Subject to the terms and conditions of this Agreement, Franchisor hereby grants the right to Developer, and Developer undertakes the obligation to establish and operate in the area designated in Exhibit 1 of this Agreement (the "Development Area") the number of Franchised Businesses specified in the development schedule on Exhibit 2 (the "Development Schedule"). This Agreement does not grant Developer any right to use the Marks; the rights to use the Marks are granted only by Franchise Agreements.

II. FEES

The total amount of the Development Fee is listed in Exhibit 2 (the "Development Fee"). The Development Fee will be applied toward the initial franchise fee due under subsequent Franchise Agreements in the manner specified in Exhibit 2. Developer will pay the balance of the initial franchise fee as so stipulated and due under the then Current Franchise Agreement for each Franchised Business at the time the Franchise Agreement for each Franchised Business is executed. The Development Fee will not be refundable, notwithstanding anything to the contrary in this Agreement or any Franchise Agreement.

III. DEVELOPMENT SCHEDULE

Developer must enter into Franchise Agreements and open and operate Punch King Fitness Franchised Business in accordance with the deadlines set forth in the Development Schedule. By each "Fee Deadline" specified in the Development Schedule, Developer must have delivered to Franchisor an initial franchise fee and a signed copy of Franchisor's then-current standard form of Franchise Agreement for the number of Punch King Fitness Franchised Businesses specified on the Development Schedule. By each "Opening Deadline" specified in the Development Schedule, Developer must have the specified number of Punch King Fitness Franchised Businesses open and operating. Developer must locate the

Punch King Fitness Franchised Businesses only at sites that Franchisor has accepted in accordance with the terms of the applicable Franchise Agreement.

IV. DEVELOPMENT AREA

A. Exclusivity

While this Agreement is in effect, provided that Developer opens and operates Punch King Fitness Franchised Businesses in accordance with the Development Schedule, and the minimum number of Franchised Business that Developer has open and is operating in the Development Area at any given time is not less than the minimum required pursuant to the Development Schedule, Franchisor shall not establish or license another to establish the same Punch King Fitness Model Concept in the Development Area; however, the Franchisor may establish or license another to establish a Punch King Fitness Model Concept including but not limited to storefront, brick, and mortar, co-branded, pop-up, virtual, or mobile outlets that are different than Developer's Model Concept within the Development Area under the Punch King Fitness Marks and the System within the Development Area.

Source: Item 22 — CONTRACTS (FDD pages 56–215)