What does 'development and operation' refer to in the context of a Floyds 99 shop?

ining will be offered without charging tuition or a fee; provided, however, the Franchisee will be responsible to pay all travel and living expenses associated with attending training. The Franchisor also reserves the right to provide additional training remotely by live video conferencing or other virtual means.

7. DEVELOPMENT ASSISTANCE

• 7.1 Franchisor's Development Assistance. The Franchisor, or its designee, shall provide the Franchisee with assistance in the initial establishment of the FLOYD'S 99 Shop as follows:
  • a. Provision of the initial training program to be conducted at the Franchisor's designated training facilities or at another location designated by the Franchisor, as described in Article 6 above.
  • b. Provision of assistance from the Franchisor's designated site selection service provider that shall include, without limitation, one on-site visit to the market area by a representative who will assist the Franchisee with specifications for space requirements, build out and the demographics and character of the surrounding market area. The Franchisee acknowledges that the Franchisor shall have no other obligation to provide assistance in the selection and approval of a Franchised Location other than the provision of such assistance from the Franchisor's designated provider, and approval or disapproval of a proposed Franchised Location, which approval or disapproval shall be based on information submitted to the Franchisor in a form sufficient to assess the proposed location as may be reasonably required by the Franchisor.
  • c. Design plans and specifications, directives regarding the required construction, conversion, design and decoration of the FLOYD'S 99 Shop premises, plus services from the Franchisor's designated suppliers, if any, regarding specifications for signs, decor, color, products, inventory, software, equipment, furnishings and layout.
  • d. Information regarding the selection of suppliers of equipment, inventory, items and materials used, hair care products and merchandise offered for sale in connection with the FLOYD'S 99 Shop. The Franchisor shall make available to the Franchisee a list of designated and approved suppliers, if any, of such equipment, inventory, items, materials, products, merchandise and, if available, a description of any regional or central purchase and supply agreements offered by such designated and approved suppliers for the benefit of FLOYD'S 99 franchisees.
    • e. Provision of an operations manual in accordance with Section 8.1 below.
  • f. The Franchisor will assist the Franchisee in the grand opening and grand opening marketing of the FLOYD'S 99 Shop.

8. OPERATIONS MANUAL

8.1 Operations Manual. The Franchisor shall provide to the Franchisee, either electronically or in such other manner as the Franchisor shall determine, one or more manuals, technical bulletins, or other written materials (collectively referred to as "Operations Manual") covering certain standards, specifications and operating and marketing procedures that the Franchisor requires the Franchisee to utilize in operating its FLOYD'S 99 Shop. The Operations Manual is designed to protect the Licensed Methods

and the Marks and is not intended to control the day-to-day operations of the Franchisee's FLOYD'S 99 Shop. The Franchisee shall comply with the Operations Manual as an essential aspect of its obligations under this Agreement, that the Operations Manual shall be deemed to be incorporated herein by reference, and failure by the Franchisee to substantially comply with the Operations Manual may be considered by the Franchisor to be a breach of this Agreement.

• 8.2 Confidentiality of Operations Manual Contents. The Franchisee shall use the Marks and Licensed Methods only as specified in the Operations Manual. The Operations Manual is the sole property of the Franchisor and shall be used by the Franchisee only during the term of this Agreement and in strict accordance with the terms and conditions hereof. The Franchisee shall not print or duplicate the Operations Manual nor disclose its contents to persons other than its employees or officers who have signed a confidentiality and noncompetition agreement in a form approved by the Franchisor. The Franchisee shall return the Operations Manual to the Franchisor upon the expiration, termination or assignment of this Agreement.
• 8.3 Changes to Operations Manual. The Franchisor reserves the right to revise the Operations Manual from time to time as it deems necessary to update or change operating and marketing techniques or standards and specifications. The Franchisee shall download and update its copy of the Operations Manual as instructed by the Franchisor and shall conform its operations to the updated provisions within 30 days of receipt of each update. The Franchisee acknowledges that a master copy of the Operations Manual maintained by the Franchisor at its principal office shall be controlling in the event of a dispute relative to the content of any Operations Manual.

9. OPERATING ASSISTANCE

• 9.1 Franchisor's Services. The Franchisor, or its designee, shall, during the Franchisee's operation of the FLOYD'S 99 Shop, make available to the Franchisee the following services:
  • a. The Franchisor shall give the Franchisee access to advertising and promotional materials as may be developed by the Franchisor, the cost of which may be passed on to the Franchisee or charged to the National Marketing Fund (defined in Section 13.2 below), at the Franchisor's option.
  • b. Upon the reasonable request of the Franchisee, consultation by telephone, facsimile or electronic mail regarding the continued operation and management of a FLOYD'S 99 Shop and advice regarding hair care services, styling trends, client relations, product purchase, supply and sale and similar advice.
  • c. Provision of seminars, webinars or programs, at a frequency to be determined by the Franchisor, on new methods, services, marketing techniques, equipment and products.
  • d. Updates of information and programs regarding the franchised business, the FLOYD'S 99 concept, the hair care industry generally, and the Licensed Methods, at a frequency to be determined by the Franchisor, including, without limitation, information about improvements to existing hair care services offered, new hair care service offerings, styling trends and products and merchandise which may be developed and made available to FLOYD'S 99 franchisees as a part of the Licensed Methods. The Licensed Methods may address (to the extent allowed by law) the maximum, minimum or other price requirements for products and services the FLOYD'S 99 Shop sells, including requirements for special offers, discounts and promotions.
  • e. The Franchisor shall make the initial training program available to replacement or additional Principal Managers and Barbershop managers, as applicable, during the term of this

Agreement. The Franchisor reserves the right to charge a tuition or fee in an amount payable in advance, commensurate with the then current published prices of the Franchisor for such training. The Franchisee shall be responsible for all wages, travel and living expenses incurred by its personnel during the training program. The availability of the training programs shall be subject to space considerations and prior commitments to new FLOYD'S 99 franchisees.

9.2 Additional Franchisor Services. Although not obligated to do so, the Franchisor may make its employees or designated agents available to the Franchisee for on-site advice and assistance in connection with the on-going operation of the FLOYD'S 99 Shop governed by this Agreement. If the Franchisee requests such additional assistance and the Franchisor agrees to provide the same, the Franchisor reserves the right to charge the Franchisee for all travel, lodging, living expenses, telephone charges and other identifiable expenses associated with such assistance, plus a fee based on the time spent by each employee on behalf of the Franchisee, which fee will be charged in accordance with the then current daily or hourly rates being charged by the Franchisor for assistance.

10. FRANCHISEE'S OPERATIONAL COVENANTS

• 10.1 Business Operations. The Franchisee shall comply with this Agreement and the Operations Manual. In addition to all other obligations contained in this Agreement and in the Operations Manual, the Franchisee shall comply with the following operational obligations.
  • a. Quality of Operations. The Franchisee shall maintain clean, efficient and high quality FLOYD'S 99 Shop operations and shall operate the business in accordance with the Operations Manual and in such a manner as not to detract from or adversely reflect upon the name and reputation of the Franchisor and the goodwill associated with the Floyd's 99 Franchising, LLC name and the Marks.
  • b. Compliance with Laws and Good Business Practices. The Franchisee shall conduct itself and operate its FLOYD'S 99 Shop in compliance with all applicable federal, state and local laws, regulations and other ordinances, including, without limitation, barbering and cosmetology regulations, health and public safety orders and regulations, barbering and cosmetology licensing laws, music licensing laws, data security laws, privacy laws, and other orders, ordinances and regulations in such a manner so as to promote a good public image in the business community. In connection therewith, the Franchisee will be solely and fully responsible for obtaining any and all licenses to carry on business at the FLOYD'S 99 Shop. The Franchisee shall provide the Franchisor with copies of all barbering and cosmetology licenses held by the Franchisee and each of its employees upon request. Each of the Franchisee's employees shall provide only those services to clients that they are licensed to provide. In addition, the Franchisee shall provide to the Franchisor immediately copies of all barbering and cosmetology board, health and sanitation department, fire department, building department, and other state or local entity or agency warnings, notices of deficiency or non-compliance, reports of inspections and other documents indicating that the Franchisee has not met or maintained the highest governmental standards as and when such reports, notices and documents become available. The Franchisee shall be solely responsible for any penalties or fines assessed for failure to abide by such laws and regulations.
  • c. Management. The Franchisee acknowledges that proper management of the FLOYD'S 99 Shop is important and shall insure that one of the principal owners of the Franchisee entity and, if applicable, the designated Principal Manager who has completed the Franchisor's initial training program, are responsible for the management of the FLOYD'S 99 Shop at all times. The Franchisee acknowledges and agrees that if this is the first Franchise Agreement between the

Franchisee and the Franchisor, the Franchisee's principal owner shall be actively involved in the day-to-day management of the FLOYD'S 99 Shop.

• d. Approved Services and Products. The Franchisee shall offer only services and products through its Barbershop which meet or exceed the minimum standards and specifications established by the Franchisor more fully described in the Operations Manual. The Franchisee shall offer all types of services and products, including specific brands, as from time to time may be prescribed by the Franchisor and shall refrain from offering any other types of services or products, including specific brands, or operating or engaging in any other type of business or profession, from or through the FLOYD'S 99 Shop that are not authorized by the Franchisor, including, without limitation, filling "wholesale orders," defined below, or any off-premises, Internet, catalog or mail order sales, without the prior written consent of the Franchisor. "Wholesale Orders" are defined as those orders or sales where the principal purpose of the purchase is for resale, not use, or any sale other than those sold over the counter at a price other than that price charged to the general public; provided, however, that volume discounted sales made on the premises at the Franchised Location to a single purchaser, not for resale, shall not be considered a "wholesale order."
• e. Payment of Obligations.

Source: Item 22 — CONTRACTS (FDD pages 57–58)