What is the Healthsource Chiropractic franchisee's obligation regarding the physical location of their clinic?

Before you open your HealthSource Chiropractic Clinic for business, we or our designee will:

• 1. Designate your Protected Territory (Franchise Agreement Section 2.3). See Item 12 for additional information about your Protected Territory. You may only operate a Clinic physically located in your Protected Territory.
• 1. Review and approve or disapprove your proposed Clinic site (Franchise Agreement – Section 3.1). You must seek and select a mutually agreeable site within your Site Selection Area within 120 days after signing the Franchise Agreement. We will inform you of our approval or disapproval of your proposed site within 15 days of your proposal of the Clinic site. The site must meet our criteria for demographics; traffic patterns; parking; ingress and egress; character of neighborhood; competition from, proximity to, and nature of other businesses; size; appearance; and other physical and commercial characteristics. We require your Clinic to be a minimum of 1,800 square feet in size. Clinics are typically located in high-traffic strip malls. For each proposed site, you must submit to us, in the form we specify, a description of the site and any other information or materials that we may require. We will not unreasonably withhold approval of a site that meets our standards for general location and neighborhood, traffic patterns, parking size, layout, lease terms, and other physical characteristics for HealthSource Chiropractic Clinics. If you fail to identify a mutually agreeable site by the established deadline, then we may terminate your Franchise Agreement. Our approval of a proposed site is not, and should not be deemed, a judgment by us concerning the likelihood of success of a Clinic at the location, or the relative desirability of the site in comparison to other sites within the Protected Territory.
• 1. If we require, approve the terms of the lease for the premises of your Clinic (Franchise Agreement – Section 3.1). You must lease the premises for the Clinic within 180 days after signing the Franchise Agreement. We may terminate your Franchise Agreement if you do not sign your lease by this deadline. Generally, we do not own premises that are leased to

HealthSource Chiropractic Clinics. Your lease must include the provisions required by the Franchise Agreement, or you must obtain our express written approval as to any variations or exclusions of such provisions in your lease.

1. Furnish you with one set of plans, specifications, and other materials reflecting our suggestions and requirements for layout, equipment, fixtures, decorations and signs for a HealthSource Chiropractic Clinic (Franchise Agreement – Section 3.2). Using an architect designated or approved by us, you must modify the plans and specifications to comply with all local ordinances, building codes, permit requirements, and lease requirements and restrictions applicable to the premises. You must submit final construction plans and specifications to us for our approval before you begin construction at the premises and you must construct the Clinic in accordance with those approved plans and specifications.

You must open your Clinic within 240 days after signing your Franchise Agreement if you are a Conversion Clinic or within 365 days if you are a Start-up Clinic. (Franchise Agreement – Section 3.3).

Source: Item 11 — Franchisor's Assistance, Advertising, Computer Systems, and Training (FDD pages 34–44)