What is the scope of the non-exclusive franchise granted to a Chem Dry franchisee?

of or related to the application was true, correct and complete as of the time of submission and is true, correct and complete as of the Effective Date. Such application has been approved by CDI in reliance upon all of the representations made therein. Subject to the terms and conditions of this Agreement, CDI hereby grants to FRANCHISEE a non-exclusive franchise to use the Marks and the Franchise System (the "Franchise") to operate a CHEM-DRY Business (the "BUSINESS") in the area as defined in the Summary Page to this Agreement (the "Franchised Area") and to use the Marks in the operation thereof from the Effective Date of this Agreement for a term (the "Term") beginning on the Effective Date and ending five (5) years from the Payment Start Date as referenced in Section 8.B. of this Agreement, or, if this Agreement pertains to the transfer of an existing Chem-Dry Business or is a Renewal Agreement, ending five (5) years from the Effective Date of this Agreement. In connection with the operation of the BUSINESS, FRANCHISEE must offer and perform carpet and area rug cleaning, upholstery cleaning, spot removal applying anti-allergen and deodorizer, and protecting services, including removing red stains, treating pet urine odor on carpets and imparting stain resistance to carpet fibers that we mandate, and such other services which may from time to time be changed, specified, and/or directed by CDI (the "Required Services"). FRANCHISEE also may, upon consent or request of CDI, offer and perform other services that CDI first approves, which may require certification by successful completion of additional training and/or purchase of additional equipment and cleaning solutions ("Additional Services"). This Agreement refers to the Required Services and the Additional Services as the "Approved Services." CDI reserves the right to change the lists of Required Services and Approved Services at any time. As of the Effective Date, the list of Additional Services includes leather and vinyl cleaning, carpet repair, carpet spot dyeing, vinyl composite tile cleaning services, wood floor cleaning, applying anti-allergen and deodorizer, and dryer vent cleaning. CDI may condition the offer and sale, or continuation of the offer and sale, of Additional Services and products in its sole discretion, and to require franchisees which offer and perform such Additional Services to be certified by successful completion of an additional training and/or the purchase of additional equipment and cleaning solutions. Termination or expiration of this Agreement shall constitute a termination or expiration of the Franchise.

D. FRANCHISED AREA

The number of franchises which can operate and perform CHEM-DRY Businesses within the Franchised Area at any given time is determined by dividing the current population of the area by

sixty thousand (60,000). The nearest whole number to the quotient (the "Maximum Number") is the maximum number of franchises that CDI may grant in the Franchised Area; provided, however, that, in addition, another franchisee or a third party designated by CDI may service national accounts in the Franchised Area if FRANCHISEE elects not to service a national account or if a national account elects not to do business with FRANCHISEE. The Franchised Area will be determined by CDI based on, among other things, population, population density, geographical terrain and market potential. Based on population changes, the Maximum Number may increase or decrease from time to time and may not remain constant; however, the Maximum Number only affects CDI's ability to grant franchises and no franchise will be terminated solely as a result of a decrease in the Maximum Number. FRANCHISEE 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;

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