What is a 'Studio Management Business' under the Degree Wellness franchise system?

ied geographic territory. This

Agreement is being presented to you because of the desire you have expressed to obtain the right to develop, own, and be franchised to operate a Degree Wellness Studio (we refer to your Degree Wellness franchise hereinafter as the "Franchise" or the "Franchised Business").

c. In certain cases, where permitted by law, we may offer franchises to persons or legal entities that meet our qualifications but are not licensed to practice or provide health related care, and are willing to undertake the investment and effort to own and operate a business that will manage a Studio under the System; we refer to these businesses as "Studio Management Businesses." For example, certain states do not permit non-licensed persons to own and/or health care practices, but some states do. In states that do not permit non-licensed persons to own or operate businesses performing health care related services, a Studio Management Business may be offered. In states that do permit non-licensed persons to own and operate health care businesses, a Studio Management Business Franchise is not necessary, but may be offered by us under certain circumstances.

As further described below, to operate a Studio Management Business, you must enter into a Franchise Agreement with us and a Management Agreement with a "PC" that will own and operate the Studio. A "PC" will be one or more licensed individuals, or a professional corporation or similar entity, such as a professional limited liability company, that is duly authorized to provide health care services under local and state laws. In such an arrangement:

• i) You, as franchisee, will construct or build-out the Studio for use by the PC.

• ii) The Studio business will be operated by the PC using the Degree Wellness name and Marks.

• iii) In addition to signing the Franchise Agreement with us, before you begin operating the Studio Management Business, you must enter into a management agreement ("Management Agreement") with the PC. If permitted by state and local law, the PC may be the same entity as your franchisee entity or have the same owners. Under the Management Agreement, you will provide the PC with management and administrative services and support consistent with the System to support the PC's health care business and its delivery of health care services and related services and products to patients at a Studio, consistent with all applicable laws and regulations. Our Franchise Disclosure Document contains a general form of Management Agreement as an exhibit that can serve as a starting point for satisfying this requirement, but the actual Management Agreement to be used must be approved by us, in our discretion, and must satisfy all requirements and limitations of applicable laws, rules and regulations of the state in which the Studio will be located.

• iv) You must obtain our written approval of the final Management Agreement prior to signing it with the PC. We may provide you with assistance in preparing the Management Agreement, but you are responsible for determining whether such agreement is in

• compliance with all applicable laws, rules and regulations of the state in which the Studio is located. You must have a Management Agreement in effect with a PC at all times during the operation of the Franchised Business and the Initial Term of this Agreement.

• v) We must approve the PC and its owners, but you are responsible for ensuring that the PC is in compliance with all applicable laws, rules and regulations of the state in which the Studio is located.

• vi) The PC will employ and control the personnel who will provide the health related services required to be delivered at and through the Studio.

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