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Under your Body & Brain franchise (referred to in this Disclosure Document as your "Business" or your "Center"), you will focus on offering the physical aspects of Body & Brain holistic products and services. In particular, you will establish and operate a business that provides holistic health and natural healing programs to individuals and small groups and sells related products. Body & Brain Centers offer Dahn Yoga classes, including dieting programs, Tai-chi programs, exercise programs, relaxation programs, natural healing programs and life coaching. Many of the exercises are brain-based, meaning they are designed to encourage normal brain wave functions, which allows the human body to take advantage of its natural healing power. You will utilize integrative lifestyle coaching to help people develop a healthy lifestyle using certain tools, such as counseling, exercise, media content and related products. You will utilize the Solar Body Method, which is a systemized training method that strengthens the body's natural healing capacity. The products sold by Body & Brain franchisees include books, uniforms, clothing, dietary supplements, skin care products, subscriptions to online programs (including changeyourenergy.com), and various devices that assist with the health and natural healing programs.

As part of your Business, you will also have the opportunity to receive referral fees if you refer your members to certain of our affiliated companies (including BBYHC) and they participate in a workshop, retreat, or other program offered by the affiliated company. These affiliated companies may include companies under common ownership with us or third parties operating under a license granted by us or one of our affiliates. In order to take advantage of these referral programs, you mustsign the Referral Agreement that is attached to this Disclosure Document as EXHIBIT "F". In the past, we offered a "Platinum Membership" program for Body & Brain customers that included acceptance of Dahn Center Gold members. We no longer offer the Platinum Membership program and BBYHC no longer offers the Gold

Membership program, although pre-existing platinum members and gold members are still permitted to receive the benefits under these programs.

We will grant you a license to use certain trademarks, service marks, logos, trade dress and trade names, including the service marks "Body & Brain" and "Body & Brain Center" (collectively, the "Marks") in the operation of your Business. You must sign a franchise agreement (the "Franchise Agreement") and operate your Business in accordance with the terms of the Franchise Agreement. The form of Franchise Agreement is attached to this Disclosure Document as EXHIBIT "C". Before you attend training, you must sign either the Franchise Agreement or the form of Training Agreement that is attached to this Disclosure Document as EXHIBIT "D" (the "Training Agreement"). Under the terms of the Training Agreement, you will have a period of 180 days after successfully completing training to sign the Franchise Agreement. If you do not sign the Franchise Agreement within that period of time, we will have no further obligation to grant you a franchise.

We have developed a unique system (the "System") for the operation of a Body & Brain Center. Distinctive characteristics of the System include logo, trade secrets, concept, proprietary programs and products, confidential operations manuals, marketing techniques and strategies, Solar Body Method of systemized training, coaching system (including specially developed media content and merchandise) and operating system. The operational aspects of a Body & Brain franchise are contained within our confidential Operating Manual (the "Manual"). You will operate your Body & Brain franchise as an independent business using the Marks, the System, the Body & Brain name, as well as the support, guidance and other methods and materials provided or developed by us.

Market and Competition

The primary target market for Body & Brain customers includes individuals who want to develop their brain potential and create a healthier lifestyle. The alternative health industry is large, well developed, and highly competitive. A Body & Brain franchisee competes primarily with other businesses that provide healing and relaxation services, for instance life coaching, massage therapy, physical therapy and Yoga, as well as businesses that provide alternative medicine, for instance acupuncture, chiropractic services, homeopathy, herbs and energy therapies. Some of these businesses operate through franchises.

Laws and Regulations

There are no laws or regulations that are specific to this industry. However, in certain states, "health clubs" are subject to special laws and regulations and some of these laws may apply to your Center if it is deemed to be a health club. Among other things, these laws and regulations may impose requirements relating to the consumer contracts that your members will sign. The federal Truth in Lending Act may also require you to provide certain disclosures in these consumer contracts to the extent that you offer financing. You must hire an attorney to review the form of membership agreement and other consumer contracts that you use to ensure they comply with the laws of your state. Dietary supplements and skin care products sold by Body & Brain franchisees may be subject to regulation or approval by the United States Food and Drug Administration under the Food Drug and Cosmetic Act of 1938, the Dietary Supplement Health and Education Act of 1994, or other applicable laws. You must comply with all federal and state licensing and other regulatory requirements for the operation of your Business.

Source: Item 1 — FRANCHISOR AND ANY PARENTS, PREDECESSORS AND AFFILIATES (FDD pages 6–8)