st pay us an "Underperformance Fee" equal to 6% of the difference between your actual Gross Revenues and $240,000. If you fail to do this within 30 days on completion of your year-end financial statements, we have the option of exercising any of our rights under the Franchise Agreement including: (i) eliminating your rights in your Limited Protected Territory; or (ii) terminating the Franchise Agreement. This minimum performance standard is not a financial performance representation and does not infer that you will experience Gross Revenues of any particular level.

ARTICLE 5 - INTELLECTUAL PROPERTY

Section 5.1 OUR REPRESENTATIONS AS TO THE INTELLECTUAL PROPERTY

We represent to you that:

• (a) Ownership. We are the sole owner of the Intellectual Property.
• (b) Protection. We will take all steps necessary to preserve and protect the ownership and validity of the Intellectual Property.

Section 5.2 YOUR USE OF THE INTELLECTUAL PROPERTY

You may use the Intellectual Property only in accordance with standards and specifications we reasonably determine and implement on a Network-wide basis. You agree that:

(a) Limitation on Use. You will use the Intellectual Property only for the operation of your Franchise Business at the Premises.

• (b) Prohibitions. You will not employ any of the Intellectual Property in signing any contract, check, negotiable instrument or legal obligation, application for any license or permit, or in a manner that may result in liability to us for any indebtedness or obligation of yours.
• (c) Sole Business Name. You will use our Principal Trademark as the sole service mark identification for your Franchise Business and will display prominently our Principal Trademark on and/or with all materials that we designate and authorize and in a manner that we specify.
• (d) No Encumbrance. You will not use any of the Intellectual Property as security for any obligation or indebtedness.
• (e) Fictitious Name. You cannot use the Stretch Zone trade name as part of your legal business name. You must comply in filing and maintaining any required fictitious, trade or assumed name registrations for the "Stretch Zone" trade name for example, John Jones d/b/a "Stretch Zone" or ABC, Inc. d/b/a "Stretch Zone," and will sign all documents that we or our counsel deem reasonably necessary to obtain protection for the trademarks and our interest in the trademarks.
• (f) Impairment. You will exercise caution when using the Intellectual Property to ensure that the Intellectual Property is not in any manner jeopardized.

Section 5.3 INFRINGEMENT BY YOU

You acknowledge that the use of the Intellectual Property outside the scope of this Agreement, without our written consent, is an infringement of our rights in the Intellectual Property. You agree that during the Initial Term, and after the expiration or termination of this Agreement, you will not, directly or indirectly, commit an act of infringement or contest or aid in contesting the validity of, or our right to, the Intellectual Property, or take any other action in derogation of our rights.

Section 5.4 CLAIMS AGAINST THE INTELLECTUAL PROPERTY

If there is any claim of infringement, unfair competition or other challenge to your right to use the Principal Trademark or the other Intellectual Property you will promptly (within 7 days) notify us in writing.

Source: Item 8 — Receipts. Any sale made must be in compliance with § 683(8) of the Franchise Sale Act (N.Y. Gen. Bus. L. § 680 et seq.), which describes the time period a Franchise Disclosure Document (offering prospectus) must be provided to a prospective franchisee before a sale may be made. New York law requires a franchisor to provide the Franchise Disclosure Document at the earliest of the first personal meeting or ten (10) business days before the execution of the franchise or other agreement or the payment of any consideration that relates to the franchise relationship. (FDD pages 99–263)