If you are granted a Franchise, you must operate your Studio at a location that we approve (the "Authorized Location"). You must sign the Franchise Agreement to be granted a Franchise for your Studio. If you are a legal entity, such as a limited liability company, partnership, or corporation, each person who directly or indirectly owns a 10% or greater ownership in you (each, a "Guarantor") must sign and deliver to us our then-current form of Guarantee, Indemnification, and Acknowledgment (a "Guarantee"), and one of your Guarantors must be designated as an Operating Principal, who has the authority communicate with us and otherwise act on your behalf in all matters relating to your Studio.

Each Studio offers fitness and other exercise programs through live instructional group and individual classes, including, but not limited to, strength and endurance training, high-intensity intermittent training exercises, high-intensity resistance training, hypertrophy-style training, and any other services that we authorize (collectively, the "Approved Services"). Studios are established and operated under a comprehensive design that includes spacious interior, a significant number of exercise equipment/apparatuses, specifications, and procedures for operations; quality customer service; management and financial control; training and assistance; and advertising and promotional programs (which we call our "System"). The System's standards, specifications and procedures (collectively, the "System Standards") are described in our confidential learning management system, which includes electronic versions of manuals and written policies and procedures related to the development and operation of Studios (as we may collectively refer to as, the "Learning Management System"). The System and the Learning Management System, and their various components, may be modified, discontinued, and further developed in our discretion.

Your Studio must engage at least one (1) individual that is capable of and authorized to provide fitness instruction and other Approved Services at all times (an "Authorized Instructor"). To be an Authorized Instructor, the individual must attend and complete our Pre-Opening Instructor Training and the proprietary "fundamentals" training program (the "Fundamentals Training Program") designed to provide individuals with guidelines and information on how to provide the Approved Services in accordance with our current System Standards.

Development Rights

We also offer qualified individuals and entities the right to acquire multiple Franchises (the "Development Rights") within a designated geographical area (the "Development Area") under our current form of multi-unit agreement, which is attached to this Disclosure Document as Exhibit K (the "Multi-Unit Agreement"). The Multi-Unit Agreement will provide a designated schedule in which you (or your affiliates) must acquire Franchises and open and operate the designated number of Studios (a "Development Schedule").

Under the Multi-Unit Agreement, the minimum number of Franchises you may commit to acquiring is three. For each Franchise you acquire pursuant to the Multi-Unit Agreement, you (or your affiliate) will sign our then-current form of Franchise Agreement. When you sign the Multi-Unit Agreement, you will also sign your 1st Franchise Agreement in the form attached to this Disclosure Document as Exhibit A. Each subsequent Franchise Agreement you sign will be our then-current form, and it might contain terms that are materially different than those found in our current form, including with respect to fees.

You will be required to pay us a one-time development fee that will be calculated based on the number of Studios you commit to develop under the Multi-Unit Agreement (the "Development Fee").

Source: Item 1 — THE FRANCHISOR, ANY PARENTS, PREDECESSORS AND AFFILIATES (FDD pages 7–12)