Does The Standardx allow the franchisee to manage the hotel themselves?

or to help us obtain intellectual property rights in the Innovation.

OBLIGATION TO PARTICIPATE IN THE ACTUAL OPERATION OF THE FRANCHISE BUSINESS

Hotel Management

Either a management company we approve, or you (if we approve you to manage the Hotel), must at all times retain and exercise direct management control over all aspects of the Hotel's business and be the employer of the Hotel's Core Management and other personnel, except for any members of Core Management that are overseen by an F&B Operator whom we approve. You may not enter into any lease, management agreement, or other similar arrangement with any management company for the management or other oversight of all or a part of the Hotel's operation (a "Management Arrangement") without our prior written approval of the management company, and you may not yourself manage the Hotel without our approval of you as the Hotel's operator. We will not unreasonably withhold our approval if the management company or you (as applicable) meets our minimum qualifications and ensures that its or your personnel attend and satisfactorily complete required brand standard training programs. If we approve a management company, as a condition of that approval, the management company must sign the documents we require to protect our intellectual property rights and reflect its agreement to perform its management responsibilities and operate the Hotel in compliance with the Franchise Agreement. Our current form of Management Company Rider is attached as Exhibit F to the Franchise Agreement.

We may refuse to approve a management company that is a Competing Brand Owner. "Competing Brand Owner" means any entity that (a) is either a franchisor or owner of a Competing Brand (defined below), (b) manages or otherwise operates hotels exclusively for the franchisor or owner of a Competing Brand, or (c) is an affiliate of any entity described in (a) or (b) above. A "Competing Brand" is a hotel concept that has at least 5 hotels operating under that concept's trade name anywhere in the world and that, in our reasonable opinion, competes with Brand Hotels. If the management company or you (if we approve you to manage the Hotel) at any time becomes a Competing Brand Owner, fails to meet our minimum qualifications (as we may periodically modify them) or fails to comply with the Franchise Agreement (including any System Standards and/or if the Hotel remains in any remedial or non-compliant status under our then current Quality Assurance and Compliance Program for 3 or more consecutive months), the Management Company Rider, or any conditions of operator approval that we previously imposed, then we may: (a) revoke our approval of that management company or you as the Hotel's manager; or (b) as a condition of our continued approval, we may impose on that management company or you additional requirements, including participation in remedial training and other operational programs, at the Management Company's or your expense. If we revoke our approval of the Management Company or you as the manager, then you must promptly terminate the Management Arrangement (if applicable) and either assume direct control of the Hotel's management and operation, if we approve you to manage the Hotel, or engage another management company we approve.

You must ensure that all F&B Operations operate in full compliance with all applicable laws, rules and regulations and all applicable System Standards. You must provide, or cause the

management company to provide, all brand standard training programs to the F&B Operator that we periodically specify. If the F&B Operator at any time fails to operate in full compliance with all applicable laws, rules and regulations and all applicable System Standards, or fails to comply with any agreement with us, then, without limiting our other rights and remedies under the Franchise Agreement and applicable law, we may revoke our approval of the F&B Operator. You then must promptly terminate your arrangement with the F&B Operator and either assume (if we approve you to manage the Hotel) or have your approved management company assume direct control of the Hotel's F&B Operations or engage another approved F&B Operator.

At our option, before any of the Hotel's Core Management are engaged, you must submit to us the proposed candidate's identity and qualifications. If the general manager fails to ensure that the Hotel satisfies our quality assurance requirements and other brand standards, then we may require you (or your approved management company) to hire a new general manager for the Hotel. You or the management company (as applicable) is solely responsible for hiring the Core Management and other Hotel personnel and determining the terms and conditions of their employment. You (or your approved management company or F&B Operator) must hire and properly train all Core Management personnel and have a Core Management team in place at the Hotel at all times. Also, all members of the Hotel's Core Management must spend all of their working time at the Hotel fulfilling their management and operational responsibilities and may not concurrently maintain a position at another lodging facility or in any other capacity related to the lodging industry.

If you or your approved management company choose to retain a revenue manager for the Hotel, we must certify the revenue manager within 90 days after the revenue manager's date of hire or, if already employed by you or your approved management company, within 90 days after the date the revenue manager begins providing revenue management services to the Hotel. Revenue managers must: (a) provide revenue management services to no more than 20 Brand Hotels;

Source: Item 15 — OBLIGATION TO PARTICIPATE IN THE ACTUAL OPERATION OF THE FRANCHISE BUSINESS (FDD pages 71–74)