What rights does the Kidokinetics Franchise Agreement grant regarding the operation of the Kidokinetics Business?

AGREEMENT

1. GRANT OF FRANCHISE. Franchisor hereby grants to Franchisee and Franchisee accepts, upon the terms and conditions herein contained, the license to operate a Kidokinetics franchise (the "Kidokinetics Business" or the "Franchised Business"), using only the Marks licensed hereunder, in strict conformity with the System, which may be changed, improved and further developed by Franchisor from time to time. This grant applies only to the territory which will be selected by Franchisee and approved by Franchisor, which is more particularly described in Section 2 herein and in Attachment "B" (the "Territory"). Franchisee understands and acknowledges that present or future franchisees of Franchisor may operate under different forms of franchise agreements and consequently that Franchisor's obligations and rights with respect to its various franchisees may differ materially in certain circumstances.

KidokineTics

2. TERRITORY

• 2.1. Territory. This Agreement grants Franchisee the right to operate the Kidokinetics Business from a single location within a Territory ("Kidokinetics Business Location") described and/or mapped in Attachment "B" to this Agreement and incorporated into this Agreement. Except as otherwise provided for in this Agreement, as long as Franchisee is in compliance with the terms and conditions hereof, Franchisor agrees it will not operate, nor permit any other franchisee to operate, a Kidokinetics Business within the Territory using the same Marks. Franchisee acknowledges that other franchisees may operate their Kidokinetics Businesses from home offices located within the Territory, however, such Franchisee shall not be granted the right to operate within the Territory. Franchisee may not operate outside the Territory without express written authorization from Franchisor.
• 2.2. Reservation of Rights. Franchisee acknowledges and agrees that Franchisor and any parties Franchisor designates will have the right to: (i) establish and operate, and license third parties the right to establish and operate, other franchised businesses using the Marks and System at any location outside of the Territory; (ii) acquire, merge with, engage in joint ventures with, or otherwise affiliate with, and thereafter own and operate and franchise others the right to own and operate, any business of any kind, including businesses that offer products that are similar to those provided by a Franchised Business, within or outside the Territory; (iii) open and operate, or license third parties the right to open or operate, businesses that offer products and services similar to the Franchised Business under marks other than the Marks at any location; (iv) sell and distribute, directly or indirectly, or license others to sell and distribute, directly or indirectly, any products, services or merchandise, from any location or to any purchaser, through any channel or method of distribution (including, but not limited, to virtual classes, sales made by or through telemarketing, and/or on the Internet); (v) provide the services or sell products authorized for Kidokinetics Businesses to customers whose principal residence (or principal business office, if the customer is a business entity) is within Franchisee's Territory if contact with the customer is initiated by the customer and not Franchisor; (vi) to use and license the use of technology to non-franchisee locations inside and outside the Territory; and (vii) engage in any other activities not expressly prohibited under this Agreement. Franchisee acknowledges and agrees that this Agreement does not grant it any right to (a) offer any product or service via e-commerce without prior approval by Franchisor, (b) establish an independent website or to establish a URL incorporating the Marks or any variation thereof, or (c) distribute, market, or implement Franchisor's products and services in any channel of distribution not specifically identified in this Agreement. Franchisee may not sell products through other channels of distribution such as wholesale, Internet or mail order sales. Franchisor is not required to pay Franchisor if Franchisor exercises any of its rights within the Territory. Franchisor will not be required to pay any compensation for soliciting or accepting orders inside the Territory.
• 1. TERM. The term of this Agreement will commence on the date that Franchisor signs this Agreement and will continue for 10 years, unless sooner terminated as provided in this Agreement (the "Term").
• 1. RENEWAL. Franchisee has the right to renew this Agreement for one successive, additional 10-year period, provided Franchisee has met the following conditions:
  • 4.1.1 Franchisee has notified Franchisor of Franchisee's intention to renew this Agreement in writing at least 90 days, and no more than nine months, prior to expiration of the current term;
  • 4.1.2 Franchisee has completed, to Franchisor's satisfaction, no later than 90 days prior to the expiration of the then-current term, any updates to required equipment, hardware and software necessary to bring the Franchised Business into full compliance with Franchisor's then-current System standards and specifications;
  • 4.1.3 Franchisee is not in breach of any provision of this Agreement, or any other agreement between Franchisee and Franchisor, Franchisor's affiliates, or Franchisor's designated suppliers and

• vendors, and Franchisee has substantially complied with all such agreements during their respective terms;
• 4.1.4 Franchisee has satisfied all monetary obligations Franchisee owes Franchisor, Franchisor's affiliates, or Franchisor's designated suppliers and vendors;

Source: Item 22 — CONTRACTS (FDD page 59)