Under what conditions does Beehive Homes grant a franchise to a franchisee?

• A. Bee Hive Homes, Inc. (the "Franchisor"), a Utah corporation, is engaged in the business of developing, operating and franchising in various states a unique kind of Home (as defined below) for residential care, assisted living, rehabilitation, memory care and/or hospice care for individuals. Standards of interior and exterior design, furnishings and equipment for the Homes have been established by the Franchisor which are original and unique.
• B. Franchisor has developed and holds rights to a unique System (as defined below) for the operation of the Homes. The Franchisor has from time to time revised and updated the System and may continue to revise and update the System.
• C. Franchisor has developed and holds rights to the Names and Marks (as defined below) used for the Homes and licenses the use of said Names and Marks in connection with the franchising of the Homes and the System.
• D. Franchisor has established a high reputation with the public as to the quality of services and high standards in connection with the operation of Homes using the System under the Names and Marks, whether at Homes owned by Franchisor and its affiliates or franchised by it to franchisees. This high reputation and goodwill have been and continue to be a unique benefit to Franchisor and its franchisees and this has created and is creating a demand for services provided at the Homes using the System under the Names and Marks.
• E. Franchisee is desirous of acquiring the right, franchise and sub-license to construct or acquire a Home conforming to the Standards (as defined below) and to operate the Home using the System under the Names and Marks at the Location (as defined in Section 3.1). Franchisor is ready and willing to grant such a right, franchise and sub-license to Franchisee upon the terms and subject to the conditions hereinafter set forth.

AGREEMENT

NOW, THEREFORE, in consideration of the terms, conditions and covenants contained herein, and for other valuable consideration, the receipt and sufficiency of which are hereby mutually acknowledged, it is understood and agreed by and among the parties hereto as follows:

I. ACKNOWLEDGMENTS. Franchisee acknowledges to have carefully read this Agreement and the Bee Hive Homes Franchise Disclosure Document and understands and accepts the terms, conditions and covenants contained in this Agreement as being reasonably necessary to maintain Franchisor's high standards of quality and service and the uniformity of those Standards at each Home using the System under the Names and Marks. Franchisee has conducted an independent investigation of the business venture contemplated by this Agreement and recognizes that, like any other business, the nature of the business conducted at a Home using the System may change over time, that an investment in a Home involves business risks and that Franchisee's business abilities and efforts are vital to the success of the venture. Any information Franchisee may acquire from franchisees of other Homes relating to their sales, profits or cash flows does not constitute information obtained from Franchisor, nor does Franchisor make any representation as to the accuracy of any such information. Franchisee acknowledges that, in all of Franchisor's past, present and future dealings with Franchisee, Franchisor's respective officers, directors, employees and agents act only in a representative, and not in an individual, capacity. All business dealings between Franchisee and such persons in connection with this Agreement are solely between Franchisee and Franchisor. Franchisee further acknowledges that Franchisor has advised Franchisee to have this Agreement reviewed and explained to Franchisee by an attorney prior to signing. Franchisee represents and warrants to Franchisor, as an inducement to Franchisor's entry into this Agreement, that all statements Franchisee has made and all materials Franchisee has submitted to Franchisor in connection with Franchisee's application for and purchase of the franchise contemplated herein are accurate and complete and that Franchisee has made no misrepresentations or material omissions in entering into this Agreement. Franchisor's approval of Franchisee's application for a franchise for a Home is made in reliance upon all of Franchisee's representations and warranties to Franchisor.

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