What is the purpose of the Engel & Volkers Franchise Agreement in relation to operating a brokerage?

ings, client relationship management and online marketing support and for brokerage services and for the integration of franchisees into the ENGEL & VÖLKERS technology network and such other purposes as may be determined by Franchisor from time to time (the "Integrated Product Suite");

• Provision of ongoing business administration and technical and marketing support;
• Initial and continuing training courses; and
• Organization of exchanges of information and experience among franchisees.
• 1.4 The Franchisee: Franchisee wishes to be franchised the right to use the ENGEL & VÖLKERS System to operate a residential real estate brokerage and franchised business under this Agreement (the franchised "Business") at and only at the approved location specified in Appendix 1 (hereinafter called the "Approved Location"). If, as of the date of this Agreement, the Approved Location has not yet been determined, then it shall thereafter be determined in accordance with Section 3.1 and, upon determination, inserted into Appendix 1. Franchisor is prepared to grant Franchisee, at its request, a franchise to use the ENGEL & VÖLKERS System to operate a residential real estate brokerage at the Approved Location and to use commercially reasonable efforts to support Franchisee.
• 1.5 Independent Investigation: Franchisee has independently investigated the business risks involved and such other matters as Franchisee deems important, including current and potential market conditions and competitive factors and risks, has read Franchisor's Franchise Disclosure Document, and has not relied on any representations not set forth in this Agreement. Aware of the relevant facts, Franchisee desires to enter into this Agreement to obtain a franchise to use the ENGEL & VÖLKERS System to operate a residential real estate brokerage at the Approved Location. Franchisee agrees that it will bear the financial risk involved in operation of the real estate brokerage.

2. Nature of Franchise

• 2.1 Grant of Franchise: Subject to the terms of this Agreement, Franchisor hereby grants to Franchisee the non-exclusive right to establish and operate an ENGEL & VÖLKERS® residential real estate brokerage at the Approved Location for the provision of real estate brokerage services with respect to residential properties of the type permitted under Section 2.2 using the ENGEL & VÖLKERS System and Trademarks (the "Residential Real Estate Brokerage").
• 2.2 Types of Property: Franchisee may provide real estate brokerage services only for residential properties consisting of a house or building (including an apartment within a multi-family building) or undeveloped land, including leaseholds, vacation and resort residential units, cooperatives, condominiums, and any other form of real estate for which a residential real estate brokerage license is required under applicable law.

Although this Agreement is granting a franchise for a Residential Real Estate Brokerage, Franchisee may also provide real estate brokerage services for commercial properties under the residential Trademarks, provided: (i) the commercial real estate brokerage services are offered as a service ancillary to the provision of real estate brokerage services for residential properties, (ii) Franchisee does not hold itself out as providing commercial real

estate brokerage services as its principal business or as being a stand-alone provider solely of commercial services, and (iii) Franchisee's aggregate listings on a unit basis of commercial properties does not exceed five percent (5%) of all its listings in any calendar year during the term of Franchisee's agreement ("Permitted Commercial Services"). For purposes of clarity, the definition of Permitted Commercial Services does not provide Franchisee with a right to conduct business under any other Trademarks, other than the residential Trademarks.

2.3 Protected Area: Subject to the restrictions set forth in this Agreement, during the Term of this Agreement, if Franchisee is not in default under this Agreement, Franchisee will have exclusivity with regard to its Residential Real Estate Brokerage in an area defined by U.S. postal zip codes (hereinafter called the "Protected Area"). The Protected Area and the geographic scope of the U.S. postal zip codes used to define it will be determined as of the Effective Date.

Source: Item 22 — CONTRACTS (FDD page 88)