What is the Face Foundrie franchisee's obligation regarding the use of the System and Marks?

2. GRANT OF RIGHTS.

• 2.01 Grant of Franchise. Subject to the terms of this Agreement, Franchisor grants to Franchisee the right, and Franchisee assumes the obligation, to operate a Facial Bar from the location set forth on Exhibit A hereto (the "Premises") and to use the System and the Marks solely in connection therewith, for a term of ten (10) years, commencing on the Effective Date of this Agreement (the "Term").

Franchisee may not conduct the business of the Facial Bar or use the System at any site other than the Premises, or relocate the Facial Bar, without Franchisor's prior written consent.

Any approved relocation of the Facial Bar shall be at Franchisee's sole cost and expense, and Franchisor shall have the right to charge Franchisee a relocation fee equal to One Thousand Dollars ($1,000) plus any expenses Franchisor incurs in facilitating the relocation.

The option for renewal of the rights granted to Franchisee in this Agreement is described in Section 15 below.

• 5.06 Modification by Franchisor. Franchisee recognizes and agrees that from time to time hereafter, Franchisor may change, modify or improve the System, including, without limitation, modifications to the Operations Manual, the processes and systems to support the Facial Bar, the products and services offered for sale, the required equipment, the signage, the presentation and usage of the Marks, and the adoption and use of new, modified or substituted Marks or other proprietary materials.

Franchisee agrees to accept, use and/or display for the purposes of this Agreement any such changes, modifications or improvements to the System, including, without limitation the adoption of new, modified or substituted Marks, as if they were part of the System as of the date of this Agreement, and Franchisee agrees to make such expenditures as such changes, modifications or improvements to the System may require.

• 5.07 Modification by Franchisee. If Franchisee develops any new modification, concept, process, improvement or slogan (including any and all inventions, discoveries, trademarks and improvements)

in the operation or promotion of the Facial Bar or to the System, the same shall be deemed a work made for hire, and Franchisee shall promptly notify Franchisor of, and provide Franchisor with all necessary information regarding, such modification, concept, process, improvement or slogan, without compensation to Franchisee. Franchisee acknowledges that any such modification, concept, process, improvement or slogan shall become Franchisor's sole and exclusive property and that Franchisor may use and/or allow other franchisees to use the same in connection with the System or the operation of Face Foundrié Facial Bars, without compensation to Franchisee. Franchisee shall assist Franchisor, at Franchisor's expense, in obtaining execution of all documents and taking all other actions which Franchisor may reasonably request to make possible the filing of patent applications for any such developments and to establish that Franchisor is the owner of both the developments and any patent applications made in connection with such developments

Agreement, and if it does so, Franchisee will use the form of Membership Agreement that Franchisor provides to Franchisee, and will not make any modifications in the forms without Franchisor's prior written consent. Notwithstanding the foregoing, Franchisee acknowledges that it is responsible for ensuring that the Membership Agreements and its offer of Memberships comply with all applicable laws for its Facial Bar. If such laws require that Franchisee modify the Membership Agreements or the terms of Membership that if offers, Franchisee may do so only to the extent necessary to comply with such applicable laws, provided that Franchisee provide Franchisor with written notice at least fourteen (14) days prior to such modifications. Any Membership Agreement that has been modified without Franchisor's consent shall be void. Franchisee agrees to comply with Franchisor's System standards regarding Memberships, including regarding the following matters: (i) the types and terms of Memberships it may offer; (ii) the form(s) of Membership Agreement; (iii) the terms and conditions upon which a member may transfer his or her Membership from the Facial Bar to another Face Foundrié Facial Bar and vice versa; (iv) admission of members of the Facial Bar to other Face Foundrié Facial Bars; (v) procedures to follow when members transfer to or from the Facial Bar; (vi) use and acceptance of coupons, passes, certificates, and gift cards; (vii) group accounts and group Memberships (and discounts applicable thereto); and (viii) payment terms for Memberships. Franchisee agrees that Franchisor and its Affiliates own all information relating to clients and members of the Facial Bar, including names, addresses, telephone numbers, e-mail addresses, buying habits, preferences, demographic information and related information, that it comprises personal information and part of the Confidential Information, and that Franchisor and its Affiliates may use such membership information in its and their business activities.

Franchisee will not include the Marks on any employment- or personnel-related documents, including without limitation employment applications, employment agreements, or methods of payment to its employees.

Franchisee will receive and maintain in each of its employee's files an acknowledgement that the employee works for Franchisee and not Franchisor, and Franchisee will on a monthly basis or as otherwise requested by Franchisor acknowledge in writing to Franchisor that such acknowledgements have been completed and maintained in Franchisee's personnel files.

• (a) Franchisor shall have the right to specify or require that certain brands, types, makes, and/or models of communications, computer systems, and hardware to be used by, between, or among Face Foundrié Facial Bars, including without limitation: (i) computerized data processing systems, data, audio, video, and voice storage, retrieval, and transmission systems for use at Face Foundrié Facial Bars, between or among Face Foundrié Facial Bars, and between and among the System and Franchisor and/or Franchisee; (ii) credit card, debit card, and other non-cash payment systems, and related hardware; (iii) physical, electronic, and other

security systems; (iv) tablets, printers and other peripheral devices; (v) archival back-up systems; and (vi) internet access mode and speed (collectively, the "Computer System").

• (c) Franchisee shall make, from time to time, such upgrades and other changes to the Computer System and Required Software as Franchisor may request in writing, and Franchisor may periodically require Franchisee, at its expense, to upgrade or update the Computer System and Required Software to remain in compliance with the standards, specifications and requirements required by Franchisor (collectively, "Computer Upgrades").

At Franchisor's sole discretion, Franchisor is entitled to prosecute, defend and/or settle any proceeding arising out of Franchisee's use of any Mark pursuant to this Agreement, and, if Franchisor undertakes to prosecute, defend and/or settle any such matter, Franchisor has no obligation to indemnify or reimburse Franchisee for any fees or disbursements of any legal counsel retained by Franchisee.

6.01 Initial Franchise Fee. Upon the execution of this Agreement, Franchisee shall pay to Franchisor an initial franchise fee in an amount set forth on Exhibit A (the "Initial Franchise Fee"). Franchisee acknowledges and agrees that the Initial Franchise Fee is paid as consideration for Franchisor granting Franchisee the right to develop, open and operate the Facial Bar using the Marks and the System, that the Initial Franchise Fee is fully earned by Franchisor at the time this Agreement is executed, and that the Initial Franchise Fee shall not be refundable for any reason.

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