What is a Chem Dry franchisee prohibited from doing in terms of business or advertising practices?

NCHISEE is in compliance with this Agreement when no event or circumstance has occurred that will give CDI the right to terminate this Agreement under Section 15, whether or not CDI has given notice of default, non-compliance or termination to FRANCHISEE.

FRANCHISEE agrees to operate and conduct business from a single location within the nonexclusive Franchised Area from which FRANCHISEE may operate as many crews, teams, sales forces and vans as necessary. In the event FRANCHISEE has multiple franchises, a separate cleaning crew must be available for each franchise to perform requested work within the Franchised Area for the Approved Services.

FRANCHISEE agrees to advertise and solicit business for the authorized services within the Franchised Area only. FRANCHISEE further agrees that FRANCHISEE will accept and perform only those jobs that are within the Franchised Area.

If FRANCHISEE accepts and performs a job outside of the Franchised Area, CDI will have the right to impose on FRANCHISEE a fine of $5,000 for each occurrence, due and payable upon invoice, or the right to terminate this Agreement.

FRANCHISEE agrees to, at all times, faithfully, honestly and diligently perform his or her obligations hereunder and to continuously exert best efforts to effectively promote and enhance the BUSINESS and develop and service customers within the Franchised Area.

E. RIGHTS CDI RESERVES

Except for the limited license and rights expressly granted to FRANCHISEE under this Agreement, CDI retains all rights with respect to CHEM-DRY Businesses, the Franchise System, the Marks, the sale of the same or similar products and services, and any other activities CDI deems appropriate whenever and wherever CDI desires including inside or outside the Franchised Area. Specifically, but without limitation, CDI reserves the right to:

• 1. subject to the foregoing limitations on the Maximum Number of franchises in the Franchised Area, grant franchises for any area, including inside or outside the Franchised Area, on any terms CDI deems appropriate;
• 1. develop, sell, manufacture or distribute, inside or outside the Franchised Area, whether in proximity to the BUSINESS or otherwise, any type of product or service identified by or associated with the Marks or other trademarks in any channel of distribution, including but not limited to telephone and mail order, television, electronic

media (i.e., including the internet), catalogue sales, and/or through retail or similar establishments or outlets;

• 1. develop, sell, manufacture or distribute inside or outside the Franchised Area, whether in proximity to the BUSINESS or otherwise, any type of product or service identified by trademarks or service marks other than the Marks in any channel of distribution including but not limited to telephone and mail order, television, electronic media (i.e., including the internet), catalogue sales, and/or through retail or similar establishments or outlets; and
• 1. subject to the terms of this Agreement, conduct promotional programs and/or national accounts programs, involving, without limitation, the provision of services to customers inside or outside the Franchised Area.

F. MODIFICATION OF FRANCHISE SYSTEM

Because complete and detailed uniformity among Franchise System franchisees under varying conditions might not be possible or practical, FRANCHISEE acknowledges that CDI specifically reserves the right and privilege, to vary, waive, modify, change or add to System Standards for any franchisee based upon the particulars of any condition that CDI considers important to that franchisee's successful operation. FRANCHISEE has no right to require CDI to grant FRANCHISEE a similar variation or accommodation, or to claim for damages from such variation, or to prevent or enjoin the granting and continuation of such variation or accommodation. Furthermore, FRANCHISEE acknowledges and agrees that CDI may from time to time add to, subtract from, modify or otherwise change the Franchise System, including, without limitation, the adoption and use of new or modified certification marks, trademarks or trade names, new fixtures, equipment and signs, new products or services and new techniques in connection therewith, and FRANCHISEE agrees, at its own cost, to promptly accept, implement, use and display all such alterations, modifications and changes.

2. BUSINESS DEVELOPMENT

A. BUSINESS DEVELOPMENT

FRANCHISEE agrees to do the following, at FRANCHISEE's own expense, to develop the BUSINESS:

• 1. secure all financing required to develop and operate the BUSINESS;
• 1. obtain and maintain in good standing all required permits and licenses necessary to operate the BUSINESS, and comply with all applicable laws relating to the operation of the BUSINESS;
• 1. purchase or lease, and install, all required equipment, supplies, products, vehicles (including at least one (1) white cargo van) and signs (collectively, "Operating Assets") for the BUSINESS; and
• 1. complete all required training in a timely manner, as more fully described in Section 3 below.

B. VANS

FRANCHISEE agrees to purchase or lease one (1) or more white cargo van(s) suitable for the purpose of transporting various equipment, supplies and materials needed to operate the BUSINESS and which otherwise meets CDI's System Standards in the Manual. The van(s) must be used for all cleaning jobs.

Source: Item 23 — Receipts (FDD pages 68–264)