What are the 'System Standards' that Dermani Medspa franchisees must adhere to?

t Agreement.

ITEM 8. RESTRICTIONS ON SOURCES OF PRODUCTS AND SERVICES

General

To ensure that the highest degree of quality and service is maintained, you must operate the Franchised Business in strict conformity with the mandatory and suggested specifications, standards, operating procedures and rules as we may periodically prescribe in the Manuals or otherwise in writing (the "System Standards"). We periodically may modify System Standards, and you must implement any changes in System Standards within the time period we request, whether they involve refurbishing, remodeling, or upgrading the Premises or any other aspect of the Franchised Business, including, without limitation, any change in furniture, fixtures, décor, the computer system, or equipment.

At all times during the term of the Franchise Agreement, you must:

• maintain all of the fixtures, furnishings, equipment, decor, and signs that we prescribe from time to time in accordance with our System Standards;
• manage the PC so that it offers only those services and products that we require to be offered at the dermani MEDSPA® or for which we have given our written approval;
• stock and maintain all types of supplies, equipment and materials which we prescribe or are required by the PC, in quantities sufficient to meet reasonably anticipated customer demand;
• not deviate from our System Standards, unless you have received our prior written consent; and
• stop selling and offering for sale any services or products that we have later disapproved.

Notwithstanding the foregoing, we acknowledge and agree that the selection and use of any equipment and products used in connection with medical services provided by the PC to its clients will be subject to the PC's approval based on the professional opinion of the PC's physicians.

Designated, Specified or Approved Suppliers

You must buy all products, supplies, equipment, materials, services, and other products used or offered for sale at the dermani MEDSPA® only from suppliers (including manufacturers, distributors, and other sources) that meet our specifications in the Manuals and/or that we have approved in writing. You may not buy from any supplier that we have not yet approved in writing, and you must stop buying from any supplier who we approve, but later disapprove. We have the right to designate only one manufacturer, distributor, reseller and/or vendor for any particular item or service. We may be a supplier of any product or service, and we may be the sole approved supplier of any product or service.

The types of products and services that you must purchase or use from approved suppliers, designated sources, us or an affiliate, or according to our specifications, include (among other things): dermani MEDSPA® design and image items, such as décor, color schemes, signs, fixtures, and furniture;

POS; medical equipment and supplies; computer hardware, software, and other technology platforms; mobile applications and programs; email addresses and hosting platforms; Online Management Services; construction contractors; real estate brokers; bookkeeping and accounting services; membership programs; insurance coverage; and retail products to be sold at the dermani MEDSPA®.

You must use our designated real estate broker to either be your real estate broker, or, if you elect to use your own real estate broker, then you must use our real estate broker to oversee your site selection process. If you use your own real estate broker, then you must still pay our designated broker their thencurrent fee in connection with providing their oversight services. Likewise, you must use our designated construction contractor to either be your contractor, or, if you elect to use your own contractor, then you must use our contractor to oversee your buildout. If you use your own contractor, then you must still pay our designated contractor their then-current fee in connection with providing their oversight services. We reserve the right to approve your real estate broker and construction contractor.

If you wish to purchase, lease or use any products or services that we have not previously approved, or you wish to purchase or lease from a supplier or vendor we have not previously approved, you must submit a written request for approval or you must request the supplier to do so. You must pay our thencurrent evaluation fee for each product, service, vendor or supplier you request that we evaluate, plus the costs we incur in connection with testing, inspecting, and evaluating the proposed product, service, vendor or supplier. We must approve any product, service, vendor or supplier in writing before you make any purchases of that product or from that supplier. We can require that our representatives be permitted to inspect the supplier's facilities or vendor's work and that samples from the supplier or vendor be delivered, either to us or to an independent laboratory or entity, for testing. We reserve the right to re-inspect the facilities and products or services of any approved supplier or vendor and to revoke our approval if the supplier or vendor fails to continue to meet any of our then-current standards in our sole discretion. Our supplier or vendor approval procedure does not obligate us to approve any particular supplier or vendor. We will notify you in writing within 30 days after you have requested our approval, and you have provided all information that we might request to evaluate a supplier or vendor, whether the proposed product, service, vendor or supplier is, in fact, approved or disapproved. We are not required to make available to you or to any supplier or vendor our criteria for product, service, vendor or supplier approval. We are not obligated to approve any specific product, service, vendor or supplier if we believe that approval of that product, service, vendor or supplier is not in the best interests of the System. We may revoke our prior approval of any product, service, vendor or supplier at any time, and after your receipt of written notice from us regarding our revocation you must stop using that product or service or stop purchasing from that supplier or vendor.

Required Purchases from Us or Our Affiliates

Except as provided in this Item, neither we nor our affiliates are currently required or the sole suppliers of any product or service used in the operation of the Franchised Business or management of the dermani MEDSPA®, but we reserve the right to designate ourselves or our affiliates as such in the future.

Source: Item 8 — RESTRICTIONS ON SOURCES OF PRODUCTS AND SERVICES (FDD pages 26–28)