What rights does Beehive Homes grant to the franchisee upon establishment of the franchise?

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• 3.2. Grant of Licenses. Subject to the terms and conditions contained in this Agreement, Franchisor hereby grants to Franchisee, and Franchisee hereby accepts, the nonexclusive right and sub-license to use (but only in connection with the Home and the System) the Names and Marks, Trade Secrets and Copyrighted Materials (as such may presently exist or hereafter be modified or acquired by Franchisor and be licensed for use to the Franchisee) but only to the extent Franchisor has rights or may acquire rights to the same. Franchisor agrees to impart and disclose to Franchisee the Trade Secrets prior to opening of the Home for business.

  • 3.3. Reserved Rights. Notwithstanding the foregoing Sections 3.1 and 3.2:
  • (a) This Agreement does not limit the Franchisor's right, or the right of any of its Affiliates, to own, license or operate any other business whatsoever, whether or not under the Names and Marks;
  • (b) Franchisormayadd, alter, delete or otherwise modifyelements of the System; use or license to others all or part of the System; and use any portion of the System and Names and Marks in other businesses; and

• (c) Franchisee acknowledges and agrees that he has no rights to, and will not make any claims or demands for, damages or other relief arising from or related to any of the foregoing activities, and that such activities will not give rise to any liability on Franchisor's part, including liability for claims for unfair competition, breach of contract, breach of any applicable implied covenant of good faith and fair dealing, or divided loyalty.

• 3.4. Franchisee Name. Franchisee shall operate the Home under the trade name "BEE HIVE HOMES of ____________________" (the "Trade Name") and shall use no other name in connection with any operations conducted by Franchisee without the prior written approval of Franchisor. Franchisor may change the Trade Name or the way in which it is depicted, at its sole option. Franchisee shall use the Trade Name and such other of the Names and Marks as Franchisee may be authorized to use exclusively for the purpose of operating the Home pursuant to the franchise granted by this Agreement.

Franchisee shall display the Franchisee's Trade Name for all purposes, and on all signs, stationary, business cards, advertising materials and other media, in strict compliance with the requirements set forth in the Manual.

Franchisee shall file and keep current, in the county and/or state in which Franchisee's Home is located and at such other places as may be required by law, a "fictitious name certificate" or comparable instrument, for the Trade Name. Franchisee shall not, without Franchisor's prior written approval, use any of the Names and Marks, or the name "BEE HIVE HOMES®," or any form thereof in connection with (i) any corporate, partnership or other entity name or in any corporate or other entity filing with any political subdivision; (ii) any internet-related name (including a domain name); or (iii) any other business. Franchisee hereby agrees that if this Agreement is terminated for any reason, Franchisee shall immediately discontinue use of the Trade Name, as well as the Names and Marks.

IV. INITIAL FRANCHISE FEE AND FRANCHISE ROYALTY

• 4.1. Initial Franchise Fee. Franchisee hereby promises and agrees to pay to Franchisor an initial franchise fee (the "Initial Franchise Fee") of Seventy-Five Thousand Dollars ($75,000.00), payable one-third upon signing of this Agreement and the balance in full upon the earlier to occur of the following: (i) the funding of any construction loan for the Home; or (ii) the issuance of a building permit for the Home. The Initial Franchise Fee is fully earned and nonrefundable as and when paid as consideration for the expenses incurred by Franchisor in furnishing assistance and service to Franchisee and for Franchisor's lost or deferred opportunity to franchise to others. If the Franchise Fee is not paid in full on or before the date which is one year after the Effective Date of this Agreement, Franchisor may, in its sole discretion, terminate this Agreement, and no fees will be refunded to Franchisee.
• 4.2. Initial Franchise Fee for Additional Franchises. Franchisees in good standing and all of whose franchised Homes are open and operating may acquire additional franchises by paying the then current franchise fee for each additional franchise offered by Franchisor, subject to approval by the Franchisor. The current franchise fee for each additional franchise is Fifty Thousand Dollars ($50,000.00), payable in full upon the execution of a franchise agreement for the additional franchise and is fully earned and nonrefundable upon payment. This current franchise fee is subject

to change and this Section 4.2 does not give the Franchisee any right to acquire any additional franchise or to acquire any additional franchise at this fee.

• 4.3. Franchise Royalty. In addition to the Initial Franchise Fee, Franchisee promises and agrees to pay to Franchisor a franchise royalty (the "Franchise Royalty") in the amount of five percent (5%) of the Gross Revenues. The Franchise Royalty shall be paid monthly on or before the 10th day of each calendar month based upon the Gross Revenues of the preceding calendar month. The Franchise Royalty will commence on the earlier of (i) the first day of the first full calendar month following the date on which the Home reaches a 50% occupancy; or (ii) the first day of the sixth full calendar month following the date of opening of the Home. For purposes of determining the Franchise Royalty, "Gross Revenues" is defined to be the gross receipts of every kind and nature whatsoever received by Franchisee directly or indirectly in connection with the operation of the franchised business, the Home and/or providing of services, excepting only the amount of sales or use taxes levied upon the sale of goods or services by a governmental taxing authority and actually paid to said taxing authority.
• 4.4. Determination and Method of Payment of Franchise Royalty.

Source: Item 23 — RECEIPTS (FDD pages 34–123)