What must a C3 Wellness Spa franchisee do to get a site approved?

roved, we'll require additional training.

Site Selection

Although you are responsible for selecting a site for your Spa Location you must obtain our approval of your Spa Location. Generally, we do not own or lease the real property that will serve as your Spa Location and you are responsible for all costs and expenses in locating and evaluating proposed sites for your Spa Location and the demographic data associated with your proposed sites. Before you enter into a lease or other agreement for your Spa Location you must obtain our approval. We will provide you with site selection guidelines. If your Franchise Agreement specifies and designates a Designated Territory, your Spa Location must be located within your Designated Territory at a site that we approve. If you sign a Multi-Unit Development Agreement than each Spa Location developed under the Multi-Unit Development Agreement must be located within the Development Territory and at sites that we approve within the

Development Territory. Your leasehold interests in and to your Spa Location must be subordinated to our rights as set forth in the Lease Agreement Rider attached as Exhibit 4 to the Franchise Agreement and the Collateral Assignment of Lease attached as Exhibit 5 to the Franchise Agreement. We will approve sites for future/additional Spa Locations units under our then current site criteria.

Although there is no specified time limit for us to review the proposed site for your Spa Location, we will do so within a reasonable time period, not exceeding 30 days of our receipt of your written request for our review of a proposed site and your submission to us of the information and documentation that we may request. In determining whether to approve or disapprove a proposed site for your Spa Location, factors that we take into consideration include: (a) demographic factors, traffic patterns, parking, building structures, visibility and available sign locations; (b) characteristics of the proposed site; (c) the location of your proposed site relative to your overall Designated Territory and proximity to other Spa Location Franchises, if your Designated Territory was previously designated; (d) the location of your proposed site relative to your overall Development Territory and proximity to other Spa Location Franchises, if you signed a Multi-Unit Development Agreement and your Development Territory was previously designated; and (e) whether or not the landlord for the Spa Location approves of our Lease Agreement Rider in substantially the same form as contained in Exhibit 4 of the Franchise Agreement.

Within 120 days of signing your Franchise Agreement you must secure a Spa Location and lease that we approve (Franchise Agreement, Article 3.A). If you do not meet this requirement for any reason, including our disapproval of a proposed site location, we may terminate your Franchise Agreement without refunding any fees to you. It is your obligation to consult with government agencies, architects and legal professionals to evaluate and determine that your Spa Location permits the establishment and operation of the Franchised Business and that you possess the necessary licenses and authority to operate a Spa Location Franchise that offers and sells the Approved Spa Products and Services. (Franchise 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

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.);

• 1. 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. We will offer and make available to your replacement Operating Manager and employee managers our initial training program which must be complete to our satisfaction. The initial training program will be provided by us at the facilities that we designate that, presently, is comprised of our C3 Wellness located in Kissimmee, Florida and at the certified training C3 Wellness that we designate in Kissimmee, Florida.

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