent

investigation and analysis of the prospects for the establishment of Basecamp Fitness studios within the Development Territory, approve of the Development Schedule as being reasonable, viable, and essential to the potential success of your business and recognize that failure to sign a Franchise Agreement, obtain a site approval, open a Basecamp Studio or have a cumulative number of Basecamp Fitness Studios open and operating, according to the applicable dates set forth in the Development Schedule, gives us the right, in our sole discretion, to immediately terminate this Agreement pursuant to Section 5.

• B.

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