or remote successor to any part of Franchisee's interest in the Franchised Business, shall pledge, mortgage, grant a security interest, or otherwise encumber any interest in this Agreement, in the franchise granted hereunder, or in Franchisee (whether or not in connection with an absolute transfer of an interest in the Franchised Business). Franchisor shall not be obliged to consent to any such transfer.

C. Transfer to Controlled Entity

In the event that Franchisee proposes to transfer all of its interest in the Franchised Business to an entity formed solely for the convenience of ownership, Franchisor's consent to such transfer may, in its sole discretion, be conditioned on the following requirements:

• 1. Franchisee shall own a controlling interest in the transferee entity;
• 2. The transferee entity shall be newly organized, and its charter, articles of organization, bylaws, partnership agreement, or operating agreement shall provide that its activities are confined exclusively to operating the Franchised Business;
• 3. Franchisee, prior to the transfer, shall have provided Franchisor with written information as to each Principal of the transferee entity and the interest of each and shall promptly notify Franchisor of any changes in any such information during the term of this Agreement;
• 4. The transferee entity shall designate a Designated Manager in compliance with this Agreement;

• 5. All Principals of the transferee entity shall enter into an agreement, in a form satisfactory to Franchisor, unconditionally guaranteeing the full payment and performance of the transferee entity's obligations to Franchisor;
• 6. Each ownership certificate of the transferee entity, if any, shall have conspicuously endorsed upon its face the following legend:

"*The transfer, sale, or pledge of these shares is subject to the terms and conditions of a Franchise Agreement with Punch King Fitness, Inc.

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