Facial Bar.

ITEM 8. RESTRICTIONS ON SOURCES OF PRODUCTS AND SERVICES

To ensure that the highest degree of quality and service is maintained, you must operate the Facial Bar in strict conformity with the methods, standards, and specifications as we may from time to time prescribe in the Operations Manuals or otherwise in writing.

Required Purchases and Designated Suppliers

To ensure a uniform image and quality of products and services throughout the System, all products, supplies, equipment, technology, furnishings, uniforms, fixtures, inventory, packaging, décor items, signs, and other items used, sold, displayed or distributed in your Facial Bar (i) must comply with our methods, standards, specifications and requirements, and (ii) must be procured from manufacturers, distributors, and suppliers who demonstrate to our continuing reasonable satisfaction the ability to meet our standards, specifications, and requirements, who possess adequate quality controls and capacity to supply your needs promptly and reliably, and who have been approved by us in the Operations Manuals or otherwise in writing. You may not purchase or lease, offer or sell any products or services, or use at your Facial Bar any products or services that we have not previously approved as meeting our standards, specifications and requirements.

You may purchase these items from any supplier that meets our standards and specifications, unless we designate one or more exclusive suppliers for an item, in which case, you must purchase the item from such exclusive supplier(s). We may designate at any time and for any reason, a single or multiple suppliers for these items and require you to purchase exclusively from the designated supplier or suppliers, which exclusive designated supplier(s) may be us or an affiliate of ours. We may disapprove of products and suppliers based on our desire to consolidate System purchases through fewer suppliers.

As of the date of this Disclosure Document, we have 10 mandatory suppliers (other than us and our affiliates as described below) that you are required to use to purchase certain proprietary products and services prior to

commencing operations of your Facial Bar and on an ongoing basis. We do not expect to approve another source of supply for any of these items that we have described in this paragraph. You may not have the right to substitute any new supplier for these items, or to request us to appoint or approve any new supplier.

• (1) You must purchase from a mandatory vendor an array of skincare products and tools sold at retail and used in the operation of your Facial Bar (including Face Foundrié-branded items), which as of the date of this Disclosure Document includes collagen spritz, serums, moisturizers, facial cups and gua sha, other general facial tools, shopping bags and other branded collateral;
• (2) You must obtain your facial bar management software, which handles scheduling, appointment booking, inventory, and payments, from our mandatory vendor;
  • (3) You must use our mandatory vendor for online accounting software;
• (4) You must use our mandatory vendor for a financial performance data reporting platform (the cost of which is included as part the Technology Fee you pay to us);
  • (5) You must use our mandatory vendor for digital advertising agency services;
  • (6) You must purchase architectural services from a vendor we require;
  • (7) You must purchase millwork for your Facial Bar from a vendor we require;
  • (8) You must purchase your branded exterior signage from a vendor we require;
• (9) You must purchase branded interior signage, along with brackets, from a vendor we require; and
  • (10) You must purchase certain skin treatment machines from a vendor we require.

In addition, we currently have a sole approved vendor to provide direct mail services.

You must also adhere to our standards and specifications for the construction and design of the Facial Bar, which may include requirements for the interior and exterior layout, signage, fixtures and trade dress including the color scheme. We are free to modify any of our methods, standards, specifications and requirements at our discretion. These modifications will be communicated to you via our Operations Manual or otherwise in writing. We have no obligation to make available to prospective suppliers the standards and specifications that we deem confidential. We may, at any time, change, delete, add to or modify any of our standards and specifications. These changes, deletions, additions or modifications, which will be uniform for all franchisees, may require additional expenditures by you. You must prepare all required construction plans and specifications and ensure they comply with building codes and ordinances. If your construction plans and specifications deviate from our plans and specifications, you must obtain our approval of the changes. It is your responsibility to obtain all required licenses, permits and approvals associated with constructing and operating your Facial Bar.

Us and Our Affiliates as Suppliers

As of the date of this Disclosure Document, our affiliate is the sole source of certain optional products in the Initial Opening Package, that you will purchase in connection with the opening of your Facial Bar. Our affiliate is also a supplier of other products, which as of the date of this Disclosure Document are optional, for use in the ongoing operation of your Facial Bar, including popsockets, key chains, and gift card boxes. Otherwise, as of the date of this Disclosure Document, we or our affiliates are not suppliers of any products, supplies,

equipment or other items used in the operation of the Facial Bar. We may supply you with uniforms, promotional materials, service menus, and other materials utilizing our Marks at our cost plus a markup for handling, and although we are not currently requiring you to purchase such goods from us, from a practical matter they may not be available from other sources. We reserve the right to designate ourselves and/or any of our affiliates as an approved supplier of additional items in the future, and we may even designate ourselves or an affiliate as the sole supplier of one or more items, in which case, you would have to buy the item from us or our affiliate at our or its then-current price. Our Operations Manual and other communications will identify our standards and specifications and the names of approved or designated suppliers. If we become a designated supplier, we may charge you a reasonable mark-up, surcharge and handling fee on any items you purchase from us. Monies you pay to us will include a profit for us.

Rebates and Allowances

In addition to the above, we and our affiliates have the right to receive payments or other benefits like rebates, discounts and allowances from authorized suppliers based upon their dealings with you and other franchisees and we may use the monies we receive without restriction for any purpose we deem appropriate or necessary. We do and reserve the right to receive payments from authorized suppliers that we retain as profit related to their dealings with our franchisees and the System, and suppliers may pay us based upon the quantities of products the System purchases from them. These payments will usually be based upon an amount per unit or percentage rebate, and generally range from 2% to 10% of the purchases you make from the vendor. We may receive payments from a supplier as a condition of our approval of that supplier. We do not provide any material benefits to you, such as the grant of additional franchises and/or territories, based on your use of designated or approved suppliers. There are currently no purchasing or distribution cooperatives in our System. We have negotiated price terms with some suppliers.

Source: Item 8 — RESTRICTIONS ON SOURCES OF PRODUCTS AND SERVICES (FDD pages 27–31)