What does the Extreme Art Studio Franchise Agreement address?

| | | FORM OF OWNERSHIP | | | ATTACHMENT D | | | OWNERS AGREEMENT | |

ATTACHMENT E EXTREME ART RIDER

FRANCHISE AGREEMENT

THIS FRANCHISE AGREEMENT ("Franchise Agreement") is made and entered into by and between EXTREME ART STUDIO FRANCHISING, LLC, a limited liability company formed under the laws of the State of Minnesota, with its principal business address at 7566 Market Place Drive Eden Prairie, MN 55344 ("we," "us," or "our"), and the Franchise Owner identified on the signature block of this Franchise Agreement ("Franchisee," "you" or "your"), made effective as of the date listed in Attachment A ("Effective Date"). If more than one person or entity is listed as the Franchisee, each such person or entity shall be jointly and severally liable for all rights, duties, restrictions and obligations under this Franchise Agreement.

1. PREAMBLES, ACKNOWLEDGMENTS, AND GRANT OF FRANCHISE.

1.1 PREAMBLES.

• 1.1.1 We and our affiliates have, with considerable effort, developed (and continue to develop and modify) a system and franchise opportunity for the establishment, operation and promotion of a business that offers painting and immersive art related activities focusing on fun for people aged 3 years through adults in a class, event and themed party format and to sell retail items. We offer an in-studio format ("Extreme Art Studio Business") that operates from an approved studio location ("Studio")
• 1.1.2 We and our affiliates use, promote and license others to use and promote certain trademarks, service marks and other commercial symbols in operating an Extreme Art Studio Business, which have gained, and may continue to gain, public acceptance and goodwill, and we may create, use and license other trademarks, service marks and commercial symbols to identify Extreme Art Studio Businesses (collectively, the "Marks").
• 1.1.3 We grant to persons who meet our qualifications and are willing to undertake the investment and effort, a franchise to own and operate an Extreme Art Studio Business offering the products and services we authorize using our business formats, business system, methods, procedures, signs, designs, layouts, standards, specifications, and the Marks we authorize ("System").
• 1.1.4 As a franchise owner of an Extreme Art Studio Business, you will comply with this Franchise Agreement, including any riders, addenda, or exhibits thereto, and all System Standards (as defined in Section 4.2) in order to maintain the high and consistent quality that is critical to attracting and keeping customers for Extreme Art Studio Businesses and preserving the goodwill of the Marks.
• 1.1.5 You have applied for a franchise to own and operate an Extreme Art Studio Business and have provided us with certain information in support of your application.

1.2 ACKNOWLEDGMENTS. You acknowledge that:

• 1.2.1 you recognize that, like any other business, the nature of the business that an Extreme Art Studio Business conducts may, and probably will, evolve and change over time;
• 1.2.2 attracting customers for the Extreme Art Studio Business will require you to make consistent marketing efforts in your community through various methods, including media advertising, direct mail advertising, networking, and display and use of promotional materials;

• 1.2.3 retaining students for the Extreme Art Studio Business will require you to have a high level of customer service and adhere strictly to the System and our System Standards, and to commit to maintain System Standards (as defined in Section 4.2);
• 1.2.4 in all of their dealings with you, our officers, directors, employees and agents act only in a representative, and not in an individual, capacity and that business dealings between you and them as a result of this Franchise Agreement are deemed to be only between you and us;
• 1.2.5 you have represented to us, to induce our entry into this Franchise Agreement, that all statements you have made and all materials you have given us are accurate and complete and that you have made no misrepresentations or material omissions in obtaining the franchise;
• 1.2.6 you understand and accept that this Franchise Agreement's terms and covenants are reasonably necessary for us to maintain our high standards of quality and service and to protect and preserve the goodwill of the Marks;
• 1.2.7 we have the right to restrict your sources of products and services and require you to sell certain products, as provided in various sections of this Franchise Agreement, including Section 8.3 below; and
• 1.2.8 you alone will exercise day-to-day control over all operations, activities and elements of the Extreme Art Studio Business, and that under no circumstance shall we do so or be deemed to do so.
• 1.3 CORPORATION, LIMITED LIABILITY COMPANY, OR PARTNERSHIP. If you are a corporation, limited liability company, or general or limited partnership (collectively, an "Entity"), you agree and represent that:
  • 1.3.1 You have the authority to execute, deliver and perform your obligations under this Franchise Agreement and all related agreements, and are duly organized or formed and validly existing in good standing under the laws of the state of your incorporation or formation;
  • 1.3.2 Your organizational documents, operating agreement or partnership agreement, as applicable, recite that this Franchise Agreement restricts the issuance and transfer of any ownership interests in you, and all certificates and other documents representing ownership interests in you will bear a legend referring to this Franchise Agreement's restrictions;
  • 1.3.3 Attachment C to this Franchise Agreement completely and accurately describes all of your owners and their interests in you as of the Effective Date;
  • 1.3.4 Each of your direct and indirect owners (i.e., each person or entity holding a direct or indirect ownership interest in the Franchisee under this Franchise Agreement), and the spouse of each such owner, during this Franchise Agreement's term will execute an Owners Agreement in the form attached hereto as Attachment D, undertaking personally to be bound, jointly and severally, by all provisions of this Franchise Agreement and any ancillary agreements between you and us. You and your owners agree to sign and deliver to us revised Attachments C to reflect any permitted changes in the information that Attachment C now contains;
  • 1.3.5 You must identify on Attachment C one of your owners who is a natural person with at least fifty-one percent (51%) ownership interest and voting power in you and who will have the authority of a chief executive officer ("Operating Owner"). In the event that your Operating

Owner ceases to own at least a fifty-one percent (51%) ownership interest in you, you must deliver to us a revised Attachment C to accurately identify the Operating Owner for our review and approval, as otherwise required by this Franchise Agreement; and

1.3.6 The Operating Owner is authorized to deal with us on your behalf in respect of all matters whatsoever which may arise in respect of this Franchise Agreement, and any decision made by the Operating Owner will be final and binding upon you. We will be entitled to rely solely upon the decision of the Operating Owner in any such dealings without the necessity of any discussions with any other party named in this Franchise Agreement, and we will not be held liable for any actions taken by you or otherwise, based upon any decision or actions of the Operating Owner.

1.4 GRANT AND TERM OF FRANCHISE.

• 1.4.1 Subject to all of the terms and conditions of this Franchise Agreement, we grant you a franchise to operate an Extreme Art Studio Business (1) a single Extreme Art Studio Business ("Single Franchise"); (2) up to two Extreme Art Studio Businesses ("Multi-2"); or (3) up to three Extreme Art Studio Businesses ("Multi-3") (collectively, the Multi-2 and Multi-3 are referred to as "Standard Franchise(s)"). If we grant you a Standard Franchise, you must sign our Multi-Franchise Addendum the form of which is attached to the Franchise Disclosure Document in Exhibit H. Prior to opening the second and each subsequent Extreme Art Studio Business under a Standard Franchise, you and we will execute the then-current form of Extreme Art Rider ("Extreme Art Rider"), the current form of which is attached to this Franchise Agreement in Attachment E but which may vary materially and substantially from the form attached to this Franchise Agreement. If you operate multiple Extreme Art Studio Businesses, each reference to the "Franchised Business" herein shall refer to each individual Extreme Art Studio Business that you operate under this Franchise Agreement, unless otherwise specified. All obligations under this Franchise Agreement shall apply individually to each Extreme Art Studio Business you operate.
• 1.4.2 We must authorize the specific location for your Studio (each an "Approved Location"). The Approved Location for your initial Extreme Art Studio Business will be designated in Attachment B, and the Approved Location for any additional Extreme Art Studio Businesses will be specified in the Extreme Art Rider applicable thereto. If the Approved Location for your initial Extreme Art Studio Business has not been selected and approved at the time this Franchise Agreement is signed, or the Approved Location for any of your subsequent Extreme Art Studio Businesses have not been selected and approved at the time the Extreme Art Rider applicable thereto is signed, Attachment B (with respect to the initial Extreme Art Studio Business) or the applicable Extreme Art Rider (with respect to any subsequent Extreme Art Studio Business) will describe the Approved Location in general terms. When we subsequently approve a location for your Extreme Art Studio Business, we will complete Attachment B-1 or our then-current form of Attachment E-1, as applicable, to specify the address of that location, and such location will automatically become the Approved Location for the applicable Extreme Art Studio Business as if originally set forth in Attachment B or the Extreme Art Rider. Although we may assist you, you are solely responsible for selecting each Approved Location and negotiating the lease or purchase terms for each of your Extreme Art Studio Businesses. You agree that you are not guaranteed any specific Approved Location for any of your Extreme Art Studio Businesses, and you may not be able to obtain your top choice for any of your Extreme Art Studio Businesses. You and we must reach agreement on an Approved Location for your Studio within four months after you sign this Franchise Agreement, or we have the option to terminate this Franchise Agreement.
• 1.4.3 The term of this Franchise Agreement begins on the Effective Date and expires ten years from that date, unless sooner terminated as provided herein.

• 1.5 TERRITORY. Provided that you are in full compliance with the terms and conditions of this Franchise Agreement and all other agreements with us and our affiliates, we will not establish or operate, or franchise any entity to establish or operate, an Extreme Art Studio Business using the Marks and System at any location within the Territory (as defined below) of any of your Extreme Art Studio Businesses, once such Territory has been determined. The "Territory" shall be the specific geographical area we specify for the applicable Extreme Art Studio Business and may be described in terms of contiguous zip codes, street boundaries, and county boundaries or depicted on a map included on Attachment B-1 or the applicable Extreme Art Rider. .
• 1.6 TERRITORIAL RIGHTS WE RESERVE.

Source: Item 22 — CONTRACTS (FDD page 49)