What must a Proposed New Owner do to be accepted as a Degree Wellness franchisee?

r of Franchisor's election to purchase. Franchisor's failure to exercise the option described in this Section 14.4(f). shall not constitute a waiver of any of the transfer conditions set forth in this Article 14.5.

• 14.5 Conditions for Approval of Transfer. If you and your Principal Owners are in full compliance with this Agreement, both monetary and otherwise, we will not unreasonably withhold our approval of a Transfer that meets all the applicable requirements of this Section 14. The Proposed New

Owner must be of good moral character and otherwise meet our then applicable standards for Degree Wellness Studio franchisees. For any proposed Transfer, in addition to waiving our right of first refusal, all of the following conditions must be met before or at the time of the Transfer:

• a. in our belief and judgment, the Proposed New Owner must have sufficient business experience, aptitude, and financial resources to operate the Franchise;
• b. you must pay any amounts owed for purchases from us and our affiliates, and any other amounts owed to us or our affiliates which are unpaid, including any Initial Franchisee Fee, Continuing Franchise Fees, and Fund contributions;
• c. the Proposed New Owner's directors and such other personnel as we may designate must have successfully completed our Initial Training program and shall be legally authorized and have all licenses necessary to perform the services offered by the Franchise. The Proposed New Owner shall be responsible for any wages and compensation owed to, and the travel and living expenses (if the Initial Training program is not held virtually in the future, and including all transportation costs, room, board and meals) incurred by, the attendees who attend the Initial Training program;
• d. if your lease for the Premises requires it, the lessor must have consented to the assignment of the lease of the Premises to the Proposed New Owner;
• e. you must pay us a non-refundable Transfer fee in the amount of $10,000.00 concurrently with the execution of the Transfer Agreement, described in Section 14.5f below, and you must reimburse us for any reasonable expenses incurred by us in investigating and processing any Proposed New Owner where the Transfer is not consummated for any reason;
• f. you and your Principal Owners must execute a Transfer Agreement, which will include (i) a general release (in a form satisfactory to us) of any and all claims you and/or they may have against us, our affiliates, and our and our affiliates' respective officers, directors, employees, and agents, and (ii) acknowledgment that the restrictive covenants set forth in Article 9 of this Agreement will survive the Transfer to the extent set forth therein;
• g. we must approve the material terms and conditions of the proposed Transfer, including without limitation that the price and terms of payment are not so burdensome as to adversely affect the operation of the Franchise;
• h. the Franchise and the Premises shall have been placed in an attractive, neat and sanitary condition.
• i. you and your Principal Owners must enter into an agreement with us providing that all obligations of the Proposed New Owner to make installment payments of the purchase price (and any interest on it) to you or your Principal Owners will be subordinate to the obligations of the Proposed New Owner to pay any amounts payable under this Agreement or any new Franchise Agreement that we may

require the Proposed New Owner to sign in connection with the Transfer, and containing a general release of any claims that you may have against us.

• j. the Franchise shall have been determined by us to contain all equipment and fixtures in good working condition, as were required at the initial opening of the Franchise. The Proposed New Owner shall have agreed, in writing, to make such reasonable capital expenditures to remodel, equip, modernize and redecorate the interior and exterior of the premises in accordance with our then existing plans and specifications for a Degree Wellness Studio franchise, and shall have agreed to pay our expenses for plan preparation or review, and site inspection.
• k. Upon receiving our consent for the Transfer or sale of the Franchise, the Proposed New Owner shall agree to assume all of your obligations under this Agreement in a form acceptable to us, and/or, at our option, shall agree to execute a new Franchise Agreement with us in the form then being used by us. We may, at our option, require that you guarantee the performance, and obligations of the Proposed New Owner.
• 14.6 Death and Disability.

Source: Item 23 — Receipts (FDD pages 66–257)