What conditions must be satisfied for a Face Foundrie franchisee to obtain a successor franchise?

15. RENEWAL RIGHTS.

15.01 Right To Acquire a Successor Franchise. Franchisee has the right, subject to the conditions contained in this Section 15, to acquire a successor franchise for the Facial Bar for one (1) additional ten (10) year term on the terms and conditions of the then-current form of franchise agreement for Face Foundrié Facial Bars, if upon expiration of the applicable Term: (a) Franchisee and its Owners and Affiliates are in compliance with this Agreement and any other agreements with Franchisor or any of its Affiliates, and Franchisee and its Owners have been in substantial compliance with this Agreement throughout the Term; (b) Franchisor has not notified Franchisee of its decision that any federal or applicable state legislation, regulation or rule, which is enacted, promulgated or amended after the date hereof, may have an adverse effect on Franchisor's rights, remedies or discretion in franchising Face Foundrié Facial Bars such that it creates an

unreasonable or overly burdensome requirement on Franchisor's ability to continue to offer franchises in such location; and (c) the following additional conditions have been met: (i) Franchisee maintains the right to possession of the Premises for the term of the successor franchise agreement; (ii) Franchisee maintains all permits and licenses necessary to operate the Facial Bar; (iii) Franchisee is current in all obligations to Franchisor and its Affiliates, and System lessors, vendors and suppliers; and (iv) if required by Franchisor, Franchisee enters into an agreement with Franchisor whereby Franchisee agrees within a specified time period (not to exceed six (6) months), to send required personnel, at Franchisee's expense, to such training programs established and required by Franchisor. Upon the exercise of the right to acquire a successor franchise, Franchisee shall pay to Franchisor at the time of renewal a renewal fee equal to 25% of the then current initial franchise fee.

Franchisee's acquisition of a successor franchise is further conditioned on Franchisee refurbishing the premises of the Facial Bar at Franchisee's expense to conform the Facial Bar to the then-current image for new Face Foundrié Facial Bars, including, without limitation, with respect to trade dress, color schemes and presentation of the Marks ("Refurbishments"). Refurbishments may include structural changes, installation of new equipment and signs, remodeling, redecoration and modifications to existing improvements. Refurbishments are intended to be large-scale re-equipping, refurbishing and remodeling of the Facial Bar, and nothing contained in this Section 15.01 will limit Franchisee's other obligations under this Agreement or the Operations Manual.

• 15.02 Notices. Franchisee must give Franchisor written notice of its desire to acquire a successor franchise not less than six (6) months nor more than nine (9) months prior to the expiration of this Agreement. Notwithstanding any notice or communication of Franchisor to Franchisee that Franchisee has the right to acquire a successor franchise for the Facial Bar, Franchisee's right will be subject to its continued compliance with all the provisions of this Agreement up to the date of its expiration. The written notice must include a plan to Franchisor outlining the Refurbishments that Franchisee plans to undertake prior to the expiration of this Agreement. Each such plan must be approved by Franchisor prior to Franchisee commencing any Refurbishments.
• 15.03 Agreements. If Franchisee has the right to acquire a successor franchise in accordance with Section 15.01 and states its desire to exercise that right in accordance with Section 15.02, Franchisor and Franchisee (and its Owners) will execute the form of franchise agreement (which may contain provisions, including royalty fees, materially different from those contained herein) and all ancillary agreements (including, personal guarantees by Franchisee's Owners on such terms as Franchisor determines to be appropriate) which Franchisor then customarily uses in granting franchises for the operation of Face Foundrié Facial Bars (collectively, the "New Agreements"), and Franchisee and its Owners must execute general releases, in form and substance satisfactory to Franchisor, of any and all claims against Franchisor, and its Affiliates, officers, directors, managers, employees, agents, successors and assigns. Failure by Franchisee (and its Owners) to sign such agreements and releases within thirty (30) days after delivery to Franchisee shall be deemed an election by Franchisee not to acquire a successor franchise for the Facial Bar.

Source: Item 22 — CONTRACTS (FDD pages 73–74)