Can Pump It Up require the implementation of any System Standards?

ICTIONS ON SOURCES OF PRODUCTS AND SERVICES**

System Standards

We own and control the distinctive plan for the establishment, operation and promotion of the Pump It Up Business and all related licensed methods of doing business, previously referred to as the ("System Standards"). System Standards may regulate and/or provide suggested specifications, best practices, standards, operating procedures, general guidance, ongoing advice, and consultation to you on any one or more of the following with respect to the Pump It Up Business: franchised site, premises, leasehold improvements, interior finish, interior décor, furnishings, equipment, products, product formulas, supplies, materials, inventory type, technical equipment standards, client relations, marketing techniques, written promotional materials, waivers, advertising, accounting systems, and service delivery methods, all of which constitute our confidential trade secrets. You acknowledge that we have valuable rights in and to such trade secrets. You further acknowledge that you have not acquired any right, title or interest in the System Standards except for the right to use the System Standards in the operation of the Pump It Up Business as it is governed by your Franchise Agreement, and that you are obligated to maintain the confidentiality of the System Standards.

We reserve the right to change the System Standards and inform you of any changes in the Manuals accessible to you online via computer systems or another electronic format. The Manuals may be modified, updated and revised from time to time to reflect changes in System Standards. You are expected to implement all relevant updates and amendments to the Manuals or System Standards as described in newsletters or any other notices we distribute through any written means. We reserve the right to require the implementation of any System Standards. You must maintain the Manuals as confidential and maintain the information in the Manuals as secret and confidential. Any form of the Manuals we make accessible to you, regardless of how we provide them (e.g. online or via email) will be deemed our Confidential Information. We will notify you in our Manuals or other communications of System Standards and/or names of PIU Vendors.

We reserve the right to require you to implement any System Standards within the time period we identify, whether they involve refurbishing or remodeling the Premises or any aspect of the Franchised Business, buying new operating assets, adding new products or services, or otherwise modifying the nature of your operations.

PIU Vendors: Designated Vendors, Preferred National Vendors and Local Vendors

You are required to purchase all products, equipment, materials, supplies and services for the operation of the Pump It Up Business from us, our affiliates, or from our Designated Vendors, Preferred National Vendors or Local Vendors of your choosing (collectively, the "PIU Vendors"). We reserve the right to require you to purchase specific products, equipment, material, supplies and/or services from specific PIU Vendors. As of the date of this Disclosure Document, we and our affiliates are not approved or designated suppliers of any items.

We may develop certain proprietary or branded products, including inflatable devices, hardware, or software programs that will be prepared by or for us according to our proprietary designs (collectively, "Proprietary Products"). We also have developed standards and specifications for other products, materials and supplies which are incorporated in or used in providing services or the packaging and delivery of products authorized for sale at Pump It Up Businesses.

If specified for your Franchised Business, you must purchase the Proprietary Products or any other specified fixture, equipment, inventory, marketing materials, or supplies, only from us or a third party designated and licensed by us to prepare and sell such products ("Designated Vendors"). From time to time, we may modify the list of PIU Vendors.

We may choose, in our sole discretion, to designate any vendor as a "Preferred National Vendor" for meeting certain criteria established by us. We reserve the right to require that you use a Preferred National Vendor for the purchase of specified fixtures, equipment, inventory, marketing materials, or supplies. We may work with these Preferred National Vendors to establish prices, products, shipping costs, contracts, and other agreements as at our discretion.

Dependent on restrictions for purchasing products and services from our Designated Vendors and/or Preferred National Vendors, you may also purchase products, equipment, materials, supplies and services from a vendor in the geographic area near your Premises (a "Local Vendor"). All such purchases from any such Local Vendors should be for high quality products, equipment, materials, supplies and services, and should be up to our System Standards. We reserve the right to override your decision to use your selected Local Vendor if we determine, in our sole discretion, that the Local Vendor does not meet the high requirements of the System Standards.

If you propose to purchase any products, equipment, materials, supplies or services that you are not required to purchase from us or an affiliate of ours, all such products, equipment, supplies or services must be fully compliant with our System Standards. If such purchases will be from a vendor that we have not previously worked with, we reserve the right to require you or the vendor itself submit to us a written request for our review of that vendor and its products, equipment, materials, or services to confirm whether such are compliant with our System Standards. We further reserve the right to have our representatives be permitted to inspect the vendor's facilities and provide us with such information, specifications, and samples as we reasonably designate to be delivered to us and/or to an independent, certified evaluator designated by us for testing prior to your use of such products, equipment or materials in the Franchised Business. We further reserve the right to charge you an amount not to exceed the actual cost of the inspection (including the actual cost of any test) for our review and confirmation that such products, equipment, materials, supplies or services comply with our System Standards. We will notify you within 60 days of any such request whether we intend on invoking any of the reserved rights set forth in this paragraph.

Source: Item 8 — RESTRICTIONS ON SOURCES OF PRODUCTS AND SERVICES (FDD pages 25–29)