Does C3 Wellness Spa require me to obtain their approval of my Spa Location?

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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.

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