C3_Wellness_Spa 2024 Franchise FAQ - FDD Ninja

Question 1

What are the required actions that a franchisee must complete before opening a C3 Wellness Spa location?

Accepted Answer

ranchise Agreement, Articles 2, 3, 7 and 16).

#### **Time to Open**

You may not open your Spa Location Franchise until you have completed our initial training requirements, obtained the necessary licensing and authorization from state and regulatory agencies within your Designated Territory, obtained and provided us with written proof of the required insurance, have timely secured and developed a Spa Location that we approved, and have met our minimum presale requirements.

We estimate that the length of time between the signing of your Franchise Agreement and opening your Spa Location Franchise to be approximately six months to 12 months. Factors that may affect this estimated time period include: (a) evaluating and selecting a suitable site for your Spa Location that is approved by us; (b) timeliness of your submission to us of information and documentation that we may request in determining whether or not to approve of the site for your proposed Spa Location; (c) length of time undertaken by you to complete our initial training program to our satisfaction; (d) negotiating and obtaining a suitable lease for your Spa Location that is approved by us; (e) obtain third party lender financing, if necessary; and (f) obtaining the necessary licenses for the operation of your Spa Location Franchise. Other factors that may affect this time period include availability of equipment, delays associated with equipment installation and the construction and/or installation of your leasehold improvements and fixtures. You must open your Spa Location Franchise within 12 months from the effective date of your Franchise Agreement, otherwise we may terminate your Franchise Agreement without refunding any fees to you. (Franchise Agreement, Article 3.C).

#### **Post-Opening Obligations**

1. Supplemental Training – We may require that you and your Operating Manager participate in supplemental on-site training that we may designate and require in our discretion. We may provide, in our discretion, supplemental training on-site at your Spa Location. You will be required to pay our then current

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supplemental training fee, which is currently \$800 per on-site trainer per day, plus travel expenses, meals and accommodation expenses incurred by us. (Franchise Agreement, Article 4.A.);

- 2. Initial Training for Replacement Operating and Employee Manager(s) Your Operating Manager and designated employee managers must complete, to our satisfaction, our initial training program.

Source: Item 11 — FRANCHISOR'S ASSISTANCE, ADVERTISING, COMPUTER SYSTEMS AND TRAINING (FDD pages 30–38)

Question 2

What is the total estimated initial investment range for a C3 Wellness Spa franchise?

Accepted Answer

| Type of Expenditure | Amount | Method of Payment | When Due |  |
|---|---|---|---|---|
|  |  |  |  | To Whom Payment is Made |
|  |  |  |  |  |
| Development Area Fee (Note 1) | $40,000 – $145,000 | Lump sum | When Franchise Agreement and Multi- Unit Development Agreement are signed |  |
| Estimated Initial Investment to Open One Spa Location Franchise (Note 2) | $652,928 – $856,616 | Estimated Initial Investment is based on estimate contained in Table A, above, of this Item 7, for a Franchise Agreement. See, Table A |  |  |

Source: Item 7 — ESTIMATED INITIAL INVESTMENT (FDD pages 21–25)

Question 3

What is the total estimated initial investment range for opening a C3 Wellness Spa?

Accepted Answer

| Type of Expenditure | Amount | Method of Payment | When Due |  |
|---|---|---|---|---|
|  |  |  |  | To Whom Payment is Made |
|  |  |  |  |  |
| Development Area Fee (Note 1) | $40,000 – $145,000 | Lump sum | When Franchise Agreement and Multi- Unit Development Agreement are signed |  |
| Estimated Initial Investment to Open One Spa Location Franchise (Note 2) | $652,928 – $856,616 | Estimated Initial Investment is based on estimate contained in Table A, above, of this Item 7, for a Franchise Agreement. See, Table A |  |  |
|  |  |  |  |  |

| Professional Fees (Note 12) | $26,500 – $32,000 | As arranged | As incurred | Attorneys, accountants, architects, advisors |
|---|---|---|---|---|
| Licenses and | $1,038 – $1,453 | As arranged | As incurred | Government |
| Permits (Note 13) |  |  |  |  |
| Uniforms | $5,000 – $30,000 | As arranged | As incurred | Suppliers, us or our affiliate |
| Additional Funds – | $130,399 – $189,678 | As incurred | Before opening | Employees, suppliers, |
| 3 months |  |  |  | landlord, utility |
| (Note 14) |  |  |  | suppliers |
| Total Estimate | $652,928 – $858,616 |  |  |  |
| (Note 15) |  |  |  |  |

| Type of Expenditure | Amount |  | When Due | To Whom Payment is Made |
|---|---|---|---|---|
|  |  |  |  |  |
|  |  |  |  |  |
|  |  |  |  |  |
| Initial Franchise Fee | $45,000 | Lump sum | When Franchise |
| (Note 1) |  |  | Agreement is signed | Us |
| Construction and Leasehold Improvements (Note 2) | $350,000 – $400,000 | As arranged | As incurred | Contractors, suppliers, and/or Landlord |
| Lease Deposits | $13,500 – $18,900 | As arranged | As incurred | Landlord |
| (Note 3) |  |  |  |  |
| Furniture, Fixtures | $30,000 – $60,000 | As arranged | As incurred | Suppliers |
| and Equipment |  |  |  |  |
| (Note 4) |  |  |  |  |
| Initial Retail | $3,000 – $5,000 | As billed | As incurred | Suppliers |
| Inventory (Note 5) |  |  |  |  |
| Initial Supply | $4,000 – $5,700 | As billed | As incurred | Suppliers |
| Inventory (Note 6) |  |  |  |  |
| Signage | $10,000 – $20,000 | As arranged | As incurred | Suppliers |
| (Note 7) |  |  |  |  |
| Grand Opening | $15,000 – $20,000 | As arranged | As incurred | Suppliers |
| Marketing Expenses |  |  |  |  |
| (Note 8) |  |  |  |  |
| Computer, Software | $16,261 – $22,766 | As arranged | As incurred | Suppliers |
| and Point of Sales |  |  |  |  |
| System |  |  |  |  |
| Utility Deposits | $1,056 – $1,478 | As arranged | As incurred | Suppliers |
| (Note 9) |  |  |  |  |
| Insurance Deposits | $164 – $689 | As arranged | As incurred | Insurers |
| (Note 10) |  |  |  |  |
| Travel for Initial | $2,010 – $5,952 | As arranged | As incurred | Airlines, ho

Source: Item 7 — ESTIMATED INITIAL INVESTMENT (FDD pages 21–25)

Question 4

What is the auditor's responsibility when auditing the financial statements of Aryes Franchising, LLC, the franchisor of C3 Wellness Spa, regarding the detection of material misstatements resulting from fraud versus error?

Accepted Answer

ubt about Aryes Franchising, LLC's ability to continue as a going concern within one year after the date that the financial statements are available to be issued.

# Auditor's Responsibilities for the Audit of the Financial Statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with generally accepted auditing standards will always detect a material misstatement when it exists. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Misstatements are considered material if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the financial statements.

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In performing an audit in accordance with generally accepted auditing standards, we:

- Exercise professional judgment and maintain professional skepticism throughout the audit.
- Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or
error, and design and perform audit procedures responsive to those risks. Such procedures include examining,
  on a test basis, evidence regarding the amounts and disclosures in the financial statements.
- Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are
  appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of Aryes
  Franchising, LLC's internal control. Accordingly, no such opinion is expressed.
- Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluate the overall presentation of the financial statements.
- Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise substantial doubt about Aryes Franchising, LLC's ability to continue as a going concern for a reasonable period of time.

Source: Item 23 — RECEIPTS (FDD pages 59–293)

Question 5

What differentiates a 'Franchise Outlet' from a 'Company Owned Outlet' within the C3 Wellness Spa franchise system?

Accepted Answer

s, as to each respective year, the 12 month period commencing on January 1 and ending on December 31.
- (c) Company Owned Outlet means an outlet owned either directly or indirectly by us, our affiliate or any person identified in Item 2 of this Disclosure Document, that operates a C3 Wellness Business. A Company Owned Outlet also includes any C3 Wellness Business that: (i) is operated as a joint venture owned in part by us, our affiliate or any person identified in Item 2 of this Disclosure Document; or (ii) is managed by us our affiliate or any person identified in Item 2.
- (d) Facial Services refers to sales related to spa facials, including chemical peels, diamond microdermabrasion, non-invasive meso-therapy, neck lifts and face lifts, and specialized facials including supersonic facials and hydrogen and oxygen therapy that are not covered by a customer's insurance.
- (e) Franchise Outlet(s) means a C3 Wellness Business operated under a Franchise Agreement that is not a Company Owned Outlet.
- (f) Gift Cards refers to gift card sales for future Approved Spa Products and Services.
- (g) Gross Sales means the total revenue derived by each Outlet less sales tax, discounts, allowances and returns.

Source: Item 19 — FINANCIAL PERFORMANCE REPRESENTATIONS (FDD pages 51–55)

Question 6

Does C3 Wellness Spa have effective dates listed for states other than California, Hawaii, Illinois, Indiana, Maryland, Michigan, Minnesota, New York, North Dakota, Rhode Island, South Dakota, Virginia, Washington, and Wisconsin?

Accepted Answer

The following states have franchise laws that require that the Franchise Disclosure Document be registered or filed with the states, or be exempt from registration:

California, Hawaii, Illinois, Indiana, Maryland, Michigan, Minnesota, New York, North Dakota, Rhode Island, South Dakota, Virginia, Washington, and Wisconsin.

This document is effective and may be used in the following states, where the document is filed, registered or exempt from registration, as of the Effective Date stated below:

| Effective Dates |  |
|---|---|
| California |  |
| Hawaii |  |
| Illinois |  |
| Indiana |  |
| Maryland |  |
| Michigan |  |
| Minnesota |  |
| New York |  |
| North Dakota |  |
| Rhode Island |  |
| South Dakota |  |
| Virginia |  |
| Washington |  |
| Wisconsin |  |

Source: Item 23 — RECEIPTS (FDD pages 59–293)

Question 7

What is the relationship between the initial franchise fee for a C3 Wellness Spa in Item 5 and the estimated total initial investment in Item 7?

Accepted Answer

to Item 7 For a Franchise Agreement

Note 1: Initial Franchise Fee – The Initial Franchise Fee for a Spa Location Franchise under a Franchise Agreement is \$45,000. All fees are non-refundable. We did not finan

Question 8

What is the relationship between the initial franchise fee for C3 Wellness Spa in Item 5 and the ongoing royalty fees in Item 6?

Accepted Answer

[Item 5: INITIAL FEES]

# **ITEM 5 INITIAL FEES**

#### **Franchise Agreement**

When you sign a Franchise Agreement, you will pay to us a non-refundable initial franchise fee in the amount of $45,000 (the "Initial Franchise Fee"). The Initial Franchise Fee is fully earned by us upon payment. The method we use to calculate the Initial Franchise Fee is uniform for all franchises that we offer through this Disclosure Document.

#### **Multi-Unit Development Agreement**

If you sign a Multi-Unit Development Agreement, you must pay a fixed non-refundable development area fee of $40,000 for each Spa (the "Development Area Fee"), over and above the first Spa authorized by the Franchise Agreement, that you will be authorized to develop under the Multi-Unit Development Agreement, as follows:

Two Spas – If under a Development Agreement you are authorized to develop two Spas, the amount of the Initial Franchise Fee for your first Spa is $45,000 and the Development Area Fee is $40,000 for the second Spa that you are authorized to develop under your Development Agreement. At the time of signing the Franchise Agreement for the second Spa, over and above the first Spa authorized by your Development Agreement, the initial franchise fee will be waived.

Three to Five Spas – If, under a Development Agreement, you are authorized to develop, in aggregate, three Spas to five Spas the amount of the Initial Franchise Fee for your first Spa is $45,000, the Development Area Fee is equal to: (i) $40,000 for the second Spa; and (ii) $35,000 for each Spa, over and above the second Spa, that you are authorized to develop under your Development Agreement. At the time of signing the Franchise Agreement for each additional Spa, over and above the first Spa authorized by your Development Agreement, the initial franchise fee will be waived.

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[Item 23: RECEIPTS]
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#### **5.B. ROYALTY FEES**

Royalty Fee: Throughout the Term of this Agreement, Franchisee shall pay to Franchisor a continuing weekly non-refundable royalty fee (the "Royalty Fee") in an amount equal to 6% (the "Royalty Rate") of Franchisee's weekly Gross Sales throughout the Term of this Agreement. Without limitation to the foregoing, Franchisee agrees that if the Franchised Business is operated as a Spa Management Business that the Gross Sales shall not be limited to sales and revenue related to the Spa Facility and Management Services but, shall also include, among other things, Gross Sales related to the Spa Location Franchise including sales and revenues from the Approved Spa Products and Services.

Notwithstanding the foregoing, Franchisor and Franchisee further agree that if any federal, state, and/or local government agency, entity, law, rule and/or regulation, and/or any court order or order from any legal proceeding prohibits and/or invalidates, Franchisee's payment of royalty fees based on Gross Sales related to services and/or products related to and/or associated with services performed by and/or administered by an Authorized Care Provider and/or the Franchised Business, then Franchisor, at Franchisor's election and in Franchisor's sole discretion, may either:

- (a) increase the Royalty Rate, as applied to the permissible portion of the Gross Sales that is not otherwise restricted or prohibited, to a rate determined by Franchisor so that the net dollar amount of the Royalty Fees paid by Franchisee to Franchisor shall not be less than the Royalty Fees that Franchisor would have received had the federal, state, and/or local government agency, entity, law, rule and/or regulation not prohibited Franchisee's payment of royalty fees based on Gross Sales related to a restricted activity; or
- (b) modify the Royalty Fee to a fixed fee Royalty Fee to be charged to and paid by Franchisee to Franchise in accordance with the following schedule (the "Franchisor's Optional Fixed Fee Royalty Fee"):

Question 9

How does the royalty fee percentage for C3 Wellness Spa in Item 6 compare to the initial franchise fee in Item 5?

Accepted Answer

### **Franchise Agreement**

When you sign a Franchise Agreement, you will pay to us a non-refundable initial franchise fee in the amount of \$45,000 (the "Initial Franchise Fee"). The Initial Franchise Fee is fully earned by us upon payment. The method we use to calculate the Initial Franchise Fee is uniform for all franchises that we offer through this Disclosure Document.

#### **Multi-Unit Development Agreement**

If you sign a Multi-Unit Development Agreement, you must pay a fixed non-refundable development area fee of \$40,000 for each Spa (the "Development Area Fee"), over and above the first Spa authorized by the Franchise Agreement, that you will be authorized to develop under the Multi-Unit Development Agreement, as follows:

Two Spas – If under a Development Agreement you are authorized to develop two Spas, the amount of the Initial Franchise Fee for your first Spa is \$45,000 and the Development Area Fee is \$40,000 for the second Spa that you are authorized to develop under your Development Agreement. At the time of signing the Franchise Agreement for the second Spa, over and above the first Spa authorized by your Development Agreement, the initial franchise fee will be waived.

Three to Five Spas – If, under a Development Agreement, you are authorized to develop, in aggregate, three Spas to five Spas the amount of the Initial Franchise Fee for your first Spa is \$45,000, the Development Area Fee is equal to: (i) \$40,000 for the second Spa; and (ii) \$35,000 for each Spa, over and above the second Spa, that you are authorized to develop under your Development Agreement. At the time of signing the Franchise Agreement for each additional Spa, over and above the first Spa authorized by your Development Agreement, the initial f

Question 10

What service category generated the highest percentage of gross sales for the C3 Wellness Spa Solivita, Florida location in 2023?

Accepted Answer

|  | Table 1A |  |  |
|---|---|---|---|
|  | Gross Sales by Service Category for Company Owned Outlet: Solivita, Florida 2023 Calendar Year |  |  |
| Service Category |  | Gross Sales | Percentage of Gross Sales |
| Acupuncture Services |  | $196,506 | 8.65% |
| Facial Services |  | $14,590 | 0.64% |
| Massage Services |  | $816,259 | 35.91% |
| Medical Services |  | $791,943 | 34.85% |
| Other Services |  | $392,030 | 17.25% |
| Packages and Memberships |  | $61,425 | 2.70% |
| Total Gross Sales | Table 1B Gross Sales by Service Category for Company Owned Outlet: Kissimmee, Florida 2023 Calendar Year | $2,272,753 | 100.00%

Source: Item 19 — FINANCIAL PERFORMANCE REPRESENTATIONS (FDD pages 51–55)

Question 11

What are the two possible maximum contribution amounts for the C3 Wellness Spa Brand Development Fund Fee?

Accepted Answer

At all times and from time to time, as determined by Franchisor, in Franchisor's Reasonable Business Judgment, Franchisor may institute, implement, maintain, delegate and administer a brand development fund (the "Brand Development Fund"). The following shall apply to the Brand Development Fund at all times throughout the Term:

- (1) If Franchisor institutes the Brand Development Fund, Franchisee shall pay, on the Due Date, a mandatory and continuing fee to the Brand Development Fund in an amount equal to a percentage of Gross Sales (as determined and designated by Franchisor in Franchisor's Reasonable Business Judgment) for each weekly Accounting

On an on-going calendar month basis, Franchisee must spend not less than 2% of Franchisee's monthly Gross Sales on the local marketing of the Franchised Business within and/or targeted to Franchisee's Designated Territory.

Source: Item 23 — RECEIPTS (FDD pages 59–293)

Question 12

In North Dakota, can C3 Wellness Spa require a franchisee to waive their right to a jury trial in the Franchise Agreement?

Accepted Answer

Article 18 of the Franchise Agreement is hereby amended by the addition of the following language: "Provisions requiring a franchisee to consent to a waiver of trial by jury are not enforceable under Section 51-19-09 of the North Dakota Franchise Investment Law."

Source: Item 23 — RECEIPTS (FDD pages 59–293)

Question 13

According to the C3 Wellness Spa agreement, what happens if the dispute resolution procedures in the Franchise Agreement conflict with those in this agreement?

Accepted Answer

In the event of any inconsistency or conflict between this Site Selection Acknowledgment and the terms of the Franchise Agreement, the terms of the Franchise Agreement shall take precedence and govern.

Source: Item 23 — RECEIPTS (FDD pages 59–293)

Question 14

Can additional services be added to the Manager's responsibilities for a C3 Wellness Spa practice, and if so, how?

Accepted Answer

"Spa Facility and Management Services" shall have the meaning defined in the "Recitals" section of this Agreement and is further supplemented, as follows: the term "Spa Facility and Management Services", shall refer to and mean those services authorized by Franchisor as set forth in the Operations Manual and to be further described in the Management Agreement that Franchisee will enter into, including and relating to (a) the development and maintenance of a Spa Facility at a Spa Location

designated and established in accordance with the terms of this Agreement; (b) services involving the subleasing and/or license of a Spa Facility to Authorized Care Providers subject to a Management Agreement; (c) administration and management services related to the administration and management of a Spa in connection with all Spa where such administrative and management services do not violate Authorized Care Provider Regulation or other applicable laws, rules or regulations; (d) all services and/or products that Franchisor authorizes for a Management Agreement; and (e) all other services and products that Franchisor, in Franchisor's Reasonable Business Judgment, designates and authorizes in the Operations Manual and as Franchisor, in Franchisor's Reasonable Business Judgment, may supplement and modify from time to time. Notwithstanding anything contained herein to the contrary, to the extent that the Spa Facility and Management Services are governed by and/or subject to Authorized Care Provider Regulation and/or any other federal, state or local rules or regulations that prohibit and/or otherwise restrict Franchisor's determination as to the required Spa Facility and Management Services, the foregoing definition shall be interpreted to provide Franchisor with the fullest discretion and ability to specify and designate the Spa Facility and Management Services without violating the Authorized Care Provider Regulation and applicable laws, rules and regulations. At all times Franchisee is responsible for ensu

Source: Item 23 — RECEIPTS (FDD pages 59–293)

Question 15

Can C3 Wellness Spa affiliate with businesses that offer similar services to C3 Wellness Spa within a franchisee's Designated Territory?

Accepted Answer

We and our affiliates reserve to ourselves the exclusive right on any and all terms and conditions that we deem advisable and, without any compensation or consideration to you (Franchise Agreement, Article 2.D and Multi-Unit Development Agreement, Article 2.3), to engage in the following activities (our "Reserved Rights"): (a) operate and grant to others the right to develop and operate Spa Location Franchises and Franchised Businesses using the System and Licensed Marks at locations outside your Designated Territory and, if applicable, Development Territory, as we deem appropriate and irrespective of the proximity to your Designated Territory and, if applicable, Development Territory; (b) acquire, merge with or otherwise affiliate with one or more businesses of any kind, including businesses that offer and sell products and services that are the same as, or similar to, the Franchised Business, and after such acquisition, merger or affiliation to own and operate and to franchise, or license others to own and operate and to continue to own and operate such businesses of any kind, even if such businesses offer and sell products and services that are the same as or similar to a the Franchised Business (but not using the Licensed Marks) within your Designated Territory and, if applicable, within your Development Territory; (c) be acquired by or merge with or otherwise affiliate with one or more businesses of any kind, including businesses that offer and sell products and services that are the same as or similar to the Franchised Business, even if such business or businesses presently or, in the future, own and operate and franchise or license others to own and operate businesses that offer and sell products and services that are the same as or similar to the Franchised Business (but not utilizing the Licensed Marks) within your Designated Territory and, if applicable, your Development Territory; (d) use the Licensed Marks and System to distribute the Approved Services and Products offered and sold by the Franchised Business or products and services similar to the Approved Services and Products offered and sold by the Franchised Business in alternative channels of distribution including internet / web based sales and similar outlets that sell cosmetic products or spa products, within or outside your Operating Territory; (e) operate, and grant to others the right to own and operate, a Spa Location Franchises in non-traditional sites including, but not limited to hotels, resorts, airports, universities, government facilities, and shopping malls both within and outside your Designated Territory and, if applicable, your Development Territory; and (f) use the Licensed Marks and System and to license others to use the Licensed Marks and System, to engage in all other activities not expressly prohibited by the Franchise Agreement.

Source: Item 12 — TERRITORY (FDD pages 38–40)

Question 16

What agreement's termination will cause the C3 Wellness Spa sublease to terminate?

Accepted Answer

Assignee has the right and possesses full power and authority to take possession of the Leased Premises, to eject and expel Assignor from possession and occupancy of the Leased Premises and to terminate Assignor's right, title and interest in and to the Lease in the event of: (a) a default by Assignor under the terms of the Lease and Assignor's failure to timely cure such default, assuming that such default is capable of curing; (b) a default by Assignor (in Assignor's capacity as an C3 Wellness franchisee) under the terms and conditions of the C3 Wellness Franchise Agreement between Assignor, as franchisee, and Assignee, as franchisor (the "Franchise Agreement"), and Assignor's failure to timely cure such default, assuming that such default is capable of curing; (c) upon default of any agreement supporting or guaranteeing the Franchise Agreement; or (d) the expiration or termination of the Franchise Agreement.

Source: Item 23 — RECEIPTS (FDD pages 59–293)

Question 17

Does the amendment to the C3 Wellness Spa Franchise Agreement specify any exceptions to the governing law?

Accepted Answer

connection with the commencement of the franchise relationship shall have the effect of: (i) waiving any claims under any applicable state franchise law, including fraud in the inducement, or (ii) disclaiming reliance on any statement made by any franchisor, franchise seller, or other person acting on behalf of the franchisor. This provision supersedes any other term of any document executed in connection with the franchise.
- 8. All representations requiring prospective franchisees to assent to a release, estoppel or waiver of liability are not intended to nor shall they act as a release, estoppel or waiver of any liability incurred under the Maryland Franchise Registration and Disclosure Law.

IN WITNESS WHEREOF, the parties have duly executed and delivered this Maryland amendment to the Aryes Franchising LLC Franchise Agreement and, if applicable, the Development Agreement on the same date as the Franchise Agreement and Development Agreement were, respectively, executed.

| Franchisor: Aryes Franchising LLC | Franchisee:         |  |
|--------------------------------------|---------------------|--|
| Signature                            | Signature           |  |
| Name and Title (please print)        | Name (please print) |  |
| Dated                                | Dated               |  |

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#### **MINNESOTA FRANCHISE AND DEVELOPMENT AGREEMENT AMENDMENT**

### Amendment to the C3 Wellness Franchise and Multi-Unit Development Agreement

In recognition of the requirements of the Minnesota Statutes, Chapter 80C. and Minnesota Franchise Rules, Chapter 2860, the parties to the attached Aryes Franchising LLC Franchise Agreement (the "Franchise Agreement") as follows:

1.Article 14.C of the Franchise Agreement, under the heading "Conditions for Approval of Transfer," subarticle 14.C(6) is supplemented with the addition of the following language:

; provided, however, that all rights enjoyed by Franchisee and any causes of action arising in Franchisee's favor from the provisions of the Minnesota Franchise Act, Minn. Stat. Section 80C.14 et seq. and Minnesota Rules 2860.4400(D), shall remain in force; it being the intent of this provision that the non-waiver provisions of the Minnesota Rules 2860.4400(D) be satisfied; and

Minnesota law provides a franchisee with certain termination and non-renewal rights. Minn. Stat. Sect. 80C.14 Subdivisions 3, 4, and 5 require, except in certain specified cases, that franchisee be given 180 days-notice of nonrenewal of this Agreement by Franchisor.

2. Article 15.B of the Franchise Agreement, under the heading "Conditions for Renewal," sub article 15.B(8) is supplemented with the addition of the following language:

; provided, however, that all rights enjoyed by Franchisee and any causes of action arising in Franchisee's favor from the provisions of the Minnesota Franchise Act, Minn. Stat. Section 80C.14 et seq. and Minnesota Rules 2860.4400(D), shall remain in force; it being the intent of this provision that the non-waiver provisions of the Minnesota Rules 2860.4400(D) be satisfied; and

Minnesota law provides a franchisee with certain termination and non-renewal rights. Minn. Stat. Sect. 80C.14 Subdivisions 3, 4, and 5 require, except in certain specified cases, that franchisee be given 180 days-notice of nonrenewal of this Agreement by Franchisor.

3. Under Article 11 of the Franchise Agreement, under the heading "Notification of Infringement and Claims," the subarticle 11.C. shall be supplemented by the addition of the following:

Franchisor agrees to protect Franchisee, to the extent required by the Minnesota Franchise Act, against claims of infringement or unfair competition with respect to Franchisee's use of the Marks when, in the opinion of Franchisor's counsel, Franchisee's rights warrant protection pursuant to Article 11.E. of this Agreement.

4. Under Article 14 of the Franchise Agreement, under the heading "Conditions for Approval of Transfer," the subarticle 14.C. shall be supplemented by the addition of the following:

Franchisor shall not unreasonably withhold consent to transfer the Franchise Agreement.

5. Under Article 16 of the Franchise Agreement, under the heading "Defaults and Automatic Termination Upon Written Notice Without Cure Period," the subarticle 16.A.(2). shall be supplemented by the addition of the following:

Article 16.A.(2) will not be enforced to the extent prohibited by applicable law.

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- 6. Under Article 16 of the Franchise Agreement, under the heading "Defaults and Automatic Termination After 30 Day Cure Period," the subarticle 16.A.(4)(f), shall be supplemented by the addition of the following:
  - Subarticle 16.A.(4)(f) will not be enforced to the extent prohibited by applicable law.
- 7. Under both subarticles 16.A.(2) and 16.A.(4) of the Franchise Agreement, the following is added:
  - Minnesota law provides a franchisee with certain termination rights. Minn. Stat. Sect. 80C.14 Subdivisions 3, 4, and 5 require, except in certain specified cases, that franchisee be given 90 daysnotice of termination (with 60 days to cure) of this Agreement.
- 8. Article 18.F. of the Franchise Agreement, under the heading "Governing Law", shall be amended by the addition of the following statement added to the end of the last sentence of Article 18.F.:
  - ; except to the extent otherwise prohibited by applicable law with respect to claims arising under the Minnesota Franchise Act.
- 9. Article 18.G. of the Franchise Agreement and, if Franchisee executes a Development Agreement, Article 7.6 of the Development Agreement, under the heading "Choice of Law, Non-Binding Mediation, Binding Arbitration, and Consent to Jurisdiction", shall be amended by the addition of the following statement added to the end of the last sentence of Article 18.G. of the Franchise Agreement and Article 7.6 of the Development Agreement:
  - ; except to the extent otherwise prohibited by applicable law with respect to claims arising under the Minnesota Franchise Act.
- 10. Article 18.K of the Franchise Agreement, and if Franchisee executes a Development Agreement, Article 7.10 of the Development Agreement, under the heading "Waiver of Jury Trial", shall be supplemented by the addition of the following statement at the end of the sentence contained in Article 18.K. of the Franchise Agreement and Article 7.10 of the Development Agreement:
  - ; except that nothing in this Agreement should be considered a waiver of any right conferred upon Franchisee by the Minnesota Franchise Act.
- 11. Article 18.I.

Source: Item 23 — RECEIPTS (FDD pages 59–293)

Question 18

Is attendance at a System-Wide Training Program required for C3 Wellness Spa franchisees, and if so, what expenses are the franchisee responsible for?

Accepted Answer

After the opening of your Spa Location Franchise we reserve the right to require that you (or your Managing Owner if you are a Corporate Entity) attend a system-wide training program (the "System-Wide Training Program") that we may establish in our discretion. If we establish a System-Wide Training Program, the program will be offered from our affiliate owned C3 Wellness in Kissimmee, Florida or a designated training location and you will be responsible for all travel, lodging, food, automobile rental expenses, and employee wages that you incur in connection with your attendance. We will not require your attendance at a System-Wide Training Program for more than a total of five days in any calendar year.

Source: Item 11 — FRANCHISOR'S ASSISTANCE, ADVERTISING, COMPUTER SYSTEMS AND TRAINING (FDD pages 30–38)

Question 19

Besides the first Spa Location Franchise, what is the Development Area Fee for each additional C3 Wellness Spa authorized under the Multi-Unit Development Agreement?

Accepted Answer

For a Multi-Unit Development Agreement

Note 1: Development Area Fee and Franchise Fees – When you sign a Multi-Unit Development Agreement you must also sign a Franchise Agreement for the first Spa Location Franchise that you will be required to develop under your Multi-Unit Development Agreement. At the time of signing your Multi-Unit Development Agreement, in addition to paying the Franchise Fee for your first Spa Location Franchise, you must pay to us a Development Area Fee. The amount of the Development Area Fee varies depending on the number of additional Spa Location Franchises, over and above the first Spa Location Franchise authorized by the Franchise Agreement that you will sign with the Multi-Unit Development Agreement, that you will be authorized to develop and operate within the Development Area. The minimum number of Spa Location Franchises that you may be authorized to development is two and the maximum number is five. The Development Area Fee depends on the total number of Spas that you are authorized to develop under our Development Agreement and ranges from \$40,000 for the second Spa that you are authorized to open to \$35,000 for each Spa over and above the second Spa authorized by the Franchise Agreement that you will sign simultaneously with the Development Agreement)

Source: Item 7 — ESTIMATED INITIAL INVESTMENT (FDD pages 21–25)

Question 20

Besides the insurance coverages specifically listed, what other insurance policies might be required for a C3 Wellness Spa franchise?

Accepted Answer

- (i) All other insurance that we require in the Manual or that is required by law or by the lease or sublease for your Spa Location Franchise.

Source: Item 8 — RESTRICTIONS ON SOURCES OF PRODUCTS AND SERVICES (FDD pages 25–29)

Question 21

What is the condition for a C3 Wellness Spa franchisee to engage in specific activities at their Spa Location Franchise?

Accepted Answer

- (7) The Spa operated at Franchisee's Spa Facility shall only offer the Approved Spa Products and Services under the Licensed Marks, exclusively utilizing the System Supplies and in compliance with Franchisor's requirements and specifications as set forth in the Operations Manual;

- (8) Franchisor, in Franchisor's Reasonable Business Judgment and for any reason or no reason at all, may prohibit Franchisee from soliciting Spa customers located outside Franchisee's Designated Territory;

- (9) Except as otherwise provided in this Agreement including, but not limited to, the Reserved Rights, provided that, at all times Franchisee is and remains in compliance with all of the terms and provisions of this Agreement, during the Term of this Agreement, neither Franchisor nor any affiliate of Franchisor will establish or operate, or grant a franchise to any third party to establish or operate, a Spa Location Franchise using the Licensed Marks and System at a Spa Location that is located within Franchisee's Designated Territory (provided that a Designated Territory has been designated and approved by Franchisor in accordance with the terms of this Agreement).

Notwithstanding the foregoing, Franchisee agrees that Franchisee may face competition from other C3 Wellness, Spa Location Franchises and other System franchisees with Spa locations and/or designated territories that are located adjacent to and/or within a close proximity to Franchisee's Spa Location and/or Designated Territory.

Franchisee agrees that although Franchisor may disapprove of any marketing medium that is distributed and/or reaches outside of Franchisee's Designated Territory, that Franchisor is not obligated to do so and that Franchisee may face competition from other Spas, Spa Location Franchises and System franchisees that market and promote their Spa(s) through internet, mail, public relations, and other marketing activities and mediums that are distributed to or within Franchisee's Designated Territory.

Franchisee agrees that

![](_page_103_Picture_0.jpeg)

Franchisee shall not receive any compensation whatsoever if Franchisor or another System franchisee solicits customers from within Franchisee's Designated Territory; and

(10) The foregoing rights granted in this Article 2.A. are subject to and contingent upon each and every, term and condition of this Agreement, the rights of any prior user, and are non-exclusive and subordinate to the Reserved Rights.

Source: Item 23 — RECEIPTS (FDD pages 59–293)

Question 22

What is the condition for a C3 Wellness Spa franchisee to enter into a Management Agreement with Authorized Care Providers?

Accepted Answer

ogos and designs are subject to modification, replacement and discontinuance by Franchisor in Franchisor's Reasonable Business Judgment.

"**Management Agreement**" shall have the meaning defined in the "Recitals" section of this Agreement and is further supplemented, as follows: the term "Management Agreement" shall apply to a Spa Location Franchise that operates as a Spa Management Business and shall further refer to and mean an agreement / agreements that relate to Spa Facility and Management Services performed by Franchisee on behalf of Authorized Care Providers related to the Approved Spa Products and Services offered and provided by a Spa at Franchisee's Spa Location. The Management Agreement must be prepared by Franchisee in accordance with Authorized Care Provider Regulation and must be approved by Franchisor in writing. Franchisor's approval of a Management Agreement does not, in any way, constitute any representation or warranty by Franchisor that the Management Agreement complies with Authorized Care Provider Regulation – Franchisor's approval only indicates that Franchisor does not object to Franchisee's use of the Management Agreement. To the extent that Franchisor supplies Franchisee with form sample Management Agreements, Franchisor only does so as to inform Franchisee as to the types of Management Agreements that Franchisor, typically, will not object to. At all times Franchisee must have an independent lawyer employed directly by Franchisee to review and approve of all Management Agreements used by Franchisee, even if the Management Agreement is a proposed agreement provided to Franchisee by Franchisor. At no time does Franchisor make any representation and/or warranty as to any Management Agreement and to the extent that Franchisor provides Franchisee with a sample Management Agreement same is provided to Franchisee "AS IS" and without any representation or warranty whatsoever including, but not limited to, any representation as to the fitness of the Management Agreement for the fitness of the Spa Location Franchise. To the extent that Franchisor approves of a Management Agreement proposed by Franchisee, Franchisor does so on an "AS IS" basis and without any representation or warranty whatsoever including, but not limited to, any representation as to the fitness of the Management Agreement for the fitness of the Spa Location Franchise. Subject to the foregoing, attached as Exhibit 10 to this Agreement is a sample form Management Agreement indicating the type of form Management Agreement that Franchisor may not object to.

Source: Item 23 — RECEIPTS (FDD pages 59–293)

Question 23

What is the condition for a C3 Wellness Spa franchisee to grant the Authorized Care Providers a license to use the Licensed Marks at the Spa Location?

Accepted Answer

- (7) The Spa operated at Franchisee's Spa Facility shall only offer the Approved Spa Products and Services under the Licensed Marks, exclusively utilizing the System Supplies and in compliance with Franchisor's requirements and specifications as set forth in the Operations Manual;

Source: Item 23 — RECEIPTS (FDD pages 59–293)

Question 24

What is the condition for a C3 Wellness Spa franchisee to own and operate a Spa Location Franchise?

Accepted Answer

## **3.C. SPA LOCATION FRANCHISE AND SPA OPENING**

Franchisee must develop and open the Spa Location Franchise including, the underlying Spa, to the public and, commence the day to day operations of the Franchised Business, on or before the Scheduled Business Commencement Date. Notwithstanding the foregoing, prior to opening the Franchised Business to the Public, Franchisee must: (a) be in compliance with the terms and conditions of this Agreement; (b) have satisfied the pre-opening obligations set forth by Franchisor in the Operations Manual; (c) have completed and satisfied the training obligations designated by Franchisor; and (d) have completed two to three days of on-site support from Franchisor following the conclusion of Franchisee's pre-opening process and obtained Franchisor's written consent to open.

#### **3.D. SPA LOCATION FRANCHISE OPERATIONS**

At all times, the Franchised Business shall, subject to compliance with applicable laws, rules and regulations including, but not limited to Authorized Care Provider Regulation: (a) be exclusively operated from Franchisee's Spa Location that has been previously approved by Franchisor; (b) be exclusively operated from a Spa Facility; (c) exclusively offer and sell the Approved Spa Products and Services (either directly or, if the Franchised Business operates as a Spa Management Business, from the underlying Spa located at the Spa Location) as designated by Franchisor, in Franchisor's Reasonable Business Judgment,

![](_page_106_Picture_0.jpeg)

Source: Item 23 — RECEIPTS (FDD pages 59–293)

Question 25

What is the condition for a C3 Wellness Spa franchisee to provide the Authorized Care Providers the Spa Facility and Management Services?

Accepted Answer

WHEREAS, the System relates to and includes the development and operation of a spa location franchised business (hereinafter referred to as either the "Spa Location Franchise" or the "Franchised Business"), that depending on Franchisee's qualifications and applicable local, state and federal laws and regulations involves either:

a Spa Location Franchise that Owns and Operates a Spa: Franchisee's development and operation of a Spa Location Franchise that owns and operates a Spa that provides the Approved Spa Products and Services under the Licensed Marks and in accordance with the requirements of the System; or

a Spa Location Franchise that Owns and Operates a Spa Facility and Management Company: Franchisee's development and operation of a Spa Location Franchise that owns and operates a management business ("Spa Management Business") that provides management, marketing, and spa facility based services (the "Spa Facility and Management Services") to medical practices and licensed professionals authorized to offer and provide the Approved Spa Products and Services (hereinafter referred to as "Authorized Care Providers") at a Spa that is operated by the Authorized Care Providers and/or their professional corporation authorized to directly offer and provide the Approved Spa Products and Services.

Source: Item 23 — RECEIPTS (FDD pages 59–293)

Question 26

For C3 Wellness Spa, what is the condition under which the Franchisor can direct the Brand Development Fund to pay for media placements that may benefit or include any media market that includes Franchisee's Spa Location or Designated Territory?

Accepted Answer

The Brand Development Fund will not be utilized to directly or indirectly market or promote the Franchised Business or, unless otherwise directed by Franchisor, in Franchisor's Reasonable Business Judgment, pay for media placements that may benefit or include any media market that includes Franchisee's Spa Location or Designated Territory;

Source: Item 23 — RECEIPTS (FDD pages 59–293)

Question 27

What is the condition under which a transferee can continue to operate the C3 Wellness Spa at the same location after a transfer?

Accepted Answer

- (7) Except in the event an authorized transferee continues to operate Franchisee's former Spa at Franchisee's Spa Location subsequent to a Transfer, at Franchisee's sole cost and expense: (a) modify and alter Franchisee's former Spa, Franchisee's former Spa Facility, and Franchisee's Spa Location, as reasonably necessary or otherwise required by Franchisor, to ensure that Franchisee's Spa Facility and Franchisee's Spa Location have been completely de-identified and differentiated from its former appearance to prevent any confusion by the public as to the continued existence of a Spa at the Spa Location; (b) remove from Franchisee's Spa Facility and Franchisee's Spa Location all distinctive physical and structural features identifying a Spa and all distinctive signs, trade dress and emblems associated with the System including, without limitation, signs, trade dress, and emblems bearing the Licensed Marks; and (c) make specific additional changes to Franchisee's Spa Facility and Franchisee's Spa Location as Franchisor reasonably requests for the purpose of completely de-identifying Franchisee's former Spa.

Franchisee shall immediately initiate the foregoing actions and complete such actions within the period of time designated by Franchisor, and Franchisee agrees that Franchisor and/or Franchisor's designated agents may enter the premises of Franchisee's Spa Facility and Franchisee's Spa Location at any time to make foregoing alterations at Franchisee's sole risk and expense.

Source: Item 23 — RECEIPTS (FDD pages 59–293)

Question 28

What conditions must a C3 Wellness Spa franchisee meet to gain franchisor approval for a transfer?

Accepted Answer

| l. | Franchisor's approval of transfer | 14.B. | Transfers require our prior written consent, which may be |
|----|-------------------------------------------------------------------------|-------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  | by franchisee |  | granted or withheld in our discretion. |
| m. | Conditions for franchisor's approval of transfer                     | 14.C.             | For approval of your transfer, you must provide us with 30 days prior written notice of the proposed transfer; you and your Owners must not have defaulted in your obligations under the Franchise Agreement and all other agreements with us; you and your Owners must be in compliance with your obligations under the Franchise Agreement and all other agreements with us; the transferee must agree to be bound by all of the terms and provisions of the Franchise Agreement; the transferee's owners and their spouses must personally guarantee all of the terms and provisions of the Franchise Agreement; you and your Owners and their spouses must sign a general release in favor of us; the transfer must provide for the assignment and/or ownership of the approved location for the Franchised Business, and the transferees continued use and occupancy of such location throughout the term of the Franchise Agreement; the assets of the Franchised Business must be transferred to the transferee; the transferee and the transferee's owners and managers, at the transferee's expense must complete our training programs; we waive our right of first refusal; and we approve of the transfer and transferee in writing and subject to our discretion; and you pay the Transfer Fee (subject to applicable state laws). |

Source: Item 17 — RENEWAL, TERMINATION, TRANSFER AND DISPUTE RESOLUTION (FDD pages 43–50)

Question 29

What are the conditions that a C3 Wellness Spa franchisee must meet to maintain the right to develop additional spas under a Multi-Unit Development Agreement?

Accepted Answer

You do not have the right to establish additional Spas unless you sign a Multi-Unit Development Agreement. If we enter into and sign a Multi-Unit Development Agreement with you then you will have the right to develop a mutually-agreed upon number of additional Spas within a specified Development Area. The size of your Development Area will vary significantly from other franchisees and your right to develop additional Spas under a Multi-Unit Development Agreement will be subject to your timely compliance with the agreed upon development schedule, your compliance with the terms of your Multi-Unit Development Agreement, and your compliance with all other agreements with us and our affiliates, including all Franchise Agreements. Our approval of future Spa Locations and their respective designated territories will be based on our then current site and territory criteria.

Source: Item 12 — TERRITORY (FDD pages 38–40)

Question 30

For C3 Wellness Spa, what are the conditions that trigger the deadline for signing the Franchise Agreement for the second and subsequent Development Spas?

Accepted Answer

Franchisee's second Development Spa and all Development Spas thereafter, respectively, are to be developed and operated by Franchisee pursuant to the terms and conditions of Franchisor's then current Franchise Agreement which Franchisee must sign, on or before the earlier of: (a) The date Franchisee (subject to Franchisor's approval of the Spa Location) executes a lease for the Spa Location for each respective Development Spa; (b) The date Franchisee (subject to Franchisor's approval of the Spa Location) enters into a purchase agreement for the real estate for the Spa

Source: Item 23 — RECEIPTS (FDD pages 59–293)

Question 31

Does Crystal Bethea's role as Owner of C3 Wellness, LLC affect her responsibilities as CEO of C3 Wellness Spa?

Accepted Answer

Crystal Bethea is our CEO and has served in this role since our formation on February 2, 2010. Since 2010, and, continuing to date, Crystal Bethea has served as Owner of our affiliate owned C3 Wellness, LLC located in Kissimmee, Florida.

Source: Item 2 — BUSINESS EXPERIENCE (FDD pages 14–15)

Question 32

Does the definition of 'Private Pay' for C3 Wellness Spa exclude sales paid for by customer's insurance?

Accepted Answer

- (r) Private Pay refers to sales made through cash or credit and that are not paid for by customers' insurance, and which are not Third Party Sales or Medical Sales.

Source: Item 19 — FINANCIAL PERFORMANCE REPRESENTATIONS (FDD pages 51–55)

Question 33

For a C3 Wellness Spa, what is the dependency between the franchisee's qualifications and the applicable local, state and federal laws and regulations and the type of Spa Location Franchise they can operate?

Accepted Answer

hysical therapy, light and laser skin enhancement, cosmetic services, topical skin treatments, essential oils, and spa related services and retail products (the "Approved Spa Products and Services") under the Licensed Marks (defined below);

WHEREAS, the System relates to and includes the development and operation of a spa location franchised business (hereinafter referred to as either the "Spa Location Franchise" or the "Franchised Business"), that depending on Franchisee's qualifications and applicable local, state and federal laws and regulations involves either:

a Spa Location Franchise that Owns and Operates a Spa: Franchisee's development and operation of a Spa Location Franchise that owns and operates a Spa that provides the Approved Spa Products and Services under the Licensed Marks and in accordance with the requirements of the System; or

a Spa Location Franchise that Owns and Operates a Spa Facility and Management Company: Franchisee's development and operation of a Spa Location Franchise that owns and operates a management business (the "Spa Management Business") that provides management, marketing, and spa facility based services (the "Spa Facility and Management Services") to medical practices, professional corporations and licensed professionals authorized to offer and provide the Approved Spa Products and Services (hereinafter referred to as "Authorized Care Providers") at a Spa that is operated and potentially owned by the Authorized Care Providers authorized to offer and provide the Approved Spa Products and Services.

WHEREAS, If the Franchised Business is a Spa Location Franchise that owns and operates a Spa Management Business, among other things, Franchisee will be required to enter into a management agreement (the "Management Agreement") with the Authorized Care Providers whereby, among other things, Franchisee will provide the Authorized Care Providers the Spa Facility and Management Services and grant the Authorized Care Providers a license to use the Licensed Marks at Franchisee's spa facility location (the "Spa Location");

WHEREAS, Franchisee has been advised that, among other things, the Approved Spa Products and Services and the Spa Facility and Management Services, involve products, services and activities of a nature and type that require the administration, supervision, management, and oversight of Authorized Care Providers, including licensed medical professionals and health care providers and that whether or not Franchisee may own and operate a Spa Location Franchise and, if applicable, the types of activity that Franchisee's Spa Location Franchise may engage in is subject to and requires compliance with significant federal, state and local rules and regulations related to the practice of medicine and other licensing requirements (collectively referred to as the "Authorized Care Provider Regulation");

Source: Item 23 — RECEIPTS (FDD pages 59–293)

Question 34

What is the disclaimer regarding potential earnings for a C3 Wellness Spa franchise based on the performance of company-owned outlets?

Accepted Answer

Kissimmee, Florida | $2,018,626 | 26,298 | $76.76 |
| Total Gross Sales | $4,291,369 | 40,859 | $87.83 |
# **Some Outlets have earned this amount. Your individual results may differ. There is no assurance that you'll earn as much.**

Material financial and operational characteristics that are reasonably anticipated to differ from future operational franchise outlets include: (a) managerial skill and efficiency experienced by our Company Owned Outlets as a result of our extensively experienced management team; (b) brand recognition within the markets in which our Company Owned Outlets operate; and (c) non obligation to pay ongoing monthly fees that a franchisee will pay to us, such as royalties and a brand development fund fee.

Written substantiation of the data used in preparing these sales figures will be made available to you upon reasonable request.

![](_page_54_Picture_0.jpeg)

Other than the preceding financial performance representations, we do not make any representations about a franchisee's future financial performance or the past financial performance of company-owned or franchised outlets. We also do not authorize our employees or representatives to make any such representations either orally or in writing. If you are purchasing an existing outlet, however, we may provide you with the actual records of that outlet. If you receive any other financial performance information or projections of your future income, you should report it to the franchisor's management by contacting Crystal Bethea, Aryes Franchising LLC, 1060 Cypress Parkway, Kissimmee, Florida 34759 and (440) 238-6898, the Federal Trade Commission, and the appropriate state regulatory agencies.

Source: Item 19 — FINANCIAL PERFORMANCE REPRESENTATIONS (FDD pages 51–55)

Question 35

To what extent will Article 16.A.(2) of the C3 Wellness Spa Franchise Agreement be enforced?

Accepted Answer

Article 16 of the Franchise Agreement is hereby amended by the addition of the following language: "Provisions requiring North Dakota Franchisees to consent to termination or liquidated damages are not enforceable in North Dakota."

Source: Item 23 — RECEIPTS (FDD pages 59–293)

Question 36

To what extent is each provision of the New York amendment to the C3 Wellness Spa franchise agreement effective?

Accepted Answer

In recognition of the requirements of the New York General Business Law, Article 33, Sections 680 through 695, and of the regulations promulgated thereunder (N.Y. Comp. Code R. & Regs., tit. 13, §§ 200.1 through 201.16), the parties to the attached Aryes Franchising LLC Franchise Agreement (the "Franchise Agreement") as follows:

- 1. Under Article 14.C of the Franchise Agreement, under the heading "Conditions for Approval of Transfer," the subarticle 14.C(6) is supplemented with the addition of the following language:
  - ; provided, however, that all rights and causes of action arising in favor of Franchisee from the provisions of New York General Business Law Sections 680-695 and the regulations issued thereunder, shall remain in force; it being the intent of this provision that the non-waiver provisions of N.Y. Gen. Bus. Law Sections 687.4 and 687.5 be satisfied.
- 2. Under Article 15.B of the Franchise Agreement, under the heading "Conditions for Renewal," the subarticle 15.B(8) is supplemented with the addition of the following language:
  - ; provided, however, that all rights and causes of action arising in favor of Franchisee from the provisions of New York General Business Law Sections 680-695 and the regulations issued thereunder, shall remain in force; it being the intent of this provision that the non-waiver provisions of N.Y. Gen. Bus. Law Sections 687.4 and 687.5 be satisfied.
- 3. Article 18 of the Franchise Agreement and, if Franchisee executes a Development Agreement, Article 7 of the Development Agreement, under the heading "Enforcement and Construction," shall be supplemented by the addition of the following new subarticle 18.AA. to the Franchise Agreement and Article 7.24 of the Development Agreement:

Nothing in this Agreement should be considered a waiver of any right conferred upon franchisee by New York General Business Law, Sections 680-695.

Source: Item 23 — RECEIPTS (FDD pages 59–293)

Question 37

Does a Force Majeure event excuse a C3 Wellness Spa franchisee from paying fees, charges, or other monetary obligations to the franchisor, and if not, what is the maximum duration that non-performance of other obligations can be excused?

Accepted Answer

If either Franchisor or Franchisee is delayed in performing any obligation under this Agreement by any cause reasonably beyond its control when such cause would affect any person or entity similarly situated, including, without limitation, war, civil disorder, catastrophic weather, power outage, acts of God, including, but not limited to, natural disaster, tornados, earthquakes, wildfires, and pandemics and/or labor strikes unassociated with Franchisee or Franchisor (collectively, "Force Majeure"), then the time period for performing such obligation shall be extended by a period of time equal to the period of delay. Notwithstanding the immediately foregoing sentence, any delay resulting from Force Majeure shall not excuse Franchisee's payment of any fee, charge, amount, and/or any other monetary or financial obligation to Franchisor under this Agreement, including, without limitation, the payment of the Royalty Fee and Advertising Contributions, and the non-performance of any obligation under this Agreement due to Force Majeure shall not be extended or otherwise excused for more than six months.

Source: Item 23 — RECEIPTS (FDD pages 59–293)

Question 38

In the C3 Wellness Spa franchise agreement, what happens in the event of a conflict between the Assignment and the Franchise Agreement?

Accepted Answer

In the event of any inconsistency or conflict between this Site Selection Acknowledgment and the terms of the Franchise Agreement, the terms of the Franchise Agreement shall take precedence and govern.

Source: Item 23 — RECEIPTS (FDD pages 59–293)

Question 39

For a C3 Wellness Spa franchise in Hawaii, under what condition is each provision of the amendment effective?

Accepted Answer

#### **HAWAII FRANCHISE AGREEMENT AMENDMENT**

#### Amendments to the C3 Wellness Franchise Agreement

In recognition of the requirements of the Hawaii Franchise Investment Law, the undersigned agree to the following modifications to the Aryes Franchising LLC Franchise Agreement (the "Franchise Agreement"), as follows:

- 1. Sub-Article 14.C.(6). Sub-article 14.C.(6), under the Article section titled "Conditions for Approval of Transfer," is supplemented by the addition of the following language:
  - ; provided, however, that all rights enjoyed by Franchisee and any causes of action arising in Franchisee's favor from the provisions of the Hawaii Franchise Investment Law, shall remain in force; it being the intent of this provision that the non-waiver provisions of the Hawaii Franchise Investment Law be satisfied; and

The Hawaii Franchise Investment Law provides rights to the franchisee concerning non-renewal, termination and transfer of the Franchise Agreement. If this Sub-article contains a provision that is inconsistent with the Hawaii Franchise Investment Law, the Hawaii Franchise Investment Law will control.

- 2. Sub-Article 15.B.(8). Sub-article 15.B.(8), under the Article section titled "Conditions for Renewal," is supplemented by the addition of the following:
  - ; provided, however, that all rights enjoyed by Franchisee and any causes of action arising in Franchisee's favor from the provisions of the Hawaii Franchise Investment Law, shall remain in force; it being the intent of this provision that the non-waiver provisions of the Hawaii Franchise Investment Law be satisfied; and

The Hawaii Franchise Investment Law provides rights to the franchisee concerning non-renewal, termination and transfer of the Franchise Agreement. If this subarticle contains a provision that is inconsistent with the Hawaii Franchise Investment Law, the Hawaii Franchise Investment Law will control.

Source: Item 23 — RECEIPTS (FDD pages 59–293)

Question 40

Does the franchise registration statute of Florida automatically apply to the C3 Wellness Spa franchise agreement?

Accepted Answer

EXCEPT TO THE EXTENT GOVERNED BY THE UNITED STATES TRADEMARK ACT OF 1946 (LANHAM ACT, 15 U.S.C. §§ 1051 *ET SEQ.*) OR OTHER FEDERAL LAW, THIS AGREEMENT AND THE RELATIONSHIP BETWEEN THE PARTIES HERETO SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF FLORIDA, EXCEPT THAT ITS CHOICE OF LAW AND CONFLICTS OF LAWS RULES SHALL NOT APPLY AND ANY FRANCHISE REGISTRATION, DISCLOSURE, RELATIONSHIP OR SIMILAR STATUTE WHICH MAY BE ADOPTED BY THE STATE OF FLORIDA SHALL NOT APPLY UNLESS ITS JURISDICTIONAL REQUIREMENTS ARE MET INDEPENDENTLY WITHOUT REFERENCE TO THIS PARAGRAPH.

Source: Item 23 — RECEIPTS (FDD pages 59–293)

Question 41

Is a C3 Wellness Spa franchisee required to enter into a Management Agreement if they operate a Spa Location Franchise that owns and operates a Spa?

Accepted Answer

At all times Franchisee must maintain the necessary licenses and permits and those licenses and permits recommended and/or required by Franchisor in connection with Franchisee's ownership and operation of the Franchised Business; (j) if the Franchised Business operates as a Spa Management Business, the Franchised Business must utilize a Management Agreement that has been prepare, reviewed, and confirmed by independent legal counsel to Franchisee as being compliant with all Authorized Care Provider Regulation and such Management Agreement must be approved by Franchisor as a Management Agreement that Franchisor does not object to; and (k) under no circumstance shall Franchisee accept payment and/or permit the Spa associated with Franchisee's Spa Location Franchise and/or any other business operating at Franchisee's Spa Location to accept payment from a Third party Payer or provide services on behalf of a customer who may seek reimbursement from a Third party Payer – payments and/or reimbursements from Third party Payers is prohibited.

Source: Item 23 — RECEIPTS (FDD pages 59–293)

Question 42

Is a C3 Wellness Spa franchisee required to pay the Annual Conference Attendance Fee even if they do not attend the Annual System Conference?

Accepted Answer

- (4) Annual Conference Fees Franchisee shall be responsible for all expenses of its personnel attending the Annual System Conference including travel, meals and lodging. Franchisee shall be required to pay to Franchisor an Annual Conference Attendance Fee. **Franchisee agrees that if Franchisee fails to attend the Annual System Conference that Franchisor shall, nevertheless, charge and Franchisee shall pay the Annual Conference Attendance Fee – even if Franchisor waives such fee for franchisees who attend the Annual System Conference.**

Source: Item 23 — RECEIPTS (FDD pages 59–293)

Question 43

Does the C3 Wellness Spa franchisee have to transfer the accounts related to all telephone numbers associated with the Franchised Business to the Franchisor upon termination?

Accepted Answer

Franchisee agrees that in the event of the termination of this Agreement, for any reason, that the accounts related to all telephone numbers associated with the Franchised Business and all rights in and to the telephone numbers associated with the Franchised Business, shall, at Franchisor's election, be transferred to Franchisor.

Without limitation to the foregoing, Franchisee shall, upon the request of Franchisor, execute and deliver to Franchisor the Assignment of Telephone Numbers and Digital Media Accounts attached to this Agreement as Exhibit 6. Upon the request of Franchisor, Franchisee shall execute, update, and/or re-execute the Assignment of Telephone Numbers and Digital Media agreement upon the request of Franchisor. As between Franchisor and all third parties, Franchisee does hereby represent and acknowledge that such third party is authorized to rely on the Assignment of Telephone Numbers and Digital Media agreement, irrespective of any dispute and/or controversy between Franchisor and Franchisee and irrespective of any contrary instructions of Franchisee.

Source: Item 23 — RECEIPTS (FDD pages 59–293)

Question 44

Does the C3 Wellness Spa franchisee have to transfer all rights in and to the telephone numbers associated with the Franchised Business to the Franchisor upon termination?

Accepted Answer

Franchisee agrees that in the event of the termination of this Agreement, for any reason, that the accounts related to all telephone numbers associated with the Franchised Business and all rights in and to the telephone numbers associated with the Franchised Business, shall, at Franchisor's election, be transferred to Franchisor.

Without limitation to the foregoing, Franchisee shall, upon the request of Franchisor, execute and deliver to Franchisor the Assignment of Telephone Numbers and Digital Media Accounts attached to this Agreement as Exhibit 6. Upon the request of Franchisor, Franchisee shall execute, update, and/or re-execute the Assignment of Telephone Numbers and Digital Media agreement upon the request of Franchisor. As between Franchisor and all third parties, Franchisee does hereby represent and acknowledge that such third party is authorized to rely on the Assignment of Telephone Numbers and Digital Media agreement, irrespective of any dispute and/or controversy between Franchisor and Franchisee and irrespective of any contrary instructions of Franchisee.

Source: Item 23 — RECEIPTS (FDD pages 59–293)

Question 45

Can the C3 Wellness Spa Franchisor change the specific day of the week that Royalty Fees are due?

Accepted Answer

Payment and Due Date: Royalty Fee payments will be paid weekly and sent by ACH, electronic funds transfer, or as otherwise designated by Franchisor and shall be due on the Tuesday of each weekly Accounting Period, for the preceding week and each week thereafter throughout the entire Term of this Agreement, or such other specific day of the week that Franchisor designates from time to time or for such other period that Franchisor may designate (the "Due Date").

Source: Item 23 — RECEIPTS (FDD pages 59–293)

Question 46

Can the C3 Wellness Spa Franchisor designate a recurring accounting period other than weekly for Royalty Fee payments?

Accepted Answer

On-Going Obligation: The Royalty Fee is an on-going obligation due from Franchisee to Franchisor, is payable in United States Dollars and, as designated by Franchisor, is to be calculated and paid weekly, unless another recurring Accounting Period is designated by Franchisor, on the Gross Sales for the previous weekly Accounting Period for each and every week throughout the Term of this Agreement and any applicable renewal term.

Source: Item 23 — RECEIPTS (FDD pages 59–293)

Question 47

Can the Franchisor elect to bypass arbitration for claims related to a breach of the C3 Wellness Spa agreement that entitles the Franchisor to injunctive relief?

Accepted Answer

Notwithstanding the preceding paragraph, Franchisor and Franchisee agree this Sub-Article 18.G.(1) and, thereby, the prerequisite requirement of non-binding mediation, shall not, at Franchisor's election, apply to: (a) any claims or disputes related to or concerning a breach of this Agreement by Franchisee that, under the terms of this Agreement, may entitle Franchisor to the award of injunctive relief including, but not limited to, Franchisee's violation or purported violation of Article 6 of this Agreement; and/or (b) claims by either Franchisor or Franchisee under this Agreement that relates to either Franchisor's or Franchisee's failure to pay fees or other monetary obligations due under this Agreement.

(2) **Arbitration** – Subject to the prerequisite requirements of non-binding mediation as set forth in Sub-Article 18.G.(1), and, except, at Franchisor's election, as to any claims or disputes related to or concerning a breach of this Agreement by Franchisee that, under the terms of this Agreement, may entitle Franchisor to the award of injunctive relief including, but not limited to, Franchisee's violation or purported violation of Article 6 of this Agreement, Franchisor and Franchisee agree that all disputes, controversies, and claims, arising from and/or related to this Agreement, the relationship between Franchisor and Franchisee, the System, and/or the validity

Source: Item 23 — RECEIPTS (FDD pages 59–293)

Question 48

Is the Franchisor's right to inspect a C3 Wellness Spa facility subject to any conditions or limitations as described in Article 3.H of the agreement?

Accepted Answer

The following Inspection and Audits provisions are all subject to Article 3.H. of this Agreement:

# **13.A. FRANCHISOR'S RIGHT TO INSPECT**

Franchisor has the right at any time during business hours, and without prior notice to Franchisee, to inspect Franchisee's Spa Facility. Franchisee shall fully cooperate with representatives of Franchisor making any inspection and permit such representatives of Franchisor to take photographs, videos, and/or recordings of Franchisee's Spa Facility and interview employees and customers of the Franchised Business, conduct secret-shopper inspections, and other inspections either with or without notice to Franchisee. Franchisor shall undertake reasonable efforts to minimize the impact of any inspection on the operations of the Franchised Business.

Source: Item 23 — RECEIPTS (FDD pages 59–293)

Question 49

For C3 Wellness Spa, are Gift Cards included in 'Other Services'?

Accepted Answer

If this Franchise Outlet remained in operation throughout the 2023 Calendar Year, it would qualify as an Operational Franchise Outlet during the 2023 Calendar Year.

- (o) Other Services relates to all sales that are not Acupuncture Services, Facial Services, Massage Services, or Medical Services.

Other Services includes: (i) body contouring; (ii) medical spa services; (iii) permanent makeup; (iv) physical therapy; (v) salt therapy; (vi) product sales; (vii) class fees; (viii) IV therapy; (ix) all enhancements; and (x) Gift Cards, so long as such services and products are not covered by a customer's insurance.

Source: Item 19 — FINANCIAL PERFORMANCE REPRESENTATIONS (FDD pages 51–55)

Question 50

What happens if a federal, state, or local tax is imposed on the C3 Wellness Spa Royalty Fee?

Accepted Answer

Tax Obligations: If any federal, state or local tax, other than an income tax, is imposed on the Royalty Fee paid by Franchisee to Franchisor that, Franchisor cannot directly and, dollar for dollar, offset against taxes required to be paid by Franchisor under any applicable federal or state laws, Franchisee must compensate Franchisor in the manner prescribed by Franchisor so that the net amount or net rate received by Franchisor for the Royalty Fee is not less than that which has been established by this Agreement and which was due to Franchisor on the effective date of this Agreement.

Source: Item 23 — RECEIPTS (FDD pages 59–293)

Question 51

What happens if the C3 Wellness Spa franchised business operates as a Spa Management Business regarding the Approved Spa Products and Services?

Accepted Answer

oved Spa Products and Services (hereinafter referred to as "Authorized Care Providers") at a Spa that is operated and potentially owned by the Authorized Care Providers authorized to offer and provide the Approved Spa Products and Services.

WHEREAS, If the Franchised Business is a Spa Location Franchise that owns and operates a Spa Management Business, among other things, Franchisee will be required to enter into a management agreement (the "Management Agreement") with the Authorized Care Providers whereby, among other things, Franchisee will provide the Authorized Care Providers the Spa Facility and Management Services and grant the Authorized Care Providers a license to use the Licensed Marks at Franchisee's spa facility location (the "Spa Location");

WHEREAS, Franchisee has been advised that, among other things, the Approved Spa Products and Services and the Spa Facility and Management Services, involve products, services and activities of a nature and type that require the administration, supervision, management, and oversight of Authorized Care Providers, including licensed medical professionals and health care providers and that whether or not Franchisee may own and operate a Spa Location Franchise and, if applicable, the types of activity that Franchisee's Spa Location Franchise may engage in is subject to and requires compliance with significant federal, state and local rules and regulations related to the practice of medicine and other licensing requirements (collectively referred to as the "Authorized Care Provider Regulation");

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WHEREAS, Franchisee has been advised that prior to signing this Agreement that prior to developing a Spa Location Franchise, that Franchisee should retain Franchisee's own independent legal counsel to advise Franchisee as to all applicable Authorized Care Provider Regulation, whether or not Franchisee may own a Spa Location Franchise and, if applicable, the types of activities that Franchisee's Spa Location Franchise may or may not engage in.

Source: Item 23 — RECEIPTS (FDD pages 59–293)

Question 52

What happens if the insurance coverage maintained by the Practice is not acceptable to the Manager for C3 Wellness Spa?

Accepted Answer

- (e) **Insurance; Risk of Loss.** During the Term, Practice must maintain insurance coverage for the full value of the Medical Equipment and insurance coverage against liability for bodily injury, including death, and property damage arising out of the ownership, maintenance, use and operation of the Medical Equipment with limits acceptable to Manager.

Practice must ensure the policies name Manager as additional insured and provide a waiver of subrogation in favor of Manager.

Such coverage must be in a form acceptable to Manager and Practice must deliver all policies of insurance, or evidence satisfactory to Manager of such coverage, upon Manager's request.

Source: Item 23 — RECEIPTS (FDD pages 59–293)

Question 53

What happens to the information related to the C3 Wellness Spa Franchised Business on the System Website if the Franchisee does not comply with the terms and conditions of the Franchise Agreement?

Accepted Answer

ee's failure to timely make modifications and alterations to Franchisee's Spa Facility and Franchisee's Spa Location will cause irreparable injury to Franchisor, and Franchisee consents to the entry, at Franchisee's expense, of any ex-parte order by any court of competent jurisdiction authorizing Franchisor or its agents to take action, if Franchisor seeks such an order;
- (8) Take all actions necessary and/or reasonably required to cancel all fictitious or assumed names or equivalent registrations relating to the Licensed Marks;
- (9) At no cost to Franchisor, take such action as may be determined by Franchisor to: (a) provide and assign to Franchisor the Business Management System, the Business Management System Data, and all customer lists, customer information, and customer data; and (b) transfer, disconnect, and/or otherwise assign, as directed by Franchisor, all telephone numbers, email addresses, yellow pages telephone directories, telephone directory type listings, Web Based Media listings, accounts and log-in information used in connection with Franchisee's former Spa and/or otherwise associated with the System and/or the Licensed Marks, cancel Franchisee's interests in same as such cancellation may be directed by Franchisor, and effectuate, perform, honor, and comply with Franchisee's obligations under the Assignment of Telephone Numbers and Digital Media Accounts attached to

Source: Item 23 — RECEIPTS (FDD pages 59–293)

Question 54

What happens to the C3 Wellness Spa Multi-Unit Development Agreement if the franchisee fails to meet certain obligations for four consecutive months?

Accepted Answer

|    | Provision                                         | Sections in Multi-Unit Development Agreement | Summary                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|----|---------------------------------------------------|-------------------------------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| a. | Length of the franchise term | 3 | Varies depending on the number of Spa Location Franchises to be developed and the Development Area. The agreement commences on the effective date and the term automatically expires at the earlier of the opening of the final Spa Location Franchise required for development, or the last day of the calendar month in which the final Spa Location Franchise was required to be open under the Multi-Unit Development Agreement. |
| b. | Renewal or extension of the | Not | There is no renewal of the Multi-Unit Development |
|  | term | applicable | Agreement. |
| c. | Requirements for franchisee to | Not | There is no renewal of the Multi-Unit Development |
|  | renew or extend | applicable | Agreement. |
| d. | Termination by franchisee | Not applicable | There is no option for your termination of the Multi Unit Development Agreement. |
| e. | Termination by franchisor | Not | We can terminate without cause only if you and we |
|  | without cause | applicable | mutually agree, in writing, to terminate. |
| f. | Termination by franchisor with "cause" | 3.2 | We may terminate your Multi-Unit Development Agreement with cause. Your Multi-Unit Development Agreement can be terminated by us if: (a) you abandon your obligations under the Multi-Unit Development Agreement; (b) if you for four consecutive months, or any shorter period that indicates an intent by you to discontinue your development of Spa Location Franchises within the Development Area; (c) if you become insolvent or you are adjudicated bankrupt, or if any action is taken by you, or by others against you, under any insolvency, bankruptcy or reorganization act, or if you make an assignment for the benefit or creditors or a receiver is appointed by you; (d) if you fail to meet your development obligations under the Development Schedule for any single Development Period including, but not limited to, your failure to establish, open and/or maintain the cumulative number of Spa Location Franchises in accordance with Development Schedule; and/or (e) in the event that any one Franchise Agreement is terminated respecting any |

Source: Item 17 — RENEWAL, TERMINATION, TRANSFER AND DISPUTE RESOLUTION (FDD pages 43–50)

Question 55

What happens after C3 Wellness Spa provides written notice to the franchisee regarding the percentage of Gross Sales to be paid to the Brand Development Fund?

Accepted Answer

- (2) Franchisor will provide Franchisee with written notice of the percentage of Gross Sales that Franchisee is required to contribute to the Brand Development Fund.

Upon such written notice to Franchisee, the percentage of Gross Sales to be paid by Franchisee to the Brand Development Fund will be applicable for each and every weekly Accounting Period thereafter during the Term until otherwise designated by Franchisor in writing.

The Brand Development Fund Fee shall be paid to Franchisor on the Due Date and in accordance with the payment terms and methods set forth in Article 5.B for the payment of Royalty Fees;

Source: Item 23 — RECEIPTS (FDD pages 59–293)

Question 56

If C3 Wellness Spa defends a trademark infringement claim, is the company obligated to reimburse the franchisee for attorney fees?

Accepted Answer

We will protect your right to use the Licensed Marks and other related rights and to protect you against claims of infringement and unfair competition related to the Licensed Marks, provided that your use of the Licensed Marks is in accordance with the Franchise Agreement, the Manuals, and is consistent with our instructions and the license granted to you. We will indemnify you against direct damages for trademark infringement in a proceeding arising out of your use of the Licensed Marks, provided your use of the Licensed Marks comply with the terms of your Franchise Agreement, the Manuals, our written instructions to you and, you have timely notified us of the claim, have given us sole control of the defense and settlement of the claim, and you are in compliance with your Franchise Agreement and, if applicable, Multi-Unit Development Agreement. If we defend the claim, we have no obligation to indemnify or reimburse you with respect to any fees or disbursements of any attorney that you retain.

Source: Item 13 — TRADEMARKS (FDD pages 40–41)

Question 57

If C3 Wellness Spa designates a Designated Territory before I select a Spa Location, what are my obligations?

Accepted Answer

Site Review, Approval and Designated Territory We will review the proposed site that you select for your Spa Location and we will notify you of our approval or disapproval.

Once you select a site that we approve for your Spa Location, we will designate your Designated Territory.

However, if you negotiate and we agree to designate and grant to you a Designated Territory prior to your selection of a Spa Location, then you must locate your Spa Location Franchise within the Designated Territory and at a site that we approve as your Spa Location.

You must obtain our approval of your Spa Location.

Source: Item 11 — FRANCHISOR'S ASSISTANCE, ADVERTISING, COMPUTER SYSTEMS AND TRAINING (FDD pages 30–38)

Question 58

If C3 Wellness Spa elects to assume the defense of a claim, does the franchisee's obligation to indemnify, defend, and hold harmless C3 Wellness Spa diminish?

Accepted Answer

Franchisee and each Owner shall indemnify, defend through counsel acceptable to Franchisor, and hold Franchisor, Franchisor's affiliates, and their respective officers, directors, shareholders, members, owners, partners, agents, representatives, independent contractors, employees, assigns and successors (the "Franchisor Indemnified Parties") harmless from all losses, expenses, claims, causes of action, lawsuits, liabilities, taxes, costs, demands, proceedings, investigations, hearings, and/or damages arising out of, or relating to, Franchisee's Spa Facility, Franchisee's Spa Location, and/or the Franchised Business (including, without limitation, the ownership and operation of the Franchised Business), unless such loss, expense, claim, cause of action, lawsuit, liability, tax, cost, demand, proceeding, or damage is solely due to Franchisor's gross negligence, and Franchisee shall pay all of the Franchisor Indemnified Parties' reasonable costs, fees and expenses of defending any such claim, cause of action, lawsuit, demand, proceeding, investigation, and/or hearing brought against any of the Franchisor Indemnified Parties or any such claim, cause of action, lawsuit, demand, proceeding, investigation, and/or hearing in which any of the Franchisor Indemnified Parties is named as a party, including, without limitation, reasonable accountant fees, attorney fees, and expert witness fees, court costs, deposition fees, travel expenses and other litigation expenses. At the expense and risk of Franchisee and each Owner, Franchisor may elect to assume (but is not obligated to undertake) the defense and/or settlement of any action, lawsuit, proceeding, claim, or demand. Such an election by Franchisor to assume its defense shall not diminish the obligation of Franchisee and each Owner to indemnify, defend and hold harmless Franchisor.

Source: Item 23 — RECEIPTS (FDD pages 59–293)

Question 59

If a C3 Wellness Spa franchisee abandons their obligations, can the Multi-Unit Development Agreement be terminated?

Accepted Answer

|    | Provision                                         | Sections in Multi-Unit Development Agreement | Summary                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|----|---------------------------------------------------|-------------------------------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| a. | Length of the franchise term | 3 | Varies depending on the number of Spa Location Franchises to be developed and the Development Area. The agreement commences on the effective date and the term automatically expires at the earlier of the opening of the final Spa Location Franchise required for development, or the last day of the calendar month in which the final Spa Location Franchise was required to be open under the Multi-Unit Development Agreement. |
| b. | Renewal or extension of the | Not | There is no renewal of the Multi-Unit Development |
|  | term | applicable | Agreement. |
| c. | Requirements for franchisee to | Not | There is no renewal of the Multi-Unit Development |
|  | renew or extend | applicable | Agreement. |
| d. | Termination by franchisee | Not applicable | There is no option for your termination of the Multi Unit Development Agreement. |
| e. | Termination by franchisor | Not | We can terminate without cause only if you and we |
|  | without cause | applicable | mutually agree, in writing, to terminate. |
| f. | Termination by franchisor with "cause" | 3.2 | We may terminate your Multi-Unit Development Agreement with cause. Your Multi-Unit Development Agreement can be terminated by us if: (a) you abandon your obligations under the Multi-Unit Development Agreement; (b) if you for four consecutive months, or any shorter period that indicates an intent by you to discontinue your development of Spa Location Franchises within the Development Area; (c) if you become insolvent or you are adjudicated bankrupt, or if any action is taken by you, or by others against you, under any insolvency, bankruptcy or reorganization act, or if you make an assignment for the benefit or creditors or a receiver is appointed by you; (d) if you fail to meet your development obligations under the Development Schedule for any single Development Period including, but not limited to, your failure to establish, open and/or maintain the cumulative number of Spa Location Franchises in accordance with Development Schedule; and/or (e) in the event that any one Franchise Agreement is terminated respecting any |

Source: Item 17 — RENEWAL, TERMINATION, TRANSFER AND DISPUTE RESOLUTION (FDD pages 43–50)

Question 60

If the Franchisee for a C3 Wellness Spa is a corporate entity, what representation must the Franchisee make to the Franchisor?

Accepted Answer

| Wellness                  | Multi-Unit Development Agreement between Aryes Franchising LLC, a Florida  |                        | Limited Liability                                                                                                    |
|---------------------------|----------------------------------------------------------------------------|------------------------|----------------------------------------------------------------------------------------------------------------------|
| Company                   |                                                                            |                        | with a principal place of business located at 1060 Cypress Parkway, Kissimmee, Florida 34759                         |
|                           | (the "Franchisor") and(the "Franchisee").                                  |                        |                                                                                                                      |
|                           | Defined terms shall have the meanings set forth in the C3 Wellness         |                        | Multi-Unit Development Agreement                                                                                     |
|                           |                                                                            |                        | between Franchisor and Franchisee and are further defined and set forth in this Development Information              |
| Sheet.                    |                                                                            |                        |                                                                                                                      |
|                           |                                                                            |                        |                                                                                                                      |
|                           |                                                                            |                        | If Franchisee is a Corporate Entity, Franchisee represents and affirms to Franchisor that the following is a list of |
| each Owner of Franchisee: |                                                                            |                        |                                                                                                                      |
| Owner Name                | Owner Address                                                              |                        | Ownership Interest Percentage                                                                                        |
|                           |                                                                            |                        |                                                                                                                      |
|                           |                                                                            |                        |                                                                                                                      |
|                           |                                                                            |                        |                                                                                                                      |
|                           |                                                                            |                        |                                                                                                                      |
|                           |                                                                            |                        |                                                                                                                      |
|                           |                                                                            |                        |                                                                                                                      |
|                           |                                                                            |                        |                                                                                                                      |
|                           |                                                                            |                        |                                                                                                                      |

Source: Item 23 — RECEIPTS (FDD pages 59–293)

Question 61

If the franchisee for a C3 Wellness Spa is a corporation, what agreement must the owners and their spouses sign and deliver to the franchisor?

Accepted Answer

- (6) Franchisee's Owners and their Spouses, respectively, must agree to, sign, and deliver to Franchisor, within 30 days of the date of delivery by Franchisor to Franchisee, Franchisor's then current individual guaranty agreements, and, thereby, among other things, individually and jointly guarantee the full and complete performance of the Renewal Franchise Agreement including, but not limited to, payment obligations, non-compete obligations, and restrictive covenants (the "Renewal Ancillary Agreements");

Source: Item 23 — RECEIPTS (FDD pages 59–293)

Question 62

If a C3 Wellness Spa franchisee is a corporation, does the Franchise Agreement apply to the individual owners?

Accepted Answer

If you are a corporation, partnership or other legal entity (a "Corporate Entity"), our Franchise Agreement will also apply to your individual owners, shareholders, members, officers, directors and other principals.

Source: Item 1 — THE FRANCHISOR AND ANY PARENTS, PREDECESSORS AND AFFILIATES (FDD pages 8–14)

Question 63

If a C3 Wellness Spa franchisee defaults multiple times under Articles 16.A.(3) and/or 16.A.(4), can the agreement be terminated even if the defaults were cured?

Accepted Answer

- (2) **Defaults and Automatic Termination upon Written Notice without Cure Period** Franchisee shall be in default of this Agreement, and, this Agreement may be terminated by Franchisor, at Franchisor's sole discretion, upon written notice from Franchisor to Franchisee and without providing Franchisee any opportunity to cure, upon the occurrence of any one or more of the following actions, inactions, omissions, events, and/or circumstances, with such termination effective on the date of Franchisor's notice:

- (a) Franchisee, on three or more instances and/or occasions, engages, commits, and/or suffers an action, inaction, omission, event, and/or circumstance that constitutes or qualifies as a default under Articles 16.A.(3) and/or 16.A.(4) of this Agreement, irrespective of whether or not such action, inaction, omission, event, and/or circumstance is the subject of a notice of default from Franchisor to Franchisee pursuant to Articles 16.A.(3) and/or 16.A.(4) of this Agreement and irrespective of whether or not such default was timely cured and irrespective of whether or not Franchisee paid any penalties or additional fees to Franchisor;

Source: Item 23 — RECEIPTS (FDD pages 59–293)

Question 64

If a C3 Wellness Spa franchisee executes a Development Agreement, what article and section of that agreement is supplemented regarding enforcement and construction, and what is the new subarticle number?

Accepted Answer

- 3. Article 18 of the Franchise Agreement and, if Franchisee executes a Development Agreement, Article 7 of the Development Agreement, under the heading "Enforcement and Construction," shall be supplemented by the addition of the following new subarticle 18.AA. to the Franchise Agreement and Article 7.24 of the Development Agreement:

Nothing in this Agreement should be considered a waiver of any right conferred upon franchisee by New York General Business Law, Sections 680-695.

Source: Item 23 — RECEIPTS (FDD pages 59–293)

C3_Wellness_Spa 2024 FDD FAQ