What obligation does the Area Developer undertake regarding the development of Face Foundrie Facial Bars?

Facial Bars, using the System and with respect to the style of the facilities and signs used by these Face Foundrié Facial Bars and has successfully established a reputation, demand and goodwill for their services and products; and

WHEREAS, Area Developer recognizes the value and benefits that can be derived from utilizing the System and being associated with Franchisor, the Marks and the other distinctive features of the System, and desires to obtain certain development rights to open and operate Face Foundrié Facial Bars under the System and the Marks, as well as to receive other assistance provided by Franchisor in connection therewith.

NOW, THEREFORE, for and in consideration of the covenants and agreements hereinafter set forth, the parties hereto covenant and agree as follows:

1. GRANT

• 1.1 Grant and Acceptance. Franchisor grants development rights to Area Developer, and Area Developer undertakes the obligation, pursuant to the terms and conditions of this Agreement, to develop no less than the number of Face Foundrié Facial Bars (the "Franchised Facial Bars") as set forth in Exhibit A to this Agreement. In this regard, the parties further agree that:

  • 1.1.1 Each Franchised Facial Bar developed hereunder shall be operated pursuant to a separate Face Foundrié Franchise Agreement with Franchisor (a "Franchise Agreement") that shall be executed as provided in Section 3.4 below.
  • 1.1.2 For each Franchised Facial Bar to be developed under this Agreement, Area Developer shall execute the Franchise Agreement for such Franchised Facial Bar in accordance with the deadlines set forth in the development schedule specified in Paragraph 1 of Exhibit A to this Agreement (the "Development Schedule").

• 1.1.3 Each Franchised Facial Bar developed hereunder shall be at a specific location, which shall be designated in the Franchise Agreement, that is within in the area described in Paragraph 2 of Exhibit A to this Agreement (the "Development Area"). If a "TBD" (to be determined) search area has been designated in Paragraph 2 of Exhibit A, Area Developer hereby authorizes Franchisor to designate the Development Area and complete Exhibit A subsequent to execution of this Agreement upon Franchisor approval of Area Developer's proposed territory. Until Franchisor has so designated a Development Area, Area Developer will not have any rights to a protected territory.

• 1.2 Development Area*.* Except as otherwise set forth herein (including, without limitation, the rights retained by Franchisor as described in Section 1.3), during the term of this Agreement, and so long as Area Developer is in compliance with its obligations under this Agreement and all of the Franchise Agreements between Area Developer (including any affiliate of Area Developer), Franchisor shall not establish or operate, or license anyone other than Area Developer to establish or operate, a Face Foundrié Facial Bar under the Marks and System at any location that is within the Development Area. Notwithstanding the foregoing, Franchisor has the right to operate (directly or through an Affiliate), and to grant to others the right to operate, within the Development Area and elsewhere: (a) Face Foundrié Facial Bars or other businesses using any part or all of the System and/or Marks that are operating as of the Effective Date; and (b) businesses that Franchisor or its Affiliates purchase (or as to which Franchisor or its Affiliates purchases the rights as franchisor) that are part of another franchise system or chain and either continue to operate them independently or convert them to Face Foundrié Facial Bars.

• 1.3 Franchisor's Reserved Rights.

Source: Item 23 — RECEIPTS (FDD pages 74–257)