SYSTEM STANDARDS

A.Standards

Franchisee acknowledges and agrees that every detail of the System is essential, not only to Franchisee but also to Franchisor, and other Punch King Fitness franchisees, to develop and maintain high and uniform operating standards, to increase the demand for the products and services offered by all franchisees, to establish and maintain a reputation for uniform, efficient, high-quality products and services, and to protect the goodwill of all Punch King Fitnessfranchises. Franchisee further acknowledges and agrees that a fundamental requirement of the System, this Agreement, and other Punch King Fitness franchises are adherence by all Franchisees to the uniform specifications, standards, operating procedures, and rules prescribed by Franchisor for the development and operation of the Franchised Business (collectively referred to as System Standards).

B.Use of and Improvements to the Method

In order to assure maximum uniformity of quality and service in all treatments provided by all Punch King Fitness employees and staff, Franchisee agrees to follow the procedures prescribed by Punch King Fitness methods strictly. As Franchisor develops or learns of improvements, enhancements, or innovations in the procedures and techniques embodied in the Punch King Fitness Method, Franchisor will disseminate such information to all franchisees of the system and authorize their use in the Franchised Business. In return and in consideration, therefore, Franchisee agrees that any idea or suggested innovation or variation that may tend to enhance or improve the Punch King Fitness Method that Franchisee develops, discovers, or otherwise becomes aware of during the term of this Agreement shall be submitted to Franchisor for its evaluation for adoption and use, and Franchisee agrees that all proprietary rights to such ideas, innovations, improvements, enhancements, or variations created or acquired by Franchisee or any of its employees shall belong exclusively to Franchisor and may be made available to all Punch King Fitness and Punch King Fitness franchisees and Punch King Fitness licensees.

C. Modification

Franchisor shall have the right to add, delete, or otherwise modify the Operations Manual from time to time to reflect changes in any of the System Standards, provided that no such addition or modification shall alter Franchisee's fundamental status and rights under this Agreement. All additions, deletions, or modifications to the Operating Manual and System Standard shall be effective five (5) days after the Franchisor has given notice to Franchisee or as directed by Franchisor. Franchisee agrees to comport with said additions, deletions, or modifications to the Operations Manual and System Standards at its own cost and expense. Any such modifications, enhancements, and replacements may require Franchisee to incur costs and expenses. Franchisee acknowledges that Franchisor cannot estimate the costs of future maintenance, enhancements, modifications, and replacements in accordance with updated System Standards. Franchisee shall at all times ensure that its copy of the Operations Manual is kept secure, current, and up to date, and in the event of any dispute as to the contents of the Operations Manual, the terms of the master copy of the Operations manual maintained by Franchisor at Franchisor's home office shall be controlling. Upon Franchisor's request, Franchisee will cooperate in the efficient return of all Operations manuals that have been identified by the Franchisor as obsolete.

C. Remedies

Franchisee acknowledges that any failure to comply with this Section will cause Franchisor irreparable injury, and Franchisee consents to the issuance of and agrees to pay all court costs and reasonable attorneys' fees incurred by Franchisor in obtaining, specific performance of, or any injunction against a violation of, the requirements of this Section.

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