pment, techniques, and procedures for the promotion and provision of Franchisee's services; and

WHEREAS, Franchisor has invested substantial amounts of money in developing and continues to develop, use and control the use of the marks Punch King Fitness design, stylized, any derivatives thereof, and certain other trade names, business names, service marks, trademarks, logos, designs, and trade symbols (collectively referred to as the Marks) to identify to the public the source of services marketed thereunder and through the Punch King Fitness System and to represent the Punch King Fitness uniform and high standards of quality; and

WHEREAS, The mark Punch King Fitness is registered/being with the United States Patent and Trademark Office. This registration engenders the exclusive right to use all of the Marks and any derivatives thereof in connection with the operation of the Punch King Fitness System, as are now or may from time to time be designated in writing for use in connection with the operation of the System, and

WHEREAS, Franchisee understands and acknowledges the importance of Franchisor's high standards of quality and service, the necessity of opening and operating the Franchised Business in conformity with Franchisor's standards and specifications as presented in Franchisor's Operating Manual and updates, and preserving the confidentiality of the System; and

WHEREAS, Franchisee has applied for a license to operate a Punch King Fitness Franchise. In reliance upon all of the representations made by Franchisee in the application and this Agreement, Franchisor has approved Franchisee's application;

NOW, THEREFORE, in consideration of the above Recital, which is incorporated herein as if fully rewritten, and the mutual promises contained herein, the parties agree as follows:

APPOINTMENT

A.Grant of Franchise

Franchisor grants to Franchisee the right to operate a Training Facility Franchised Business (the Model Concept) under the System and the Marks and using the system standards set (referred to herein as "System Standards" which include the terms of this Agreement, the Operating Manual (as defined here), other directives provided by Franchisor) at the location (the Site) and in the geographic area specified in the Territory Addendum attached as Exhibit 2, which thereby constitutes the collectively Franchised Business Territory (the "Territory"). Franchisee is herein granted the right to advertise, solicit, offer, accept orders, and sell within the Territory Permitted Products and Services (as defined herein) in accordance with this Agreement.

Franchisee shall not offer or perform services or sell products other than to advertise, solicit, offer, accept orders, and sell within the Territory (referred to as Outside Territory Activity) without Franchisor's prior written consent, which Franchise may give and withdraw as Franchisor deems appropriate, and which may be conditioned as Franchisor sees necessary or desirable. If Franchisor permits Outside Territory Activity, Franchisee must comply with all of the conditions and other requirements that Franchisor may, from time to time, specify in the Brand Standards Manuals or otherwise in writing with respect to such activities. Franchisor may at any time condition Franchisee's continued Outside Territory Activity on Franchisee's agreement to purchase the franchise rights for the territory in which the Outside Territory Activity is being performed.

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