What is the purpose of the Franchise Agreement mentioned for Floyds 99?

establish a FLOYD'S 99 Shop at a location identified herein or to be later identified, and the Franchisor desires to grant the Franchisee the right to operate a FLOYD'S 99 Shop at such location under the terms and conditions which are contained in this Agreement.

2. GRANT OF FRANCHISE

• 2.1 Grant of Franchise. The Franchisor grants to the Franchisee, and the Franchisee accepts from the Franchisor, the right to use the Marks and Licensed Methods in connection with the establishment and operation of one FLOYD'S 99 Shop, at the location described in Section 3.1 of this Agreement. The Franchisee agrees to use the Marks and Licensed Methods, as they may be changed, improved, and further developed by the Franchisor from time to time, only in accordance with the terms and conditions of this Agreement.
• 2.2 Scope of Franchise Operations. The Franchisee shall at all times comply with the Franchisee's obligations hereunder and shall continuously use best efforts to promote and operate the FLOYD'S 99 Shop. The Franchisee shall not engage in any business other than the operation of the Barbershop. The Franchisee shall utilize the Marks and Licensed Methods to operate all aspects of the business franchised hereunder in accordance with the methods and systems developed and prescribed from time to time by the Franchisor, all of which are a part of the Licensed Methods. The Franchisee's FLOYD'S 99 Shop shall offer all services and products as the Franchisor shall designate. The Franchisee shall be restricted from offering or selling any services or products not previously approved by the Franchisor in writing and shall further be restricted from offering the authorized services or distributing the authorized products for nonretail or off-site sale except as permitted by the Franchisor in writing.

3. FRANCHISED LOCATION AND TERRITORIAL RIGHTS

3.1 Franchised Location. The Franchisee is granted the right and franchise to own and operate a FLOYD'S 99 Shop at the address and location which shall be set forth in Exhibit I, attached hereto ("Franchised Location"). If, at the time the parties execute this Agreement, the Franchised Location cannot be designated as a specific address because a location has not been selected and approved, then the Franchisee shall promptly take steps to choose and acquire a location for its FLOYD'S 99 Shop within the

• "Designated Area," set forth in Exhibit I. In such circumstances, the Franchisee shall select and propose to the Franchisor for the Franchisor's prior approval a specific location for the Franchised Location which, once approved by the Franchisor, shall then be described in the rider to Exhibit I.
• 3.2 Protected Territory. Subject to the Franchisor's reservation of rights described in Section 3.4 below, the Franchisor shall not establish and operate, or franchise another person or entity to establish and operate, a FLOYD'S 99 Shop within the geographic area described in Exhibit I, attached hereto (the "Protected Territory"). Once Franchisor has defined the Protected Territory, Franchisee will have no further territorial or other rights in those portions of the Designated Area that are located outside of the Protected Territory.
• 3.3 Limitation on Franchise Rights; Relocation. The rights that are granted to the Franchisee are for the specific Franchised Location and cannot be transferred to an alternative Franchised Location, or any other location, without the prior written approval of the Franchisor, which approval shall not be unreasonably withheld. The Franchisee shall not operate another business, offer services or products which are part of the Licensed Methods at any site other than the Franchised Location (except for other Franchised Locations covered by other Franchise Agreements with the Franchisee), fill wholesale orders, sell products or services by mail order or through catalogs or the Internet, transship or reship products, or offer any other type of off-site service or sale of products. If Franchisee desires to relocate the FLOYD'S 99 Shop or is unable to continue the operation of the FLOYD'S 99 Shop at the Franchised Location because of damage to or destruction of the FLOYD'S 99 Shop, then Franchisee may request Franchisor's approval to relocate the FLOYD'S 99 Shop to another location in the Protected Territory, which approval shall not be unreasonably withheld. If Franchisor grants Franchisee the right to relocate the FLOYD'S 99 Shop, then Franchisee shall comply with the site selection and construction procedures set forth in Article 5 and pay Franchisor the then-current relocation fee.
• 3.4 Franchisor's Reservation of Rights. The Franchisee acknowledges that its franchise rights as granted are non-exclusive and that the Franchisor, for itself and its successors and affiliates, retains the rights, among others:
  • a. to use, and to license others to use, the Marks and Licensed Methods in connection with the operation of FLOYD'S 99 Shops, at any location except within the Protected Territory;
  • b. to use the Marks to identify any type of services and products, promotional and marketing efforts or related items, and to identify products and services distributed or otherwise made available through alternative channels of distribution other than through FLOYD'S 99 Shops, at any location, whether within or outside of the Protected Territory, including but not limited to, at temporary events and venues or by way of wholesale distribution, Internet marketing or distribution, by mail order, catalog sales, social media marketing, telemarketing, other direct marketing or retail store product display;
  • c. to use and license others to use the Marks and Licensed Methods within or outside the Protected Territory in connection with the operation of Barbershops within "Captive Audience Facilities" which are defined as facilities where people are congregating for a primary purpose unrelated to the Barbershop business, creating significant foot traffic in the facility, including airports and other transportation hubs, hospitals, college campuses, convention centers, grocery stores, department stores, resorts and hotels and within office buildings, but not including lifestyle centers, town centers, "big box" retail centers and regional shopping malls. The Franchisor and its affiliates reserve the right to contract with Captive Audience Facilities to develop and operate Barbershops within these facilities and, if the contract includes such a location within the Franchisee's Protected Territory, the Franchisor will notify the Franchisee of the opportunity to

develop and operate the proposed Barbershop within the Captive Audience Facility, on the terms and conditions negotiated by the Franchisor in the contract. The Franchisee agrees to respond to the Franchisor within 15 days of receipt of notice of the proposed Barbershop, whether the Franchisee wishes to develop the proposed Barbershop under the terms of the contract that the Franchisor has negotiated. If the Franchisee elects not to develop the proposed Barbershop, the Franchisor, one of its affiliates, or another franchisee may be granted the right to develop the proposed Barbershop and the Franchisee agrees that in such case, the Franchisee will not have any further rights to the proposed Barbershop or the location of the proposed Barbershop during the term of the contract between the Franchisor and the Captive Audience Facility; and

d. to use and license the use of other proprietary marks or methods in connection with the sale of products and services similar to those which the Franchisee will sell, whether in alternative channels of distribution, including but not limited to, the Internet, or in connection with the operation of retail hair care businesses, at any location, whether within or outside of the Protected Territory, which businesses are similar to, or different from FLOYD'S 99 Shops, on any terms and conditions as the Franchisor deems advisable.

4. INITIAL FEES

4.1 Initial Franchise Fee.

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