What standards must a Kidokinetics franchisee maintain for their business and location?

SINESS AND SYSTEM

• Franchise Operations Manual. Franchisor has created and developed special procedures, standards and 8.1. methods for operating and maintaining the Kidokinetics Business, which standards are incorporated into our Franchise Operations Manual. Franchisor will loan a copy of the Franchise Operations Manual to Franchisee. The Franchise Operations Manual and other documents are subject to modification from time to time as Franchisor determines, in its sole discretion. Franchisee agrees to operate the Kidokinetics Business in accordance with the Franchise Operations Manual. Franchisor will notify Franchisee of updates, revisions, modifications or amendments to the Franchise Operations Manual. Franchisee must comply with all updates, revisions, modifications or amendments to the Franchise Operations Manual no later than 30 days after notification at Franchisee's sole expense. The Franchise Operations Manual contains Franchisor's Trade Secrets and other Confidential Information and it shall be kept confidential by Franchisee during the term of the Franchise and subsequent to the expiration and non-renewal, termination, or transfer of this Agreement. Franchisee may provide the services Franchisor designates to all Accounts located within the Territory. The term "Accounts" means any and all schools, parks, community centers, summer camps, hotels, gyms, health centers and similar establishments that wish to contract for the services of a Kidokinetics Business where the site at which the services are to be provided is located within the Territory.
• 8.2. Maintenance of Kidokinetics Business. Franchisee will maintain the Kidokinetics Business and Kidokinetics Business Location to the standards of sanitation, repair and condition required by Franchisor, which standards are specified in the Franchise Operations Manual and other written directives, standards and specifications. Franchisee, at Franchisee's expense, will make such additions, alterations, repairs, refurbishing and replacements as may be required to comply with Franchisor's standards, including, without limitation, periodic repairs or replacement of worn or impaired supplies, equipment, vehicles and signage as Franchisor may direct. Franchisor reserves the right to require Franchisee to wrap the vehicle used in connection with the operation of the Franchised Business in accordance with Franchisor's designated specifications at Franchisee's sole cost and expense.
• 8.3. Equipment and Technology Updates. Franchisee shall make any and all upgrades to equipment, machinery, tools, including, but not limited to, QuickBooks Pro online or such other management software as Franchisor designates, and computer hardware (including an office computer, a tablet computer, a telephone, a fax machine, and a smartphone), software and applications, and any technology used in conjunction therewith, as Franchisor requires in its sole and absolute discretion.
• 8.4. Trade Dress Modifications. Franchisee is aware that, to maintain and improve the image and reputation of the System, Franchisor, in its sole and absolute discretion, may change and modify identifying elements of the System, including but not limited to, the adoption and use of new vehicle wraps, new color schemes, and new or modified marks (collectively, "Trade Dress Modifications"). Franchisee, upon notice by Franchisor, shall immediately discontinue the use of any Mark that is no longer available to Franchisor or that Franchisor has otherwise discontinued, and substitute a different Mark or Marks as Franchisor directs. Franchisee will accept, use and display any such Trade Dress Modifications as if they were a part of this Franchise Agreement at the time of execution.
• 8.5. No Liability/Waiver of Claims. Franchisor will not be liable to Franchisee for any expenses, losses or damages sustained by Franchisee as a result of any of the modifications, including Trade Dress Modifications, required by this Article 8. Franchisee hereby covenants not to commence or join in any litigation or other proceeding against Franchisor or any third party, complaining of any such or seeking expenses, losses or damages caused thereby. Further, Franchisee expressly waives any claims, demands or damages arising from or related to the modifications contemplated by this Article 8, including, without

Kidokinetics

• limitation, any claim of breach of contract, breach of fiduciary duty, fraud, and/or breach of the implied covenant of good faith and fair dealing.
• 8.6. Franchisee Advisory Council. Franchisor reserves the right to create (and if created, the right to change or dissolve) a franchisee advisory council as a formal means for System franchisees to communicate ideas. In the event a franchisee advisory council is created, Franchisor may require Franchisee to participate in council-related activities and meetings and to pay any fees assessed for the administration of the council.

9. FRANCHISOR'S OBLIGATIONS

Franchisor and/or its designated representative may provide some or all of the following services as it deems necessary in its sole discretion:

• 9.1. Franchise Operations Manual. A loan of one set of the confidential Franchise Operations Manuals and such other manuals and written materials as Franchisor may hereafter develop for use by franchisees, as the same may be revised by Franchisor from time to time. Such documents may be provided electronically or via the Internet, at Franchisor's sole and absolute discretion.
• 9.2. Inspection/Site Visit. Franchisor's representative may visit the Kidokinetics Business Location and inspect the equipment, vehicles, and Kidokinetics Business Location, and evaluate the operations of the Kidokinetics Business and the services rendered by Franchisee whenever reasonably determined by Franchisor. Franchisor will also, at its reasonable discretion, observe Franchisee and all employees in the performance of Kidokinetics Business services and contact and interview customers of Franchisee. Franchisor will provide a report of the visit containing instruction for the efficient operation of the Kidokinetics Business. This report is part of the System and Franchisee is obligated to implement operational changes as required by the report.
• 9.3. Pre-Opening Requirements. Provide a written list of supplies, equipment, vehicles, signage, and products that will be required to open the Kidokinetics Business for business.
• 9.4. Advertising Materials. Provide samples or camera-ready artwork of certain advertising and promotional materials and information developed by Franchisor from time to time for use by Franchisee in marketing and conducting local advertising for the Kidokinetics Business.
• 9.5. List of Suppliers. Make available from time to time, and amend as deemed appropriate by Franchisor, a list of approved suppliers and manufacturers of supplies, equipment and vehicles for System franchisees.
• 9.6. Training. The training programs specified in Article 6 herein.
• 9.7. Post-Opening Assistance. Post-opening assistance via telephone or at the Kidokinetics Business Location in accordance with the provisions of Article 6.
• 9.8 Website and Email. Maintain a website with a dedicated page for each Franchisee along with an e-mail address or addresses for Franchisee's use in the operation of the Kidokinetics Business.
• 9.9 Toll Free Telephone Number. Franchisor has the right, but not the obligation, to establish and maintain a toll-free telephone number for the purpose of dealing with prospective customers, customer service, customer follow-up and satisfaction surveys. If Franchisor establishes a toll-free number, Franchisee must comply with Franchisor's procedures for implementing the nationwide service as Franchisor specifies in the Franchise Operations Manual or otherwise in writing, and Franchisee may be required to pay a fee related to the establishment, operation and maintenance of the toll-free telephone number.

10. FRANCHISEE'S REPRESENTATIONS, WARRANTIES AND COVENANTS

• 10.1. Best Efforts. Franchisee, if a natural person, covenants and agrees that he or she will devote his or her full-time and make all commercially reasonable efforts to operate the Kidokinetics Business so as to achieve optimum sales. If Franchisee is an entity, each of Franchisee's Principals covenants and agrees to make all commercially reasonable efforts to operate the Kidokinetics Business so as to achieve optimum sales.
• 10.2. Corporate Representations. If Franchisee is a corporation, partnership, limited liability company, or other legal entity, Franchisee and each Principal represent, warrant and covenant that:
  • 10.2.1. Franchisee is duly organized and validly existing under the state law of its formation;
  • 10.2.2. Franchisee is duly qualified and is authorized to do business in the jurisdiction of the Kidokinetics Business Location and the Territory;
  • 10.2.3. Franchisee's organizational documents will, at all times, provide that the activities of Franchisee are confined exclusively to the operation of the Franchised Business granted herein, unless otherwise consented to in writing by Franchisor, which consent may be withheld by Franchisor in Franchisor's sole discretion;
  • 10.2.4. The execution of this Agreement and the consummation of the transactions contemplated in this Agreement are within Franchisee's power and have been duly authorized by Franchisee;
  • 10.2.5. Copies of Franchisee's organizational documents, other governing documents, resolutions or consents of the governing board authorizing entry into and performance of this Agreement, and any certificates, buy-sell agreements or other documents restricting the sale or transfer of equity interests in Franchisee, and any other documents as may be reasonably required by Franchisor will be furnished to Franchisor prior to the execution of this Agreement;
  • 10.2.6. The ownership interests in Franchisee are accurately and completely described on Attachment D of this Agreement. Upon the occurrence of any change of ownership, Franchisee will immediately provide Franchisor with a copy of the updated list of all owners of the entity. Franchisee will make a list of its owners available to Franchisor at any time upon request;
  • 10.2.7. Franchisee and, at Franchisor's request, each Principal, has provided Franchisor with the most recent financial statements and tax returns of Franchisee and such Principal. Such financial statements and tax returns shall present fairly the financial position of Franchisee and each Principal, as applicable, at the dates indicated therein and, with respect to Franchisee, the results of its operations and its cash flow for the years then ended. Franchisee will, at all times, maintain sufficient working capital to fulfill its obligations under this Agreement; and
  • 10.2.8. Each Principal and each Principal's spouse will personally execute and bind himself or herself to the Guaranty and Confidentiality and Non-Compete Agreement, in the forms of Attachments E and F to this Agreement, respectively. Each shall jointly and severally guarantee Franchisee's performance of all of Franchisee's obligations, covenants and agreements under the Agreement, and otherwise bind themselves to the terms of this Agreement as stated herein, pursuant to the terms and conditions of the Guaranty and Confidentiality and Non-Compete Agreement.
• 10.3. Appointment of Manager. Franchisee, or its shareholder or member if Franchisee is an entity, must devote his/her full-time attention and best efforts to the management and operation of the Franchised Business,

or may delegate the day-to-day operations of the Franchised Business to a manager ("Manager"). Franchisee may not appoint a Manager who is not the Franchisee or Principal of the Franchisee, if an entity, without the approval of Franchisor. All requests regarding appointment of a Manager must be in writing.

Source: Item 22 — CONTRACTS (FDD page 59)