Must a Mr. Sandless franchisee satisfy all monetary obligations to the franchisor and its affiliates to be eligible for a Successor Franchise Agreement?

. We reserve the right to require you to locate any new site for your Business within your Designated Territory.

3. TERM AND SUCCESSOR OPTIONS

3.1 Term

The initial term of this franchise shall begin on the Effective Date set forth on the Data Sheet by us and shall expire at midnight on the tenth (10th) anniversary of the Effective Date.

3.2 Successor Options

At the end of the initial term, you have the right to enter into a new franchise agreement and other agreements and legal instruments and documents customarily employed by us and in the form then generally being offered to prospective franchisees in the state in which your Business is located (the "Successor Franchise Agreement"), if you meet the following conditions:

• 3.2.1 You are in compliance with all the terms and conditions of this Agreement at the time you request to enter into a Successor Franchise Agreement and have substantially complied with the operating standards and criteria established by us throughout the initial term and any successor term;
  • 3.2.2 You have satisfied all monetary obligations owed to us and our affiliates;
• 3.2.3 You are in compliance with all other agreements between you and us and/or our affiliates;
• 3.2.4 You have provided us with written notice of your intention to renew the Franchise Agreement at least ninety (90) days but not more than one hundred eighty (180) days prior to expiration of the then current term;
• 3.2.5 You have the right to remain in possession of the Business premises, or you have secured other premises acceptable to us for the successor term;
• 3.2.6 At our request, you effectuate, at your expense, any changes in services, equipment, service vehicles, items offered or business system so as to reflect our then-current image, including, but not limited to, interior and exterior design or offerings of Mr. Sandless Businesses;
• 3.2.7 You execute our then-current form of franchise agreement ("Successor Franchise Agreement"), which may vary materially from the terms of this Agreement and may include, without

limitation, higher royalty and advertising fees. The Successor Franchise Agreement, when executed, will supersede this Agreement in all respects;

• 3.2.8 You pay a successor agreement fee to us in the amount of (a) One Thousand Dollars ($1,000), if the Successor Franchise Agreement relates to a Mr. Sandless Business per business owned (the "Successor Agreement Fee").
• 3.2.9 You satisfy our then-current training requirements for continuing franchisees at your expense, as of the date of such subsequent agreement;

Source: Item 22 — CONTRACTS (FDD page 42)