Does Dermani Medspa have the right to demand exact compliance with every term of the agreement?

airment, or condition that is reasonably expected to prevent or actually does prevent you or the Operating Principal from supervising the Franchised Business's management and operating.

"Entity" – a corporation, limited liability company, general or limited partnership, or legally recognized form of organized business structure.

"Franchised Business" – the business that will manage the dermani MEDSPA® which includes all of the assets of the Franchised Business you operate under a Franchise Agreement, including your revenue and any lease for the Premises.

"Indemnified Parties" – us, our affiliates, and our and their respective members, shareholders, directors, officers, employees, agents, successors, assignees and designees.

"Manual" – the confidential operations manual that we loan to you to assist you in setting up and establishing the operations of your Franchised Business.

"Marks" – the "dermani MEDSPA®" word mark and logo, and any other trademarks, service marks, and commercial symbols we may create, use or license for the dermani MEDSPA®s.

"dermani MEDSPA®(s)" – dermani MEDSPA® medical care centers that provide patients with the products and services that we specify and/or authorize.

"Operating Principal" – the person, shareholder, member, or partner that you designate to be responsible for overseeing and supervising the operation of the Franchised Business. The Operating Principal is identified on Exhibit C to this Agreement.

"Owner" – any person holding a direct or indirect ownership interest (whether of record, beneficially, or otherwise) or voting rights in you, this Agreement, or the Franchised Business, and any person who has any other legal or equitable interest, or the power to vest in himself or herself any legal or equitable interest, in their revenue, profits, rights or assets. The Owner(s) are identified on Exhibit C.

"Person" – any natural person, corporation, limited liability company, general or limited partnership, unincorporated association, cooperative, or other legal or functional entity.

"Premises" – the location that we approve for the dermani MEDSPA®.

"System Standards" – the mandatory and suggested specifications, standards, operating procedures and rules that we prescribe for the management and operation of the Franchised Business and dermani MEDSPA®.

The definitions provided above are in addition to other defined terms set forth in this Agreement.

1. GRANT OF DEVELOPMENT RIGHTS; TERRITORY

• 1.1. Grant of Development Rights. Pursuant to the terms and conditions of this Agreement, we hereby grant to you the right, and you accept the obligation, to develop a specified number of Franchised Businesses in the Development Area, as set forth Exhibit A attached hereto. In this regard, you further agree:
  • 1.1.1. To develop the Franchised Businesses and dermani MEDSPA®s pursuant to the development schedule set forth in Paragraph 3 of Exhibit A attached hereto (the "Development Schedule"). If at any time during the term of this Agreement you fail to satisfy the Development Schedule, then we have the right, but not the obligation, to exercise our termination rights and other rights pursuant to Section 8 below;
  • 1.1.2. that each dermani MEDSPA® developed under this Agreement must be established and managed by a Franchised Business pursuant to a separate dermani MEDSPA® Franchise Agreement (a "Franchise Agreement") that must be executed as provided in Section 3.1 below; and
  • 1.1.3. that each Franchised Businesses and dermani MEDSPA® developed under this Agreement must be located within the area that is specified in Paragraph 2 of Exhibit A, attached hereto (the "Development Area").
• 1.2. No Protections to Development Area. Your rights within the Development Area are nonexclusive, and we may award the same Development Area to multiple area developers. However, we will not sell the right to develop more dermani MEDSPA®s than the total number of available territories available in the Development Area.
• 1.3. Rights we Reserve. We retain all rights with respect to Franchised Businesses and dermani MEDSPA®s, the System, the Marks, the sale of similar or dissimilar services, and any other activities we deem appropriate whenever and wherever we desire, including, but not limited to:
  • 1.3.1. the right to operate, and to grant others the right to operate, Franchised Businesses and similar medical management businesses or similar medspas or medical centers under different names or marks located anywhere within or outside the Development Area under any terms and conditions we deem appropriate and regardless of proximity to the Premises or the Development Area;
  • 1.3.2. the right to establish and operate (and to grant to others the right to establish and operate) any other businesses offering products and services that are different from the products or services offered at dermani MEDSPA®s through similar or dissimilar channels of distribution (including, but not limited to: (i) sales through direct marketing, such as over the Internet or through catalogs or telemarketing; (ii) sales through retail stores that do not operate under the Marks; and (iii) sales made at wholesale), at any locations inside or outside the Development Area under trademarks or service marks other than the Marks and on any terms and conditions we deem appropriate;
  • 1.3.3. the right to acquire the assets or ownership interests of one or more businesses that operate, and/or has granted franchises, licenses, or similar rights to one or more third parties to operate, businesses similar to and/or competing with dermani MEDSPA®s and Franchised Businesses related to dermani MEDSPA®s, and/or the right to be acquired by a competing medical business or medical management business, or by another business, even if such business operates, franchises and/or licenses competitive businesses in the Development Area, and that if we acquire, or are acquired by, such a competing business or chain, we may establish or grant franchises or licenses to establish new or additional

competing businesses under the Marks or the acquired chain's marks in your Development Area, and we may rebrand such existing businesses in your Development Area to use the Marks and the System, and it is expressly acknowledged by you and us that any such business operations of the same or similar business that existed or operated at the time of such acquisition or transaction shall not constitute a breach of Section 1.2;

• 1.3.4. the right to create, place, and/or distribute any advertising and promotional materials related to the System, the Marks, Franchised Businesses and dermani MEDSPA®s, and the services and products offered, and authorize others to do so, and those materials may appear in media, including, without limitation, the Internet or similar electronic media, or be received by prospective customers located anywhere, including within the Development Area; and
• 1.3.5. the right to operate, and to grant others the right to operate, Franchised Businesses and similar medical management businesses or similar medspas or medical centers, in nontraditional or captive locations, within or outside of the Development Area, including, without limitation, in mobile clinics or limited service temporary locations (such as at a "health fair" or at a convention).
• 1.4. Limitations. You shall not engage in any of the activities we have expressly reserved for and to ourselves in Sections 1.3.1 through 1.3.5 above, except as otherwise provided in this Agreement.
• 1.5.

Source: Item 23 — RECEIPTS (FDD pages 66–311)