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Club Pilates - 2015-10-28 - FDD - Xponential Fitness

This document summarizes the key terms of investing in a Club Pilates franchise, including estimated costs, fees, and requirements. The total initial investment to open a Club Pilates studio franchise ranges from $161,252 to $244,657, which includes a $139,500 fee to the franchisor. The investment to develop three studios under an area development agreement is $236,752 to $320,157, including a $128,000 development fee. Franchise agreements and state law may limit the franchisee's rights and protections. Personal guarantees will be required of franchise owners and their spouses.

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Club Pilates - 2015-10-28 - FDD - Xponential Fitness

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FRANCHISE DISCLOSURE DOCUMENTf Received

Club Pilates Franchise, LLC, ?

a Delaware limited liability company OCT 2 9 2015
3185 Pullman Street
Costa Mesa, OA 92626
(949) 34^9794 Business Ov2rs%ht
sales@clubpilates com "
www cluboilates com

Club Pilates Franchise, LLC ("we," "us," or "our") offers for sale a franchise to establish and operate
a fitness studio that provides Pilates and other exercise classes under the "CLUB PILATES" marks ("CLUB
PILATES Studio" or "Studio")

The total estimated investment necessary to begin operations of a CLUB PILATES Studio franchise
ranges from $161,252 to $244,657 This amount includes $139,500 that must be paid to the franchisor or its
affiliate prior to opening

The total investment necessary to operate multiple CLUB PILATES Studios under our form of area
development agreement depends on the number of franchises we grant you the right to open The total
investment necessary to enter into a development agreement for the right to develop three (3) CLUB PILATES
Studios IS $236,752 to $320,157, which includes (a) a development fee of $128,000 that is paid to us, and (b)
the total estimated initial investment to begin operation of your initial CLUB PILATES Studio

This Disclosure Document summarizes certain provisions of your Franchise Agreement and other
information in plain English Read the disclosure document and all accompanying agreements carefully You
must receive this disclosure document at least 14 calendar days before you sign a binding agreement with,
or make any payments to the Franchisor or an affiliate in connection with the proposed franchise sale Note,
however, that no government agency has verified the information contained in this document

You may wish to receive your Disclosure Document in another format that is more convenient for
you To discuss the availability of disclosures in different formats, contact Shaun Grove at Club Pilates
Franchise, LLC, 3185 Pullman Street, Costa Mesa, CA 92626, and at (949) 346-9794

The terms of your contract will govern your franchise relationship Don't rely on the disclosure
document alone to understand your contract Read all of your contract carefully Show your contract and this
disclosure document to an advisor, like a lawyer or accountant

Buying a franchise is a complex investment The information in this disclosure document can help you
make up your mind Information about comparisons of franchisors is available More information on
franchising, such as "A Consumer's Guide to Buving a Franchise." which can help you understand how to use
this Disclosure Document, is available from the Federal Trade Commission You can contact the FTC at 1-877-
FTC-HELP or by writing to the FTC at 600 Pennsylvania Avenue, NW, Washington, DC 20580 You can also visit
the FTC's home page at wvw ftc gov for additional information There may also be laws on franchising in your
state Call your state agency listed on Exhibit B or visit your public library for other sources of information on
franchising

THE ISSUANCE DATE OF THIS DISCLOSURE DOCUMENT IS APRIL 14,2015, AS AMENDED OCTOBER 28,2015

©2015 Club Pilates Franchise LLC

STATE COVER PAGE

Your state may have a franchise law that requires a franchisor to register or file with a state franchise
administrator before offering or selling in your state REGISTRATION OF THIS FRANCHISE WITH A STATE
DOES NOT MEAN THAT THE STATE RECOMMENDS IT OR HAS VERIFIED THE INFORMATION IN THIS
DISCLOSURE DOCUMENT

Call the state franchise administrator listed on Exhibit B for information about the franchisor, or
about franchising in your state If you learn that anything in this disclosure document is untrue, contact the
Federal Trade Commission and the state administrators listed on Exhibit B

MANY FRANCHISE AGREEMENTS DO NOT ALLOW YOU TO RENEW UNCONDITIONALLY AFTER THE
INITIAL TERM EXPIRES YOU MAY HAVE TO SIGN A NEW AGREEMENT WITH DIFFERENT TERMS AND
CONDITIONS IN ORDER TO CONTINUE TO OPERATE YOUR BUSINESS BEFORE YOU BUY, CONSIDER WHAT
RIGHTS YOU HAVE TO RENEW YOUR FRANCHISE, IF ANY, AND WHAT TERMS YOU MIGHT HAVE TO ACCEPT
IN ORDER TO RENEW

Please consider the following RISK FACTORS before you buy this franchise

1 THE FRANCHISE AGREEMENT AND DEVELOPMENT AGREEMENT CONTAIN A MANDATORY

BINDING ARBITRATION CLAUSE GOVERNING NEARLY ALL DISPUTES BETWEEN YOU AND US THE
BINDING ARBITRATION (AND ANY LITIGATION) AND ANY ARBITRATION APPEAL WILL TAKE PLACE
IN THE COUNTY IN WHICH OUR THEN-CURRENT HEADQUARTERS IS LOCATED, AND THAT MAY
COST YOU MORE (AND BE LESS CONVENIENT) THAN IF THOSE PROCEEDINGS TOOK PLACE NEAR
YOUR RESIDENCE OR BUSINESS COSTS OF THE ARBITRATION AND ANY ARBITRATION APPEAL
MAY BE GREATER THAN IN LITIGATION YOU AND WE WILL GENERALLY BEAR EACH OF OUR OWN
COSTS IN ANY DISPUTE, BUT THE ARBITRATOR CAN ASSESS COSTS (BUT NOT ATTORNEY'S FEES)
AGAINST A LOSING PARTY

2 THE FRANCHISE AGREEMENT AND DEVELOPMENT AGREEMENT PROVIDE THAT THE LAWS OF
THE STATE OF CALIFORNIA GOVERN THE AGREEMENTS AND THAT LAW MAY NOT PROVIDE YOU
WITH THE SAME RIGHTS AND PROTECTIONS AS YOUR LOCAL LAW YOU MAY WANTTO CONSULT
AN ATTORNEY REGARDING COMPARISON OF THESE LAWS

3 IF YOU ARE AN INDIVIDUAL, YOUR SPOUSE MUST SIGN A PERSONAL GUARANTY IF THE
FRANCHISEE IS A BUSINESS ENTITY, EACH OF THE ENTITY'S OWNERS, PARTNERS, MEMBERS,
OFFICERS, DIRECTORS, TRUSTEES AND BENEFICIARIES (AS APPLICABLE), AS WELL AS THEIR
RESPECTIVE SPOUSES, MUST SIGN A PERSONAL GUARANTY THOSE WHO SIGN A PERSONAL
GUARANTY WILL BE JOINTLY AND SEVERALLY LIABLE FOR ALL DEBTS AND OBLIGATIONS OF THE
FRANCHISEE WHETHER OR NOT THEY ARE INVOLVED IN THE OPERATION OF THE FRANCHISE
BUSINESS THESE INDIVIDUALS WILL ALSO HAVE THEIR PERSONAL ASSETS AT RISK

4 THE FRANCHISOR HAS A LIMITED OPERATING HISTORY AND ITS FINANCIAL RESOURCES MIGHT
NOT BE ADEQUATE TO FUND THE FRANCHISOR'S PRE-OPENING OBLIGATIONS TO EACH
FRANCHISEE AND PAY OPERATING EXPENSES

5 IF YOU FAILTO MEETTHE MINIMUM MEMBER QUOTA (40 MEMBERS PER DAY (AVERAGED OVER
ONE WEEK) BY THE 1ST YEAR ANNIVERSARY OF THE OPENING OF THE STUDIO, 65 MEMBERS PER
DAY (AVERAGED OVER ONE WEEK) BY THE END OF THE 2ND YEAR ANNIVERSARY, AND 85

©2015 Club Pilates Franchise LLC

2015 Franchise Disclosure Document (Amended)
This document was downloaded from franchimp.com. All the information on this website is published in good faith and for general information purpose only. FranChimp.com does not make any warranties about the completeness, reliability, and
accuracy of this information. Any action you take upon the information you find on this website (FranChimp.com), is strictly at your own risk. We will not be liable for any losses and/or damages in connection with the use of our website.
MEMBERS PER DAY (AVERAGED OVER ONE WEEK) BY THE END OF THE 3RD YEAR ANNIVERSARY
AND EACH SUCCEEDING YEAR THEREAFTER) FOR 36 CONSECUTIVE MONTHS AT ANY TIME
DURING THE TERM OF THE FRANCHISE AGREEMENT, WE MAY INSTITUTE A MANDATORY
CORREaiVE TRAINING PROGRAM OR TERMINATE THE FRANCHISE AGREEMENT AT OUR SOLE
DISCRETION

6 THERE MAY BE OTHER RISKS CONCERNING THIS FRANCHISE

Effective Date See the next page for state effective dates

©2015 Club Pilates Franchise LLC

The following states require that the Franchise Disclosure Documents be registered or filed with the state
or be exempt from registration California, Hawaii, lllinois, Indiana, Maryland, Michigan, Minnesota, New
York, North Dakota, Rhode Island, South Dakota, Virginia, Washington and Wisconsin

This Franchise Disclosure Document is registered, on file or exempt from registration in the following
states having franchise registration and disclosure laws, with the following effective dates

STATE EFFECTIVE DATE

CALIFORNIA Pending Registration

FLORIDA Effective

HAWAII Different Version of Amended FDD Pending

ILLINOIS Different Version of Amended FDD Pending

INDIANA Different Version of Amended FDD Effective

KENTUCKY Effective

MARYLAND Different Version of Amended FDD Pending

MICHIGAN Effective

MINNESOTA Different Version of Amended FDD Pending

NEBRASKA Effective

NEW YORK Different Version of Amended FDD Pending

NORTH DAKOTA Different Version of Amended FDD Pending

RHODE ISLAND Different Version of Amended FDD Pending

SOUTH DAKOTA Different Version of Amended FDD Pending

TEXAS Effective

UTAH Effective

VIRGINIA Different Version of Amended FDD Pending

WASHINGTON Different Version of Amended FDD Pending

WISCONSIN Different Version of Amended FDD Pending

THIS VERSION OF OUR 2015 AMENDED FDD IS FOR USE IN CALIFORNIA ONLY

©2015 Club Mates Franchise LLC

PAGE
ITEM 1 THE FRANCHISOR, ANY PARENTS, PREDECESSORS AND AFFILIATES 1
ITEM 2 BUSINESS EXPERIENCE 4
ITEM 3 LITIGATION 5
ITEM 4 BANKRUPTCY 5
ITEM 5 INITIAL FEES 5
ITEM 6 OTHER FEES 6
ITEM 7 ESTIMATED INITIAL INVESTMENT 12
ITEM 8 RESTRICTIONS ON SOURCES OF PRODUCTS AND SERVICES 17
ITEM 9 FRANCHISEE'S OBLIGATIONS 20
ITEM 10 FINANCING 22
ITEM 11FRANCHISOR'S ASSISTANCE, ADVERTISING, COMPUTER SYSTEMS AND TRAINING 23
ITEM 12 TERRITORY 32
ITEM 13 TRADEMARKS 35
ITEM 14 PATENTS, COPYRIGHTS AND PROPRIETARY INFORMATION 37
ITEM 15 OBLIGATION TO PARTICIPATE IN THE ACTUAL OPERATION OF THE FRANCHISE BUSINESS 38
ITEM 16 RESTRICTIONS ON WHAT THE FRANCHISEE MAY SELL 38
ITEM 17 RENEWAL, TERMINATION, TRANSFER AND DISPUTE RESOLUTION 39
ITEM 18 PUBLIC FIGURES 49
ITEM 19 FINANCIAL PERFORMANCE REPRESENTATIONS 49
ITEM 20 OUTLETS AND FRANCHISEE INFORMATION 59
ITEM 21 FINANCIAL STATEMENTS 62
ITEM 22 CONTRACTS 62
ITEM 23 RECEIPTS 62

Exhibits

A FRANCHISE AGREEMENT AND EXHIBITS

B LIST OF STATE AGENTS FOR SERVICE OF PROCESS AND STATE ADMINISTRATORS
C FINANCIAL STATEMENTS
D STATEMENT OF PROSPECTIVE FRANCHISEE
E TABLE OF CONTENTS OF MANUAL
F FORM OF GENERAL RELEASE
G STATE SPECIFIC ADDENDA
H LIST OF FRANCHISEES AND THEIR OUTLETS
I LIST OF FRANCHISEE WHO CEASED TO DO BUSINESS UNDER THE FRANCHISE AGREEMENT
J DEVELOPMENT AGREEMENT
K RECEIPTS

CLUB PILATES FDD 2015

To simplify the language, this disclosure document uses "we," "us," "our," "Franchisor" or "Club Pilates"
to mean Club Pilates Franchise, LLC, the franchisor "You" means the person, corporation, partnership or other
entity that buys the franchise Terms not defined in this Disclosure Document (including various capitalized
terms) are defined in the Franchise Agreement attached as Exhibit A to this Disclosure Document (the "Franchise
Agreement")

Franchisor

We do business under the name Club Pilates Franchise, LLC, or in some cases, simply as "Club Pilates "
We do not do business under any other name Our principal business address is 3185 Pullman Street, Costa
Mesa, CA 92626, and our business phone number is (949) 346-9794 We are a Delaware limited liability company
formed on March 11, 2015

Except as provided in this Item, we do not offer franchises in any other line of business and we are not
otherwise involved in any substantive business activity

Acquisition, Predecessors, Affiliates and Other Information

On March 13, 2015, the former shareholders of Club Pilates Global, Inc ("CP Global") and Club Pilates,
LLC ("CP"), partnered with Lag Fit, Inc ("LagFit"), an independent investment firm based in Irvine, California to
offer and sell franchises for Club Pilates Studios under this Disclosure Document Pursuant to the terms of the
agreement between CP Global, CP and LagFit (the 'Transaction"), we own the CLUB PILATES marks and will
license the use of the marks directly to franchisees CP Global and CP's principal business address is the same
as ours LagFit's principal business address is 6789 Quail Hill Parkway, Suite 408, Irvine, CA 92603 CP and LagFit
engage in no other business activities and have never offered franchises in any line of business Prior to the
transaction described above, CP Global franchised business underthe CLUB PILATES marks but currently engages
in no other business activities

From September, 2012 to March, 2015, our predecessor and affiliate. Club Pilates Global, Inc, offered
franchises for Club Pilates Studios From 2007 to March, 2015, our affiliate. Club Pilates, LLC, operated five (5)
non-franchised Club Pilates Studios in San Diego, California As a result of the Transaction, we now own and
operate five (5) corporate owned Club Pilates Studios in San Diego, California

Except as disclosed above, we currently have no parents or predecessors required to be included in this
Item

/^ent for Service of Process

Our agents for service of process are disclosed in Exhibit B

The Business We Offer

We offer for sale a franchise to operate a distinctive CLUB PILATES Studio (each, a "Franchised
Business"), which is operated pursuant to the terms of our franchise agreement attached to this Disclosure
Document as Exhibit A (the "Franchise Agreement") We expect that a Studio will typically be located in a retail
shopping center, and this franchise offering assumes that the size of a typical Studio will be at least 1,500 square
feet in size (a 30 ft by SO ft rectangle) We may, however, consider alternative sites, on a case-by-case basis
1
©2015 Club Pilates Franchise LLC
2015 Franchise Disclosure Document (Amended)
This document was downloaded from franchimp.com. All the information on this website is published in good faith and for general information purpose only. FranChimp.com does not make any warranties about the completeness, reliability, and
accuracy of this information. Any action you take upon the information you find on this website (FranChimp.com), is strictly at your own risk. We will not be liable for any losses and/or damages in connection with the use of our website.
Under the Franchise Agreement, we will also grant you the right to operate your Franchised Business within a
designated geographical area wherein you will also be able to actively promote the Franchised Business and
solicit new clientele (the "Designated Territory")

If you own an existing fitness facility and meet our other qualifications, you may convert your existing
business to a CLUB PILATES Studio A converted Studio will likely encounter lower investment requirements
than those of a start-up Studio Each Studio will offer Pilates and other exercise programs through live
instructional group and individual classes, including, but not limited to, Pilates Reformer exercises, exercises
using a Pilates Ballet Bar, Spring Board, EXO Chair, and other Pilates' apparatuses, strength training, stretching
exercises, a teacher training program, and any other services that we authorize (collectively, the "Approved
Services") All classes will be paid for and scheduled online via the Internet, and taught by highly trained
instructors who have completed a minimum of 500 hours of customized instructor training

The Studios are established and operated under a comprehensive design that includes spacious interior,
a significant number of exercise equipment/apparatuses, specifications, and procedures for operations, quality
customer service, management and financial control, training and assistance, and advertising and promotional
programs (collectively, the "CLUB PILATES System") The CLUB PILATES System's standards, specifications and
procedures (collectively, the "System Standards") are described in our confidential operations manual (the
"Manual") The CLUB PILATES System and the Manual may be changed, improved and further developed by us

The Franchise Agreement is signed by us, by you, and by those of your principals whom we designate as
the principal franchisee-operator(s) (the "Designated Operator(s)") of your Franchised Business The Designated
Operator(s) (there may be up to two such individuals, but only one address to which we communicate in regards
to the franchise) named has the authority to act for you in all matters relating to the Club Pilates Franchise,
including voting responsibilities By signing the Franchise Agreement, you and the Designated Operator(s) agree
to be individually bound by certain obligations in the Franchise Agreement, including covenants concerning
confidentiality and non-competition, and to personally guarantee your performance under the Franchise
Agreement Depending on the type of business activities, which must be fully disclosed prior to signing this
document, in which you or your Designated Operator(s) may be involved, we may require you or your Designated
Operator(s) to sign additional confidentiality and non-competition agreements

You (or, if you are an entity, one of your Designated Operators) must at least complete the
owner/operator module (the "Owner/Operator Module") of our proprietary initial training program (the "Initial
Training Program") prior to the opening of the Franchised Business

You will also need to have at least one (1) instructor - which may be your Designated Operator or
another individual - that has completed (i) all requirements to be a certified Pilates instructor, including
accumulating at least 450 hours of Pilates instruction (collectively, the "Certified Pilates Requirements"), and (ii)
our proprietary "orientation program" designed to help those that have already complied with the Certified
Pilates Requirements (each, a "Certified Pilates Instructor") to provide our Approved Services at a CLUB PILATES
Studio in accordance with our System standards and specifications (collectively, the "Orientation Program") This
instructor may complete the Orientation Program at our headquarters at the same time he/she attend the rest
of our Initial Training Program or, with our approval, may complete the Orientation Program remotely via
webinar/video instruction before taking the Orientation Program test

Please note that our standard franchise offering assumes that at least one (1) of your Designated
Operator(s) and/or another individual you engage to serve as the initial instructor at your Franchised Business
will be a Certified Pilates Instructor, and that this Certified Pilates Instructor will attend the Orientation Program
component of the Initial Training Program We do offer, and will permit our franchisees to offer, a full "teacher
2
©2015 Club Pilates Franchise LLC
2015 Franchise Disclosure Document (Amended)
This document was downloaded from franchimp.com. All the information on this website is published in good faith and for general information purpose only. FranChimp.com does not make any warranties about the completeness, reliability, and
accuracy of this information. Any action you take upon the information you find on this website (FranChimp.com), is strictly at your own risk. We will not be liable for any losses and/or damages in connection with the use of our website.
training" course that provides both (a) the instruction necessary to comply with the Certified Pilates
Requirements, and (b) our Orientation Program (collectively, the "Teacher Training Program"), but our standard
franchise offering does assume that no one will need the full TeacherTraining Program prior to opening Instead,
the initial instructor and subsequent instructors at your Studio will already be Certified Pilates Instructors and
that such individuals will only be required to complete our Orientation Program before they can commence
working at your Franchised Business

Multi-Unit Offering

We also offer qualified individuals and entities the right to open and operate three (3) or more
Franchised Businesses within a designated geographical area (the "Development Area") under our current form
of development agreement that is attached to this Disclosure Document as Exhibit J (the "Development
Agreement"), which will also outline a schedule or defined period of time in which you must open and commence
operating each Franchised Business (a "Development Schedule")

You will be required to sign a Franchise Agreement for the initial Franchised Business we grant you the
right to open within the Development Area at the same time you sign your Development Agreement, and you
will need to sign our then-current form of franchise agreement for each of the Franchised Businesses you open
under the Development Schedule

You will be required to pay us a one-time development fee that will be calculated based on the number
of Franchised Businesses we grant you the right to open under the Development Agreement (the "Development
Fee"), but you will not be required to pay any other initial franchise fee at the time you execute your franchise
agreements for each Franchised Business we permit you to open under your Development Agreement

Market and Competition

The market for fitness services and studios is crowded You will face competition for members from
other Pilates studios, gyms, personal trainers, yoga studios, fitness/exercise centers and studios, health clubs,
barre-based studios, and even other CLUB PILATES franchisees

Applicable Regulations

Some states require that health/fitness facilities have a staff person available during all hours of
operation that is certified in basic cardiopulmonary resuscitation or other specialized medical training Some
state or local laws may also require that health/fitness facilities have an automated external defibrillator and/or
other first aid equipment on the premises At a minimum, your Studio will be subject to various federal, state and
local laws, and regulations affecting the business, including laws relating to zoning, access for the disabled, and
safety and fire standards You may need the local fire marshals or other local, state or federal agency's permission
before you begin operations In addition, there may be local licensing and employment regulations, including
worker's compensation insurance requirements You should examine these and other laws before purchasing a
franchise

You should consult with your attorney, and local and state agencies/authorities, before buying a
Franchise to determine if there are any specific regulations you must comply with as it relates to offering the
Studio products and services to consumers in your state, and consider the effects on you and the cost of
compliance These requirements can affect a broad scope of your operations, including location selection, and
hiring of personnel, among other things It is your sole responsibility to investigate any regulations in your area,
including those related to the establishment and operation of a CLUB PILATES Studio generally
3
©2015 Club Pilates Franchise LLC
2015 Franchise Disclosure Document (Amended)
This document was downloaded from franchimp.com. All the information on this website is published in good faith and for general information purpose only. FranChimp.com does not make any warranties about the completeness, reliability, and
accuracy of this information. Any action you take upon the information you find on this website (FranChimp.com), is strictly at your own risk. We will not be liable for any losses and/or damages in connection with the use of our website.
We make no representations or assurances as to the specific licenses, permits, authorizations or
otherwise that may be required for operating your Studio, which can vary significantly by venue and change over
time It IS your responsibility to investigate and ensure that you are in compliance with all local, state, provincial
and federal business, retail sales, zoning, and other regulations and licensing requirements, and any applicable
laws and regulations, and to identify and obtain all authorizations necessary to operate your Studio Please be
advised that you must investigate and comply with all of these applicable laws and regulations You alone are
responsible for complying with all applicable laws and regulations, despite any advice or information that we
may give you We have not researched any of these laws to determine their applicability to your Franchised
Business

ITEM 2 BUSINESS EXPERIENCE

Founder. Director of Culture and Education Allison Beardslev

Ms Beardsley has been our Director of Culture and Education since our inception in March 2015, at our
headquarters in Costa Mesa, California She was the founder of Club Pilates Global, Inc and held the positions
of CEO and President from June 2012 to March 2015, in Del Mar, California Since December 2007, she has been
the managing member of our affiliate. Club Pilates, LLC, also located in Del Mar, California

Chief Executive Officer Anthony Geisler

Mr Geisler has been our Chief Executive Officer since our inception in March 2015 Mr Geisler was the President
of UFC Gym Franchise Company from January 2013 to February 2014 in Santa Ana, California Mr Geisler
created LA Boxing Franchise Company in February 2004 and served as President until he sold his venture in
December 2012 in Santa Ana, California

President. General Counsel Shaun Grove

Mr Grove has been our President and General Counsel since our inception in March, 2015 Mr Grove was the
General Counsel for UFC Gym Franchise Company from January 2013 to June 2014, in Santa Ana, California Mr
Grove was the General Counsel for LA Boxing Franchise Corporation from March 2009 to December 2012, in
Santa Ana, California Mr Grove has owned and operated three (3) UFC Gym franchise locations in Southern
California since January 2012

Chief Financial Officer Scott LaRose

Mr LaRose has been our Chief Financial Officer since June 2015 Mr LaRose was the Chief Financial Officer for
UFC Gym Franchise Company from January 2013 to June 2015 in Santa Ana, California Mr LaRose was the Chief
Financial Officer for LA Boxing Franchise Corporation from January 2010 to December 2012, in Santa Ana,
California

Vice President Real Estate Richard Feinbere

Mr Feinberg has been our Vice President Real Estate since our inception in March, 2015 Mr Feinberg was the
Director of Real Estate for UFC Gym Franchise Company from January 2013 to March 2015 in Santa Ana,
California Mr Feinberg was the Director of Real Estate for LA Boxing Franchise Corporation from November
2006 to December 2012, in Santa Ana, California

National Sales Director Sarah Luna

Ms Luna became our National Sales Director in July 2015 Ms Luna is a comprehensively certified Pilates
instructor and from February 2013 to July 2015, operated 2 Pilates studios as EQUINOX'S Pilates Coordinator, in
Irvine, CA and Hawrthorne, CA Ms Luna attended Chapman University in Orange, CA from 2011 to March 2013,

©2015 Club Pilates Franchise LLC

2015 Franchise Disclosure Document (Amended)
This document was downloaded from franchimp.com. All the information on this website is published in good faith and for general information purpose only. FranChimp.com does not make any warranties about the completeness, reliability, and
accuracy of this information. Any action you take upon the information you find on this website (FranChimp.com), is strictly at your own risk. We will not be liable for any losses and/or damages in connection with the use of our website.
where she received her MBA in entrepreneurship From August 2009 to May 2011, Ms Luna was a professional
dancer with the Giordano Dance Company in Chicago, IL

Vice President of Operations Clare Bnance

Ms Bnance has been our Vice President of Operations since our inception in March 2015 Ms Bnance was Legal
Coordinator for UFC Gym Franchise Company from January 2013 to August 2014, in Santa Ana, California Ms
Bnance was Office Manager for LA Boxing Franchise Corporation from October 2008 to December 2012, in Santa
Ana, California

Vice President of Marketing Keith Williams

Mr Williams has been our Vice President of Marketing since our inception in March 2015 Mr Williams was the
Director of Marketing for UFC Gym Franchise Company from January 2013 to March 2015 in Santa Ana,
California Mr Williams was the Director of Marketing for LA Boxing Franchise Corporation from November
2006 to December 2012, in Santa Ana, California

Product Sales Director Whitnev Solenbereer

Ms Solenberger has been our Product Sales Director since March 2015 Ms Solenberger is also currently a
student at Cal Poly Pomona where she has been attending since January 2013 Ms Solenberger was Manager at
The Vitamin Shoppe in Irvine, California from March 2013 to November 2013 Ms Solenberger worked in Event
Services for Creative Catering from May 2010 to March 2013 in Orange and Riverside County, California

ITEM 3 LITIGATION

No litigation is required to be disclosed in this Item

ITEM 4 BANKRUPTCY

No bankruptcy information is required to be disclosed in this Item

ITEM 5 INITIAL FEES

Franchise Agreement

Initial Franchise Fee

You must pay to us a lump sum initial franchise fee of $49,500 (the "Initial Franchise Fee") to establish
a single Studio under a Franchise Agreement (whether a start-up or conversion) The Initial Franchise Fee is due
upon the signing of the Franchise Agreement The Initial Franchise Fee shall be fully earned by Franchisor upon
payment and is not refundable, in whole or in part, under any circumstance Except as disclosed in this Item, we
uniformly impose the Initial Franchise Fee on all parties that are purchasing a single Franchised Business

Initial FFE Package

You must purchase an initial package of furniture, fixtures and equipment that is designed to provide
you with the majority of these items that you will need in connection with outfitting, equipping and otherwise
building out your Studio (the "Initial FFE Package") As of the Issue Date of this Disclosure Document, the Initial
FFE Package costs approximately $87,000 and contains (a) 12 Pilates reformers and various related
equipment/supplies for use in connection with the provision of the Approved Services, (b) a Studio fixture
package comprised of a desk, displays and display rack, storage cubbies, pedestals and 1Barre package, and (c)
5
©2015 Club Pilates Franchise LLC
2015 Franchise Disclosure Document (Amended)
This document was downloaded from franchimp.com. All the information on this website is published in good faith and for general information purpose only. FranChimp.com does not make any warranties about the completeness, reliability, and
accuracy of this information. Any action you take upon the information you find on this website (FranChimp.com), is strictly at your own risk. We will not be liable for any losses and/or damages in connection with the use of our website.
certain other equipment used in connection with the Studio (e g, Pilates mini-balls, massage balls, foam rollers
and yoga blocks) Currently, you must purchase the Initial FFE Package from us but we reserve to designate
another approved supplier in our sole discretion You must purchase the Initial FFE Package prior to opening
your CLUB PILATES Studio and the Initial FFE Package is non-refundable under any circumstances

Proprietary Initial Inventory Kit

Prior to opening your CLUB PILATES Studio, you must purchase opening inventory from us in the amount
of $3,000 ("Proprietary Initial Inventory Kit"), which includes CLUB PILATES apparel, including t-shirts, yoga
pants, toe sox and jewelry, essential oils and related accessories The amount paid for the Proprietary Initial
Inventory Kit is non-refundable under any circumstances

Development Agreement

If we grant you the right to open three (3) or more Franchised Businesses under a Development
Agreement, you must pay us a one-time Development Fee upon executing your Development Agreement Your
Development Fee will depend on the number of Franchised Businesses we grant you the right to open within
the Development Area and is calculated as follows (i) $125,000 for the right to open three Franchised
Businesses, plus an additional $40,000 for the right to open each additional Franchised Business (up to a total of
five), (ii) $35,000 per Franchised Business if you agree to open and operate between six and nine Franchised
Businesses, and (iii) $30,000 per Franchised Business if you agree to open and operate 10 or more Franchised
Businesses

You will be required to enter into our then-current form of franchise agreement for each Franchised
Business you wish to open under your Development Agreement, but you will not be required to pay any
additional Initial Franchise Fee at the time you execute each of these franchise agreements If you enter into a
Development Agreement, you must execute our current form of Franchise Agreement for the first CLUB PILATES
Studio we grant you the right to open within your Development Area concurrently with the Development
Agreement

Your Development Fee will be deemed fully earned upon payment, and is not refundable under any
circumstances The Development Fee described above is calculated and applied uniformly to all of our
franchisees

ITEM 6 OTHER FEES

Type of Fee Amount Due Date Remarks

Royalty 6% of Gross Sales^ Payable weekly based You will be required to start paying your
on the Gross Sales of Royalty once your Franchised Business is
your Franchised open and operating We reserve the right
Business during the to collect your Royalty on a different
preceding business interval (for example, monthly)
week
Marketing Fund ^ Currently, 1% of Payable weekly at the Your Marketing Fund Contributions will
Gross Sales^ same time and in the begin when the Studio begins collecting
same manner as the revenue from operations
Up to 2% of Gross Royalty

©2015 Club Pilates Franchise LLC

Sales

Orientation Costs and As incurred Each instructor that provides Approved

Program Expenses (if you or Services from your Franchised Business
your instructor must (a) be a Certified Pilates Instructor,
decide to attend and (b) complete our Orientation
the Orientation Program
Program as part of
our initial Training Your initial instructor(s) may attend our
Program) Orientation Program at the same time
they attend the rest of our Initial Training
Program (and we will not charge such
attendees any training fee or tuition
provided they attend at the same time)

If you have a Certified Pilates Instructor

that needs (or requests) the Orientation
Program after you have completed the
Initial Training Program, then these
instructors may also have the ability to
participate in and complete our
Orientation Program remotely via
webinar/video instruction, but they will
be required to pass the Orientation
Program test before providing any
instruction at your Studio

Once a Certified Pilates Instructor working

at your Studio completes the Orientation
Program, that individual may assist in the
provision of the Orientation Program (and
related test) to other instructors at your
Studio

Please see Item 11 for additional

information
Teacher Training $2,000 per person Prior to training This fee is only payable to us in connection
Program Fee with each individual that is not a Certified
Pilates Instructor, but wishes to obtain
instruction necessary to (a) comply with
the Certified Pilates Requirements, and
(b) complete our Orientation Program

If an individual wishes to attend the

Teacher Training Program at your Studio,
then they will pay a single fee to our

©2015 Club Pilates Franchise LLC

approved third-party provider of $4,750,

with (a) $2,000 going to us for certain
materials that we provide in connection
with this training (including the "Webinar
Training" described in Item 11 of this
FDD), and (b) the balance of $2,750 going
to your Franchised Business (or the
appropriate Studio that will be providing
the in-person instruction)

In order to provide the Teacher Training

Program at your Studio, such training will
need to be provided by an instructor that
(a) IS a Certified Pilates Instructor that has
completed our Orientation Program, and
(b) IS otherwise approved by us as a
"Master Instructor" Please note that our
then-current criteria and conditions for a
Certified Pilates Instructor that has
completed the Orientation Program to
also become a Master Instructor will be
set forth in our Operations Manual

If you are not able to provide the Teacher

Training Program, then we will advise you
of the Studio closest to your Franchised
Business that can provide such instruction
to interested clientele

Ongoing/Refresher Then-current Prior to training This fee is paid in connection with

Training training fee, which additional training/instruction that we
IS currently $500/ may provide on an ongoing basis in
day per trainer connection with the overall operation and
development of your Studio

We will only charge this fee in connection

with training that (a) you request we
provide, or (b) we are required to provide
on-site at your Franchised Business We
will not charge this fee in connection with
training that we require you to attend at
our corporate headquarters or other
training facility we designate

We will not charge any training fee in

connection with minor, day-to-day

©2015 Club Pilates Franchise LLC

assistance that we provide remotely over

the phone or via email, subject to our
availability

In addition to our then-current training

fee, you will always be responsible for the
costs and expenses that are incurred m
connection with you and your personnel
attending training
Renewal Fee $10,000 At time of renewal You must renovate and reimage the
Studio at your expense at the time of
Renewal to conform to our then-current
standards and image
Transfer Fee under $10,000 Before the transfer Payable when you sell the Studio No
Franchise charge if the Studio is transferred to a
Agreement corporation or other entity that you
control
Assignment Fee $10,000 On submitting Payable when you want to sell/transfer
under Development application for the rights under your Development
Agreement consent to Agreement
assignment

Insurance Policies^ Amount of unpaid Must have the Payable only if you fail to maintain
premium policies within 60 required insurance coverage and we
calendar days after elect to obtain coverage for you
Our estimate for 3 signing the Franchise
mos of the Agreement, but no
minimum required later than the time
insurance is that you acquire an
$300-$900 interest in the real
property from which
you will operate the
Studio
Audit Fees" $500 - $2,500 Within 15 calendar Payable only if audit shows an
days after receipt of understatement
audit report
Late Fees The greater of the Upon demand Applies to all amounts not paid when due,
highest applicable until paid in full We may also require you
legal rate for open to pay an administrative fee of $50 for
account business each late payment or late report
credit, or 15% per
month
Cost of All costs including Upon settlement or You will reimburse us for all costs in
Enforcement or attorneys' fees conclusion of claim or enforcing our obligations concerning the

©2015 Club Pilates Franchise LLC

Defense action Franchise Agreement if we prevail

Indemnification All costs including Upon settlement or You will defend suits at your own cost
attorneys' fees conclusion of claim or and hold us harmless against suits
action involving damages resulting from your
operation of the Studio
Alternative $1,500 per day for At time of request Additionally, you must reimbursement us
Supplier Approval personnel engaged for any travel, accommodations, and
in evaluating a meal expenses
supplier

Business Then-current fee Payable every 4 Please see Items 8 and 11 of this
Management charged by our weeks, as agreed Disclosure Document for additional
Software Fee® Approved information on Approved Suppliers
Supplier, which is and this fee
currently $269

Regional As the Cooperative As the Cooperative We may establish regional cooperatives

Cooperative determines determines comprised of Studios that are within a
given geographical area (each, a
"Cooperative") If a Cooperative is
established where your Studio is located,
you will be required to participate in that
Cooperative and contribute to that
Cooperative in the amounts the
Cooperative determines
Liquidated $10,000 As incurred If you in any way compromise the secure
Damages access to the online version of the
Manual, including, but not limited to,
allowing unauthorized users access to the
Manual and its confidential contents, you
will be required to pay us liquidated
damages in the amount of $10,000, to
compensate us for the breach and related
damage to the System

All fees are imposed by and are payable to us, unless otherwise noted No other fees or payments are
to be paid to us, nor do we impose or collect any other fees or payments for any third party Any fees paid to us
are non-refundable unless otherwise noted Fees payable to third parties may be refundable based on your
individual arrangements

10
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2015 Franchise Disclosure Document (Amended)
This document was downloaded from franchimp.com. All the information on this website is published in good faith and for general information purpose only. FranChimp.com does not make any warranties about the completeness, reliability, and
accuracy of this information. Any action you take upon the information you find on this website (FranChimp.com), is strictly at your own risk. We will not be liable for any losses and/or damages in connection with the use of our website.
Notes to Chart for Franchise Agreement

^ Gross Sales The term "Gross Sales" means the total revenues you derive, directly or indirectly from
all business conducted upon, from or in connection with the Studio, less sales taxes or similar taxes imposed by
governmental authorities (See Section 5 3 of the Franchise Agreement for a more complete definition ) You
must participate in our then-current electronic funds transfer and reporting program(s) (See Exhibit 2 and
Exhibit 3 of the Franchise Agreement) All fees owed and any other amounts designated by us must be received
or credited to our account by pre-authorized bank debit by 5 00 p m on or before the applicable due date Your
franchised business may be located in a jurisdiction whose taxing authority will subject us to tax assessments
on payments you submit to us for the Royalty Fee and Marketing Fund contributions Under such
circumstances, you will be required to adjust, or "gross up" your payment to us to account for these taxes

^ Marketing Fund We have established a national advertising and marketing fund (the "Marketing
Fund") and you will be required to make a contribution weekly towards such fund ("Marketing Fund
Contribution") beginning the date your Studio begins collecting revenue from business operations The
Marketing Fund may be used for (among other things) product development, signage, creation, production and
distribution of marketing, advertising, public relations and other materials in any medium, including the internet,
social media, administration expenses, brand/image campaigns, media, national, regional and other marketing
programs, activities to promote current and/or future Studios and the CLUB PILATES brand, agency and
consulting services, research, and any expenses approved by us and associated with your Studio We will have
sole discretion over all matters relating to the Marketing Fund You must pay for your own local advertising

^ Insurance Policies The minimum limits for coverage under many policies will vary depending on
several factors, including the size of your Studio, and whether you offer classes See Item 8 of this Disclosure
Document for our minimum insurance requirements

^ Audit Fees In the event that an audit discloses an understatement of Gross Sales or other discrepancy,
in addition to the cost of the audit, you will be required to pay the marketing due on the amount of such
understatement, plus late fees and interest

^Alternative Supplier Approval You may request the approval of an item, product, service or supplier
We may require you to pre-pay any reasonable charges connected with our review and evaluation of any
proposal

^Business Management Software Fee We will make available to you a business management software
program that you will download onto your computer and use in the operation of your Studio Currently, the
approved and required software for use in the Studio is "ClubReady," an online/web-based business
management program You will pay the third-party vendor directly for all fees associated with the use of the
software We have the right to access any and all information stored in the program that pertains to the Studio
through file transfer protocol or polling through the Internet, at our discretion

11
©2015 Club Pilates Franchise LLC
2015 Franchise Disclosure Document (Amended)
This document was downloaded from franchimp.com. All the information on this website is published in good faith and for general information purpose only. FranChimp.com does not make any warranties about the completeness, reliability, and
accuracy of this information. Any action you take upon the information you find on this website (FranChimp.com), is strictly at your own risk. We will not be liable for any losses and/or damages in connection with the use of our website.
ITEM 7 ESTIMATED INITIAL INVESTMENT

YOUR ESTIMATED INITIAL INVESTMENT

A Franchise ABreement

TYPE OF EXPENDITURE' AMOUNT METHOD OF WHEN DUE TO WHOM

PAYMENT PAYMENT IS TO BE
MADE
Initial Franchise Fee^ $49,500 Lump sum, in At Signing of Us
cash, certified Franchise
check or bank Agreement
wire
Initial Training Program $0 N/A N/A N/A
(Fees)^

Travel and Living Expenses $500-$3,000 As arranged As incurred Transportation

While Training^ Carriers, Hotel
Facilities, Etc

Real Estate/Lease^ $3,750 - $11,250 As arranged As incurred Landlord

Leasehold Improvements^ $1,000 - $30,000 As arranged As incurred Approved Suppliers,
Architects and
Contractors
Signage ® $5,000 - $10,000 As arranged As incurred Approved Suppliers
Insurance^ $300-$900 As Arranged Before Opening Insurance Carrier
Pilates and Other Exercise $75,000 - $100,000 As required Before Opening Us and other
Equipment ® Approved Suppliers
Opening Inventory® $3,000 Lump Sum Before Opening Us
Utility Deposits^" $0 - $1,000 As arranged As incurred Utility Suppliers
Licenses and Permits" $0 - $3,000 As arranged As arranged Local, State or
Federal Government
Furniture, Fixtures and $7,000 As arranged As incurred Vendors
Related Supplies"
Computer System and $3,000 As arranged As arranged Approved Suppliers
related equipment" and Vendors
Shipping" $4,207 - $7,012 As arranged Before Opening Vendor
Installation $3,995 As arranged Before Opening Vendor
Additional Funds- $5,000 - $15,000 As arranged As incurred Employees, Vendors,
3 months" Utilities

TOTAL ESTIMATED INITIAL $161,252-$244,657

INVESTMENT"

12
©2015 Club Pilates Franchise LLC
2015 Franchise Disclosure Document (Amended)
This document was downloaded from franchimp.com. All the information on this website is published in good faith and for general information purpose only. FranChimp.com does not make any warranties about the completeness, reliability, and
accuracy of this information. Any action you take upon the information you find on this website (FranChimp.com), is strictly at your own risk. We will not be liable for any losses and/or damages in connection with the use of our website.
All amounts are non-refundable unless otherwise noted

Notes to Table A

^General The initial investment table shows certain expenditures required to establish and operate a
Studio Note that these amounts may vary widely, and the amounts you have to spend or invest may be higher
or lower than the estimated amounts, depending on location, size of the Studio, marketing conditions and other
factors We strongly recommend that you verify actual costs in your area, and for your intended location, and
prepare a business plan and have it reviewed by your own independent adviser, like an accountant, before
making any commitments to us or anyone else Due to legal restrictions, we will not prepare, review or comment
on any business plan for a prospective Franchisee

All amounts payable to us are nonrefundable, unless otherwise noted Amounts payable to
suppliers/vendors are refunded according to arrangements you make with the vendor, if any These figures are
estimates of the range of your initial costs in the first 3 months of operation only Leasing and financing is
available for many of the above expenses We do not offer direct or indirect financing, but we may assist you in
obtaining working capital through other sources See Items 5 and 6, and other parts of this Disclosure Document,
for more information regarding Initial Franchise Fees and other costs

^Initial Franchise Fee The Initial Franchise Fee is non-refundable The Initial Franchise Fee for a single
Studio IS $49,500 We do not provide financing for the Initial Franchise Fee

^Travel and Living Expenses While Trainine As previously disclosed in Items 1and 6 of this Disclosure
Document, you (or, if you are an entity, your Designated Operator) and, unless we agree otherwise, at least one
(1) Certified Pilates Instructor (which may be you or your Designated Operator) must attend our proprietary
Initial Training Program This Program is comprised of two (2) modules, namely the Owner/Operator Module
(which must be attended by you and/or your Designated Operator) and our Orientation Program (which is for
your instructors, which we assume will already be Certified Pilates Instructors as part of our standard franchise
offering) We will not charge any tuition or training fee in connection with the Initial Training Program, provided
all individuals attend at the same time The estimate in the Chart above assumes that you (or your Designated
Operator), along with your initial instructor, will attend the appropriate portions of our Initial Training Program

You will be responsible for the costs and expenses associated with attending our Initial Training Program
(e g, transportation, meals, lodging and other expenses) The amount you will spend while training will depend
on several factors, including the number of persons attending, the distance you must travel and the type of
accommodations you choose, if any are needed The low estimate assumes that your Studio is located in fairly
close proximity to one (1) of our designated training facilities, and that the two (2) individuals attending our
Initial Training Program will not be required to incur costs associated with flying to one of these facilities in
California The high estimate assumes that the two (2) individuals will need to fly to the Initial Training Program
(coach class) and will need to secure lodging while attending the program

* Real Estate/Lease If you do not own adequate Studio space, you must lease suitable premises These
figures assume that the leased premises will be at least 1,500 square feet (a 30' x SO' rectangle) The figures
assume a base monthly rental rate of $2 50 per square foot Landlords may also vary the base rental rate and
charge rent based on a percentage of gross sales In addition to base rent, the lease may require you to pay
common area maintenance charges ("CAM Charges"), your pro rata share of the real estate taxes and insurance,
and your pro rata share of HVAC and trash removal The actual amount you pay under the lease will vary
depending on the size of the Studio, the types of charges that are allocated to tenants under the lease, your
ability to negotiate with landlords, and the prevailing rental rates in the geographic area You may also be
13
©2015 Club Pilates Franchise LLC
2015 Franchise Disclosure Document (Amended)
This document was downloaded from franchimp.com. All the information on this website is published in good faith and for general information purpose only. FranChimp.com does not make any warranties about the completeness, reliability, and
accuracy of this information. Any action you take upon the information you find on this website (FranChimp.com), is strictly at your own risk. We will not be liable for any losses and/or damages in connection with the use of our website.
required to pay a security deposit equal to a month's rent The estimate covers the first 3 months of operation,
and 1month's rent as a security deposit

Since rental, improvement and other real-estate-related costs can vary significantly by area, it's your
responsibility to (1) independently research all applicable laws and regulations, and real estate market
conditions and costs, where you plan to locate and operate your facility, and (2) obtain appropriate advice from
your own accountant, attorney and real estate professional, before signing any binding documents or making
any investments or other commitments, whether to us or anyone else

^Leasehold Improvements The cost of leasehold improvements will vary depending on (i) the size and
configuration of the premises, (ii) pre-construction costs (e g, demolition of existing walls and removal of
existing improvements and fixtures), and (iii) cost or materials and labor which may vary based on geography
and location You must adapt our prototypical plans and specifications for the construction and finish-out of the
Studio These amounts may vary substantially based on local conditions, including the availability and prices of
labor and materials These amounts may also vary depending on whether certain of these costs will be incurred
by the landlord and allocated over the term of the lease The low-end of the range reflects modest improvements
to a smaller location, and the high end reflects significant physical improvements to a larger Studio

® Signage You will need to purchase appropriate signage for your Studio that we approve The cost of
your signage may be more or less than this estimate, and depends on the size, type and method of installation
you choose Each landlord has different restrictions it places on interior and exterior signage that may affect
your costs

^ Insurance This estimate is for 3 months of your minimum required insurance The actual cost may be
more than shown here You will need to check with your insurance carrier for actual premium quotes and costs,
and for the actual amount of deposit Insurance costs can vary widely, based on the area in which your business
IS located, your experience with the insurance carrier, the loss experience of the carrier, the amount of
deductibles and of coverage, and other factors beyond our control You should obtain appropriate advice from
your own insurance professional before signing any binding documents or making any investments or other
commitments, whether to us or anyone else

® Pilates and Other Exercise Equipment The initial required amount of Pilates and other exercise
equipment for a standard Studio is approximately 12 Pilates Reformers, 2 Pilates Ballet Bar, 12 Spring Boards, 12
EXO Chairs, 12 TRX units and smaller pieces of related exercise equipment (e g, balls, mats, etc), although we may
raise or lower this requirement depending on the size of your Gym Financing for the equipment may be available
If you chose to finance the equipment, your initial costs will be less than the range provided in the chart above,
however, your overall payments may be higher

^Opening Inventory The inventory does not fluctuate as a function of seasonal sales The typical for-
sale Items held in opening inventory are Club Pilates apparel, including t-shirts, yoga pants, toe sox and jewelry,
essential oils and related accessories

Utility Deposits Typically, a utility deposit will be required only if you are a new customer of the utility
company

" Licenses and Permits The range of costs covers the expense to acquire the required local business
permits We make no representations or assurances as to what (if any) licenses, permits, authorizations or
otherwise may be required in connection with your Studio Our estimated costs include building permits, fire
inspection, sales tax permit, and retail sales permits If an electrical permit is necessary, the costs may be more
14
©2015 Club Pilates Franchise LLC
2015 Franchise Disclosure Document (Amended)
This document was downloaded from franchimp.com. All the information on this website is published in good faith and for general information purpose only. FranChimp.com does not make any warranties about the completeness, reliability, and
accuracy of this information. Any action you take upon the information you find on this website (FranChimp.com), is strictly at your own risk. We will not be liable for any losses and/or damages in connection with the use of our website.
You should investigate applicable requirements in your area and the related costs, including receiving advice
from regulatory agencies and your own lawyer, before making any commitments, whether to us or anyone else

" Furniture. Fixtures and Supplies This is a range of expenses that will be incurred when decorating and
furnishing the Studio, including (a) surveillance cameras and office expenses, and (b) the initial FFE Package that
you must purchase from us You are required to have a surveillance camera installed in each classroom in the
Studio Typically, a Studio will have one (1) to two (2) classrooms You may be required to purchase the
camera(s) and related accessories from an Approved Supplier (see Item 8 of this Disclosure Document) The
camera(s) must be web accessible You will use the camera to monitor teacher performance, quality assurance
and safety We have an absolute right to also review and monitor the camera(s) for the same purposes as you,
and to ensure compliance with the Club Pilates System You are responsible for ensuring customer consent and
for any failure to obtain such consent You must indemnify us for any breaches of privacy from your use of any
surveillance camera Both the low-end and the high-end numbers represent a straight purchase of all furniture,
fixtures and related supplies (rather than leasing or making installment payments on these items)

" Computer Svstem and Related Equipment You must acquire a personal computer, a printer and a Point
of Sale system ("POS") for use in the operation of the Studio Your computer system must be equipped with a high
speed connection to the Internet and must include a local area network with a dedicated server We will make
available to you a certain business management software program specific for the Studio to be loaded on to your
system You will pay the third-party vendor directly for all fees associated with the use of the software (Please
see Item 6 of this Disclosure Document for the fee amount and more details on the software ) You can expect
initial cash outlays to be lower if the items can be leased rather than purchased These costs are paid to suppliers,
when incurred, before beginning business and are usually not refundable Please see Item 11of this Disclosure
Document for more information on the Computer System

"Shipping We arrange for the shipping of all of your equipment and furniture/fixtures This amount
reflects shipping costs to the East Coast and may vary based upon the location of your Studio

" Additional Funds This is an estimate of certain funds needed to cover your business (not personal)
expenses during the first three months of operation of the Studio These expenses include initial employee
wages, management compensation (but not any draw or salary for you), ongoing purchases of equipment and
supplies, marketing fees, continuing improvement of the Studio's physical features, local advertising, utilities,
repairs and maintenance Your cost will depend upon your management skill, experience and business acumen,
local economic conditions, the prevailing wage rate, competition, and sales of the Studio during the period This
estimate is based on our affiliates' experience in owning and operating Club Pilates Studios for more than 7 years

This estimate does not guarantee that you will reach, and we're unable to reliably estimate
when (if ever) you might reach, "break-even" or any other financial position You will need capital to support
on-going costs of your business, such as taxes, loan payments and other expenses, to the extent that revenues
do not cover business costs New businesses (franchised or not) often have larger expenses than revenues

This amount is only an estimate We cannot guarantee that the amounts specified will be
adequate and you may need additional funds to open and operate We do not furnish, or authorize anyone else,
to furnish estimates as to the capital or other reserve funds necessary to reach "break-even" or any other
financial position, or when or if you may be profitable, nor should you rely on any such estimates In addition,
the estimates presented relate only to costs associated with the franchised business and do not cover any
personal, "living," unrelated business or other expenses you may have

15
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2015 Franchise Disclosure Document (Amended)
This document was downloaded from franchimp.com. All the information on this website is published in good faith and for general information purpose only. FranChimp.com does not make any warranties about the completeness, reliability, and
accuracy of this information. Any action you take upon the information you find on this website (FranChimp.com), is strictly at your own risk. We will not be liable for any losses and/or damages in connection with the use of our website.
The availability and terms of financing to you will depend upon factors such as the availability of
financing in general, your credit-worthiness, the collateral security that you may have, and policies of lending
institutions concerning the type of business you operate This estimate does not include any finance charge,
interest, or debt service obligation

"Total Estimated Initial Investment All of the above figures are estimates of certain initial start-up
expenses As noted above, it is not all-mclusive, and we cannot guarantee you will not have additional expenses
in starting or operating the Studio The total listed above does not include compensation for your time or labor
or any return on your investment Your costs will vary depending on such factors as how closely you follow the
Club Pilates System, your management and marketing skills, experience and general business ability, and local
and general economic conditions, including disposable income You should review these figures carefully with
a business advisor (such as an accountant) before making any commitments In preparing the figures in this
chart, we relied on our affiliates' experience in owning and operating Club Pilates Studios

B Development Agreement

TYPE OF EXPENDITURE' AMOUNT METHOD OF WHEN DUE TO WHOM

PAYMENT PAYMENT 15 TO BE
MADE
Development Fee^ $125,000 Lump sum, in At signing of Us
cash, certified the
check or bank Development
wire Agreement
Initial Investment to Open $111,752 - $195,157 See Chart A of this Item 7
Initial Franchised Business^
TOTAL ESTIMATED INITIAL $236,752-$320,157 This IS the total estimated initial investment to enter
INVESTMENT" into a Development Agreement for the right to own a
total of three Franchised Businesses, as well as the
costs to open and commence operating your initial
Franchised Business for the first three months (as
described more fully in Chart A of this Item 7) See
Note 3

Notes to Table B

^General All amounts payable to us are nonrefundable, unless otherwise noted Amounts payable to
suppliers/vendors are refunded according to arrangements you make with the vendor, if any These figures are
estimates of the range of your initial costs in the first three (3) months of operating the initial Franchised Business
you are granted under your Development Agreement only We do not offer direct or indirect financing, but we
may assist you m obtaining working capital through other sources See Items 5 and 6, and other parts of this
Disclosure Document, for more information regarding Initial Franchise Fees and other costs

^ Development Fee The Development Fee is non-refundable The Development Fee is described in
greater detail in Item 5 of this Disclosure Document, and this Development Fee is for the right to open and
operate a total of three Franchised Businesses (provided you comply with your development obligations under
the Development Agreement) If you choose to open more than three Franchised Businesses, your Development
Fee will be calculated as follows (i) $125,000 for the right to open three CLUB PILATES Studios, plus an additional

16
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accuracy of this information. Any action you take upon the information you find on this website (FranChimp.com), is strictly at your own risk. We will not be liable for any losses and/or damages in connection with the use of our website.
$40,000 for the right to open each additional CLUB PILATES Studio (up to a total of five), (ii) $35,000 per CLUB
PILATES Studio if you agree to open and operate bet\ween six and nine Franchised Businesses, and (iii) $30,000
per Franchised Business if you agree to open and operate 10 or more Franchised Businesses

^ Initial Investment for First Franchised Business This figure represents the total estimated initial
investment required to open the initial Franchised Business you agreed to open and operate under the
Development Agreement You will be required to enter into our then-current form of franchise agreement for
the initial Franchised Business you open under your Development Agreement, most likely once you have found
a Premises for the business that we approve The range includes all the items outlined in Chart 7 A of this Item,
except for the $49,500 Initial Franchise Fee (because you are not required to pay any Initial Franchise Fee for
those Franchised Businesses you open under the Development Agreement) It does not include any of the costs
you will incur in opening any additional Franchised Business(es) that you are granted the right to open and
operate under your Development Agreement

ITEM 8 RESTRICTIONS ON SOURCES OF PRODUCTS AND SERVICES

You must operate all aspects of your Franchised Business in strict conformance with the methods,
standards and specifications of our System Our methods, standards, and specifications will be communicated
to you in writing through our confidential Manuals and other proprietary guidelines and writings that we prepare
for your use in connection with the Franchised Business and System We may periodically change our System
standards and specifications from time to time, as we deem appropriate or necessary in our sole discretion, and
you will be solely responsible for costs associated with complying with any modifications to the System

Approved Products and Services

You may only market, offer, sell and provide the Approved Services, as well as any related merchandise
and other products that Franchisor authorizes for sale in conjunction with the Approved Services (the "Approved
Products") at your Franchised Business in a manner that meets our System standards and specifications We will
provide you with a list of our then-current Approved Products and Services, along with their standards and
specifications, as part of the Manuals or otherwise m writing prior to the opening of your Franchised Business
We may update or modify this list in writing at any time

If you wish to offer any product or service in your Franchised Business other than our Approved Products
and Services, or use any item in connection with your Franchised Business that does not meet our System
standards and specifications, then you must obtain our prior written approval as described more fully in this
Item

Approved Suppliers

We have the right to require you to purchase any items or services necessary to operate your Franchised
Business from a supplier that we approve or designate (each, an "Approved Supplier"), which may include us or
our affiliate(s) We will provide you with a list of our Approved Suppliers in writing as part of the Manuals or
otherwise in writing, and we may update or modify this list as we deem appropriate

Currently, we have Approved Suppliers for the following items that you must purchase in connection
with the establishment and/or operation of your Franchised Business (i) Proprietary Initial Inventory Kit, (ii) the
Initial FFE Package, (iii) certain other exercise equipment/supplies, (iv) interior graphics and exterior signage, (v)
insurance coverage, (vi) shipping and installation services, (vii) training materials, including the "Webinar
Training" associated with the Teacher Training Program, and (viii) proprietary point-of-sale system (the "POS
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accuracy of this information. Any action you take upon the information you find on this website (FranChimp.com), is strictly at your own risk. We will not be liable for any losses and/or damages in connection with the use of our website.
System") and then-current software we require you to use in connection with that POS System and your Studio

We may develop proprietary products for use in your Franchised Business, including private-label
products that bear our Marks, and require you to purchase these items from us or our affiliate(s)

If you wish to purchase a product or service that we require you to purchase from an Approved Supplier
from an alternate source, then you must obtain our prior written approval as outlined more fully in this Item
We may provide our standards and specifications for our Approved Products and Services directly to our
Approved Suppliers, and may provide these standards and specifications to an alternative supplier you propose
if (i) we approve the supplier in writing as outlined more fully in this Item, and (ii) the alternative supplier agrees
to sign our prescribed form of non-disclosure agreement with respect to any confidential information we
disclose

As of the date of this Disclosure Document (i) besides the Proprietary Initial Inventory Kit, Initial FFE Kit,
Teacher Training materials, neither we nor any of our affiliates are an Approved Supplier for any items you are
required to purchase in connection with your Franchised Business, and (ii) none of our officers own an interest
in any of our Approved Suppliers other than us

We reserve the right to designate us orany of our affiliates as an Approved Supplier with respect to any
Item you must purchase in connection with your Franchised Business in the future

Required Purchases and Right to Derive Revenue

The products or services we require you to purchase or lease from an Approved Supplier, or purchase
or lease in accordance with our standards and specifications, are referred to collectively as your "Required
Purchases " We estimate that your required purchases, purchases from Approved Suppliers and purchases that
must meet our specifications in total will be about 70% -95% of your total purchases to establish the Studio and
about 10% - 20% of your purchases to continue the operation of the Studio Please be advised that these
percentages do not include the lease payments that you make in connection with your Premises (as defined in
Item 11)

We reserve the right to derive revenue from any of the purchases (items or services) that our System
franchisees are required to make in connection with the Franchised Business Neither we nor our affiliate(s) have
generated any revenue from our franchisees' required purchases in the past fiscal year ending December 31,
2014

Non-Approved Product/Service and Alternate Supplier Approval

We may, but are not obligated to, grant your request to (i) offer any products or services in connection
with your Franchised Business that are not Approved Products and Services, or (ii) purchase any item or service
we require you to purchase from an Approved Supplier from an alternative supplier

If you wish to undertake either of these actions, you must request and obtain our approval in writing
before (i) using or offering the non-approved product or service in connection with your Franchised Business,
or (II) purchasing from a non-approved supplier You must pay our then-current supplier or non-approved
product evaluation fee when submitting your request, as well as cover our costs incurred in evaluating your
request We may ask you to submit samples or information so that we can make an informed decision whether
the goods, equipment, supplies or supplier meet our specifications and quality standards In evaluating a supplier
that you propose to us, weconsider not only the quality of the particular product at issue, but also the supplier's
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2015 Franchise Disclosure Document (Amended)
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accuracy of this information. Any action you take upon the information you find on this website (FranChimp.com), is strictly at your own risk. We will not be liable for any losses and/or damages in connection with the use of our website.
production and delivery capability, overall business reputation and financial condition We may provide any
alternate supplier you propose with a copy of our then-current specifications for any product(s) you wish the
supplier to supply, provided the supplier enters into a confidentiality and non-disclosure agreement in the form
we specify We may also inspect a proposed supplier's facilities and test its products and/or services, and request
that you reimburse our actual costs associated with the testing/inspection

We will notify you in writing within 30 days after we receive all necessary information and/or complete
our inspection or testing to advise you if we approve or disapprove the proposed item and/or supplier The
criteria we use in approving or rejecting new suppliers is proprietary, but we may (although are not required to)
make it available to you upon request Each supplier that we approve must comply with our usual and customary
requirements regarding insurance, indemnification and non-disclosure If we approve any supplier, we will not
guarantee your performance of any supply contract with that supplier under any circumstances We may re-
inspect and/or revoke our approval of a supplier or item at any time and for any reason to protect the best
interests and goodwill of our System and Marks The revocation of a previously approved product or alternative
supplier IS effective immediately when you receive written notice from us of revocation and, following receipt
of our notice, you may not place any new orders for the revoked product, or with the revoked supplier

Purchasing Cooperatives and Right to Receive Compensation

We may, when appropriate, negotiate purchase arrangements, including price terms, with designated
and Approved Suppliers on behalf of the System We may establish strategic alliances or preferred vendor
programs with suppliers that are willing to supply some products, equipment, or services to some or all of the
CLUB PILATES Studios in our System If we do establish those types of alliances or programs, we may (i) limit
the number of approved suppliers with whom you may deal, (ii) designate sources that you must use for some
or all products, equipment and services, and (in) refuse to approve proposals from franchisees to add new
suppliers if we believe that approval would not be in the best interests of the System

We and/or our affiliate(s) may receive payments or other compensation from Approved Suppliers or any
other suppliers on account of these suppliers' dealings with us, you, or other Franchised Businesses in the
System, such as rebates, commissions or other forms of compensation We may use any amounts that we receive
from suppliers for any purpose that we deem appropriate We and/or our affiliates may negotiate supply
contracts with our suppliers under which we are able to purchase products, equipment, supplies, services and
other Items at a price that will benefit us and our franchisees

We reserve the right to create additional purchasing cooperatives in the future We may negotiate
volume purchase agreements with some vendors or Approved Suppliers for the purchase of goods and equipment
needed to operate the Studio

Franchisee Compliance

When determining whether to grant new or additional franchises, we consider many factors, including
your compliance with the requirements described in this Item 8 You do not receive any further benefit as a
result of your compliance with these requirements

Insurance

You are obligated to obtain and maintain, at your sole expense, all of the insurance coverages that we
require Your policy or policies must be written by an insurance company licensed in the state in which you
operate the Studio The insurance company must have at least an "A" Rating Classification as indicated in A M
19
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2015 Franchise Disclosure Document (Amended)
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accuracy of this information. Any action you take upon the information you find on this website (FranChimp.com), is strictly at your own risk. We will not be liable for any losses and/or damages in connection with the use of our website.
Best's Key Rating Guide, in accordance with standards and specifications set forth in the Manual The standards
may vary depending on the size of your Studio and/or other factors, such as what is customary for businesses of
your type in your area, but we typically require (i) All "Risks" or "Special" form coverage insurance on all Pilates
and exercise training equipment, furniture, fixtures, other equipment, supplies and other property used in the
operation of the Studio, (ii) Workers' Compensation and Employer's Liability Insurance as required by law, (iii)
Commercial General Liability Insurance with limits of $2,000,000 in the aggregate. Occurrence form, including a
per location or project aggregate, with the following coverages owners and contractors protective liability,
broad form property damage, contractual liability, severability of interest clause, personal and advertising injury,
and products/completed operations, medical payments and fire damage liability, insuring you and us against all
claims, suits, obligations, liabilities and damages, including attorneys' fees, based upon or arising out of actual
or alleged personal injuries or property damage resulting from or occurring in the course of, or on or about or
otherwise relating to the franchised business, and (iv) Business Interruption Insurance with coverage for a least
12 months for actual losses All insurance policies must name us and any of our Affiliates as additional insured
parties

Computer System

You must purchase the computer system that we specify, including computer hardware, software, point
of sale system, inventory control systems, and high-speed network connections (collectively, the "Computer
System") The component parts of the Computer System must be purchased from approved suppliers If we
require you to use any proprietary software or to purchase any software from a designated vendor, you must sign
any software license agreements that we or the licensor of the software require and any related software
maintenance agreements The Computer System is described in more detail in Item 11 of this Disclosure
Document

ITEM 9 FRANCHISEE'S OBLIGATIONS

This table lists your principal obligations under the franchise and other agreements It will help you
find more detailed information about your obligations in these agreements and m other items of the
Disclosure Document

Section in Disclosure
Section in Franchise
Obligation Development Document
Agreement
Agreement Item

a Site Selection and Sections 12, 6 1, 6 2, 7 2 Section 8 Items 11and 12

acquisition/lease and 7 3 of Franchise
Agreement
b Pre-opening Sections 6 1, 6 2,7 2, 7 3 Section 8 Items 5,7 and 8
purchases/leases and 8 4 of Franchise
Agreement
c Site development and Sections 6 1, 6 2,7 1and Section 3 Items 6, 7 and 11
other pre-opening 7 3 of Franchise
requirements Agreement
d Initial and ongoing Sections 5 5 and 6 3 of Not Applicable Items 6, 7 and 11
training Franchise Agreement

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2015 Franchise Disclosure Document (Amended)
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accuracy of this information. Any action you take upon the information you find on this website (FranChimp.com), is strictly at your own risk. We will not be liable for any losses and/or damages in connection with the use of our website.
Section in Disclosure
Section in Franchise
Obligation Development Document
Agreement
Agreement Item

e Opening Sections 2 2 and 6 9 of Section 3, Exhibit B Item 11

Franchise Agreement
f Fees Sections 3 2 F, 5,9 1and Section 9 Items 5 and 6
14 2 of
Franchise Agreement
g Compliance With Sections 1 2, 2 2, 4 2, 6 4, Section 3 Item 11
standards and policies 6 6, 6 7, 7 1, 7 3, 7 4, 8 7
/Operating Manual and 9 3 of Franchise
Agreement
h Trademarks and Sections 11,4,12 1,15 1 Section 13 Items 13 and 14
proprietary and 15 3 of Franchise
information Agreement
1 Restrictions on Sections 13, 2 1, 2 2, 7 1, Not Applicable Items 8 and 16
products/services 8 1and 8 4 of Franchise
offered Agreement
J Warranty and Section 8 3 of Franchise Not Applicable Not Applicable
customer service Agreement
requirements
k Territorial Sections 13 and 8 8 of Section 1,3, and Item 12
development and Franchise Agreement Exhibit B
sales quotas
1 Ongoing Sections 8 4 and 10 3 of Not Applicable Items 8 and 11
product/service Franchise Agreement
purchases
m Maintenance, Sections 3 2 D and 7 4 of Not Applicable Items 6 and 17
appearance and Franchise Agreement
remodeling
requirements
n Insurance Section 10 4 of Franchise Not Applicable Items 6, 7 and 8
Agreement
0 Advertising and Sections 5 6 and 9 of Not Applicable Items 6 and 11
Marketing Fund Franchise Agreement
p Indemnification Section 112 of Not Applicable Item 6
Franchise Agreement
q Owner's participation/ Sections 8 3 and 8 6 of Section 7 Item 15
management/staffing Franchise Agreement
r Records and reports Sections 10 1and 10 3 of Not Applicable Item 11
Franchise Agreement

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2015 Franchise Disclosure Document (Amended)
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accuracy of this information. Any action you take upon the information you find on this website (FranChimp.com), is strictly at your own risk. We will not be liable for any losses and/or damages in connection with the use of our website.
Section in Disclosure 1
Section in Franchise
Obligation Development Document
Agreement
Agreement Item

s Inspections and audits Sections 8 2 and 10 2 of Not Applicable Items 11

Franchise Agreement
t Transfer Section 14 of Franchise Section 16 Items 6 and 17
Agreement
u Renewal Section 3 2 of Franchise Not Applicable Item 17
Agreement
V Post-termination Sections 13 1and 15 3 of Sections 14,15 Item 17
obligations Franchise Agreement
w Non-competition Sections 12 2 and 13 of Section 11 Item 17
covenants Franchise Agreement
X Dispute resolution Section 16 of Sections 21, 22 Item 17
Franchise Agreement

ITEM 10 FINANCING

We do not offer direct or indirect financing for any amount due under the Franchise Agreement or
Development Agreement We do not guarantee your note, lease or any other obligation

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

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2015 Franchise Disclosure Document (Amended)
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accuracy of this information. Any action you take upon the information you find on this website (FranChimp.com), is strictly at your own risk. We will not be liable for any losses and/or damages in connection with the use of our website.
ITEM 11 FRANCHISOR'S ASSISTANCE, ADVERTISING, COMPUTER SYSTEMS AND TRAINING

Except as listed below, we are not required to provide you with any assistance

A Pre-Openine Assistance

Franchise Agreement

Before you open the Studio

1 We Will provide you (or, if you are an entity, your Designated Operator), as well as any initial
instructors of your Studio, with our proprietary Initial Training Program, that at least you (or, if appropriate, your
Designated Operator) will need to complete prior to opening your Studio We will typically provide the Initial
Training Program to you and your designated trainees within the 30 days preceding your Studio opening, but that
timing will be subject to the availability and schedules of our training personnel We will provide this Initial Training
Program at our corporate headquarters or other training facility we designate, and this initial training (as well as
other training provided by us in connection with your Studio) is described more fully below in this Item under the
heading 'Training" (Franchise Agreement, Section 6 3)

2 We will provide to you our current written Site Selection Guidelines Our guidelines for site
selection may require that you conduct, at your expense, an evaluation of the demographics of the market area
for the location (including the population and income level of residents in the market area), aerial photography,
size and other physical attributes of the location, shopping mall, tenant mix, proximity to residential
neighborhoods and proximity to schools, shopping centers, entertainment facilities that attract consumers.and
generate traffic The typical Studio will be at least 1,500 square feet and be in a rectangular shape of 30 feet by
50 feet (Franchise Agreement, Section 6 1)

If you locate a site, we will approve or disapprove of the site within 30 days after receipt of the
Location Report from you We use a software program to evaluate the demographics of a market area for site
selection approval If we cannot agree on a site, we may extend the time for you to obtain a site, or we may
cancel the Franchise Agreement

3 Concurrently with the execution of your Franchise Agreement, we will loan you one copy of the
Manual, which contains mandatory and suggested specifications, standards and procedures The Manual is
confidential and remains our property We may modify the Manual (Franchise Agreement, Section 6 4) The
Table of Contents of the Manual is attached to this Disclosure Document as Exhibit E

4 Within 30 calendar days of execution ofyour Franchise Agreement, we will provide you (through
the Manual or otherwise) with specifications for the layout and design of the Studio (Franchise Agreement,
Sections 6 2, 7 1and 7 3)

5 Within 30 calendar days of execution ofyour Franchise Agreement, we will provide you (through
the Manual or otherwise) with a list of the Pilates fitness equipment and gear, standard fixtures, furnishings,
supplies, and signs to be used in the Studio, as well as a list of Approved Suppliers (Franchise Agreement, Section
6 6)

6 We will license you the use of our trademarks (Franchise Agreement, Section 4 2)

7 We will consult and advise you on the advertising, marketing and promotion for the Grand
23
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accuracy of this information. Any action you take upon the information you find on this website (FranChimp.com), is strictly at your own risk. We will not be liable for any losses and/or damages in connection with the use of our website.
Opening of the Studio (Franchise Agreement, Section 6 9)

8 If you enter a Development Agreement, we will designate your Development Area

(Development Agreement, Section 1and Exhibit A)

We are not required to provide any other service or assistance to you before the opening of the Studio

B Site Selection Assistance and Time to Open

Site Selection Assistance

You must assume all costs, liabilities, expenses and responsibility for (i) locating, obtaining and developing
a Premises for your Franchised Business, and (ii) constructing, equipping, remodeling and/or building out the
Premises for use as a Franchised Business, all in accordance with our System standards and specifications We may
provide you with our current written site selection guidelines, to the extent such guidelines are in place, and any
other site selection counseling and assistance we believe is advisable

Before we consider approvinga location for the Studio, you must submit to us a complete report containing
all information we may reasonably request concerning the proposed location, including, without limitation,
population density, demographics, proximity to other Studios, available parking, traffic flow and entrance to and
exit from the site (the "Location Report") In deciding whether to approve a site, we may also consider the Location
Report and, among other things (i) demographic characteristics, traffic patterns, allowed design and building,
parking, visibility„allowed signage, and the predominant character of the neighborhood surrounding the proposed
site, (ii) competition from other businesses selling similar products and services within the area and the proximity
of the site to these businesses, as well as the nature of all other businesses in proximity to the proposed site, (in)
zoning restrictions, soil and environmental issues, and other commercial characteristics, and (iv) the size,
appearance, and other physical characteristics of the proposed site (Franchise Agreement, Section 12) If you
locate a site, we will approve or disapprove of the site within 30 days after receipt of the Location Report from
you

If the Authorized Location has not been identified at the time the Franchise Agreement is signed, we will
work with you to designate a geographical area within which you will locate the Studio ("Designated Market Area")
(Franchise Agreement, Section 13)

We must also have the opportunity to review and approve/reject any lease or purchase agreement for a
proposed location before you enter into such an agreement We may condition our approval on a number of
conditions, including (i) the inclusion of the terms outlined in Section 7 2 of the Franchise Agreement and Exhibit
5 to the Franchise Agreement in the lease for the location, and (ii) receiving a written representation from the
landlord of the Premises that you will have the right to operate the Studio, including offering and selling the
Approved Products and Services, throughout the term of your Franchise Agreement (Franchise Agreement,
Sections 2 2(C) and 7 2, and Exhibit 5)

You must secure an Authorized Location that we approve within six (6) months of executing your Franchise
Agreement for that Franchised Business or we may terminate that Franchise Agreement (Franchise Agreement,
Section 12)

Franchise Agreement

We will authorize the opening of your Studio when (i) all of your pre-opening obligations have been
24
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2015 Franchise Disclosure Document (Amended)
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accuracy of this information. Any action you take upon the information you find on this website (FranChimp.com), is strictly at your own risk. We will not be liable for any losses and/or damages in connection with the use of our website.
fulfilled, (ii) pre-openmg training has been completed, (iii) all amounts due us have been paid, (iv) copies of all
insurance policies (and payment of premiums) and all other required documents have been received by us, and
(v) all permits have been approved (Franchise Agreement, Sections 5 4, 5 5, 6 3 and 10 4)

The typical length of time between the signing of the Franchise Agreement and the time you open your
Studio IS approximately three (3) to six (6) months Your total timeframe may be shorter or longer depending on
the time necessary to obtain an acceptable Premises, to obtain financing, to obtain the permits and licenses for
the construction and operation of the Franchised Business, to complete construction or remodeling as it may be
affected by weather conditions, shortages, delivery schedules and other similar factors, to complete the interior
and exterior of the Franchised Business, including decorating, purchasing and installing fixtures, equipment and
signs, and to complete preparation for operating the Franchised Business, including purchasing any inventory or
supplies needed prior to opening

You are required to open your Franchised Business within six (6) months of executing your Franchise
Agreement, but we may agree in writing to provide you with an additional three (3) months to open your Studio if
you (a) have already secured an approved premises for your Studio, and (b) are otherwise making diligent and
continuous efforts to buildout and otherwise prepare your Franchised Business for opening throughout the six (6)
month period following the execution of your Franchise Agreement If you do not open your Studio within the
time period set forth in the Franchise Agreement, we will have the option to terminate your Franchise Agreement
(Franchise Agreement, Sections 12 and 2 2)

Development Agreement

If you have entered into a Development Agreement to open and operate three (3) or more Franchised
Businesses, your Development Agreement will include a Development Schedule containing a deadline by which
you must have each of your Franchised Businesses open and operating (Development Agreement, Exhibit A)

C Our Obligations Dunne the Operation of the Franchised Business

Franchise Agreement

During the operation of the franchised business

1 We will specify or approve certain equipment and suppliers to be used in the franchised business
(Franchise Agreement, Sections 6 6 and 7 1)

2 We will provide additional training to you and any of your employees at your request You are
responsible for any and all costs associated with such additional training (Franchise Agreement, Section 6 3)

3 If you do not obtain and maintain appropriate insurance coverage, we may procure the
coverage on your behalf We will pass the cost onto you (Franchise Agreement, Section 10 4 D )

4 We may institute various programs for auditing customer satisfaction and/or other quality
control measures (Franchise Agreement, Section 8 2)

5 We will maintain and administer the marketing fund (the "Marketing Fund") (Franchise
Agreement, Section 9 1)

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2015 Franchise Disclosure Document (Amended)
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accuracy of this information. Any action you take upon the information you find on this website (FranChimp.com), is strictly at your own risk. We will not be liable for any losses and/or damages in connection with the use of our website.
The Marketing Fund and Advertising Generally

The MarketingFund was established in 2014 to promote Club Pilates Studios and the Brand on a National
level Franchisee will be required to make a contribution ("Marketing Fund Contribution") of up to two percent
(2%) of Its monthly Gross Sales to the Marketing Fund Such Marketing Fund Contribution will be payable to
Franchisor, weekly, from the day the Studio is first opened for business or Franchisee receives payments from
members, whichever occurs first The current Marketing Fund Contribution is one percent (1%) of monthly Gross
Sales, but it is subject to increase at Franchisor's discretion Franchisor will give Franchisee at least sixty (60)
days written notice before any such increase will be instituted (Franchise Agreement, Section 9 1)

The Marketing Fund is administered by us with the advice provided by the Marketing Fund Committee (the
"MFC") pursuant to a charter agreement among us and the members of the MFC Under the current charter, which
IS subject to change. Club Pilates franchisees elect or appoint 2 members to the MFC to serve for a one-year term
corresponding to the calendar year and we select 2 members to serve for a one-year term corresponding to the
calendar year The 4-member MFC will, by a majority vote, assist us in determining the selection and placement
of regional and national advertising Each MFC member has one vote If the MFC is deadlocked, our President will
break the deadlock with the decidingvote, which shall be binding The Marketing Fund is maintained and operated
by us with the assistance of the MFC to meet the costs of conducting regional and national advertising and
promotional activities which are deemed most beneficial to the System The MFC serves in an advisory capacity
only With the assistance of the MFC, we will direct all public relations, advertising and promotions with sole
discretion over the message, creative concepts, materials and media used in the programs and the placement
and allocation thereof We have the power to form, change or dissolve the MFC We will pay for these activities
from the Marketing Fund The Marketing Fund contributions may be used for traditional advertising activities,
such as website development, social media, public relations, advertising campaigns (television, radio, print or
other media), or other promotions which will raise awareness of the CLUB PILATES brand (Franchise Agreement,
Sections 6 8 and 9 1)

We are not obligated to ensure that Marketing Fund activities or dollars are spent equally, on a pro rata
basis, either on your Studio, or all Studios in an area A brief statement regarding the availability of CLUB PILATES
franchises may be included in advertising and other items produced using the Marketing Fund, but we will not
otherwise use the Marketing Fund to pay for franchise sales or solicitations

Reasonable disbursements from the Marketing Fund will be made solely for the payment of expenses
incurred in connection with the general promotion of the Marks and the System, including the cost of
formulating, developing and implementing advertising and promotional campaigns, and the reasonable costs of
administering the Marketing Fund, including accounting expenses and the actual costs of salaries and fringe
benefits paid to our employees engaged in administration of the Marketing Fund The Marketing Fund is not a
trust or escrow account, and we have no fiduciary obligations regarding the Marketing Fund We will retain
independent certified public accountants to prepare an annual audit of the Marketing Fund, at the expense of
the Marketing Fund, and send a copy of the audit to franchisees upon written request Our company-owned or
affiliate-owned Studios will contribute to the Marketing Fund at the rate provided in our Franchise Disclosure
Document Should the advertising contribution for the System decrease at any time, we have the right to reduce
our contribution from company-owned or affiliate-owned Studios to the rate specified for franchised locations

We are not required to spend all Marketing Fund contributions in the fiscal year they are received

You agree to participate in all Marketing Fund programs The Marketing Fund may furnish you with
marketing, advertising and promotional materials, however, we may require that you pay the cost of producing,
shipping and handling for such materials
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accuracy of this information. Any action you take upon the information you find on this website (FranChimp.com), is strictly at your own risk. We will not be liable for any losses and/or damages in connection with the use of our website.
During the fiscal year ended on December 31, 2014, the Marketing Fund spent 0% of its contributions
on production, 0% on media and public relations, 0% on administrative expenses, 0% on sponsorships, and 0%
on internet related matters We only collected a small number of Marketing Fund Contributions from a few of
our affiliatc-owned Studios over our 2014 fiscal year, and we have rolled these amounts into the Marketing Fund
for our 2015 fiscal year

You are responsible for local marketing activities to attract members to your Studio We require you to
submit samples of all advertising and promotional materials (and any use of the Marks and/or other forms of
commercial identification) for any media, including the Internet, World Wide Web or otherwise You must first
obtain our advanced written approval before any form of co-branding, or advertising with other brands,
products or services (Franchise Agreement, Section 9 2)

You must strictly follow the social media guidelines, code of conduct, and etiquette as set forth in the
Manual regarding social media activities Any use of Social Media by you pertaining to the Studio must be in
good taste and not linked to controversial, unethical, immoral, illegal or inappropriate content You will
promptly modify or remove any online communication pertaining to the Studio that does not comply with the
Franchise Agreement or the Manual (Franchise Agreement, Section 9 3)

We have not yet established a local or regional advertising cooperative We may, in the future, decide
to form one or more associations and/or sub-associations of Club Pilates Studios to conduct various marketing-
related activities on a cooperative basis (a "Co-Op") If one or more Co-Ops (local, regional and/or national) are
formed covering your area, then you must join and actively participate You may be required to contribute such
amounts as are determined from time to time by such Co-Ops (Franchise Agreement, Section 9 4)

E Training

Initial Training Program

Prior to opening your Franchised Business, you must ensure that (i) you (or, if you are an entity, your
Designated Operator) completes the Owner/Operator Module of the Initial Training Program, which will typically
last 2-3 business days at our corporate headquarters or another training facility we designate (most likely in
California), and (ii) at your option and if you wish, one (1) or more individuals that are Certified Pilates Instructor(s)
and that will be responsible for providing the Approved Services at your Franchised Business may participate and
complete the Orientation Program component of our Initial Training Program, which typically lasts 1business day
and IS designed to provide advanced instruction on how to provide Pilates instruction, as well as the other
Approved Services, in accordance with our System standards and specifications While there is no specific deadline
by which you must complete the Initial Training Program, you must complete all of your training obligations prior
to opening your CLUB PILATES Studio

Please note that you may elect to have certain of your initial instructors and any subsequent instructors of
your Studio participate in completing the Orientation Program component of our Initial Training Program remotely
via webinar/video instruction With that said, we recommend that at least one (1) of your initial instructors come
to the Initial Training Program with you (or your Designated Principal or Designated Manager, as applicable) and
complete the entire Initial Training Program (including the Orientation Program component) at the training
facility(ies) we designate

In the event you are the owner of multiple Studios or otherwise wish to appoint a third-party individual to
manage the day-to-day operations of your Franchised Business, then that individual (a "Designated Manager")
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accuracy of this information. Any action you take upon the information you find on this website (FranChimp.com), is strictly at your own risk. We will not be liable for any losses and/or damages in connection with the use of our website.
must (a) attend and complete at least the Owner/Operator Module (and, if he/she is a Certified Pilates Instructor
and wishes to provide the Approved Services, the Orientation Program), and (b) otherwise be approved by us,
before assuming any management responsibility at your Franchised Business (Franchise Agreement, Sections 5 5
and 6 3)

We do not charge a tuition or training fee for you or your designated trainees (Designated Operator,
Designated Manager (if appropriate) or initial instructor(s)) to attend our Initial Training Program, provided these
individuals attend at the same time You will be responsible for the costs and expenses associated with these
individuals attending our Initial Training Program (Franchise Agreement, Section 5 5)

Our Initial Training Program as of the Issue Date of this Disclosure Document is described below

TRAINING PROGRAM

Owner/Operator Module
Hours of Hours of
Subject Location
Classroom Training On-The-Job Training
Club Pilates Corporate
History and Philosophy 1 0
Office - Costa Mesa, CA
Club Pilates Corporate
Real Estate 2 0
Office - Costa Mesa, CA
Club Pilates Corporate
Construction 1 0
Office - Costa Mesa, CA
Expectations and Club Pilates Corporate
Obligations 1 0 Office - Costa Mesa, CA
Studio and Equipment Club Pilates Corporate
Set- Up and Support 1 0 Office - Costa Mesa, CA
Club Pilates Studio near
Pilates Class 0 1 the Corporate Office
Club Pilates Corporate
Products 1 0 Office - Costa Mesa, CA
Intro to Studio Club Pilates Corporate
Management Software 1 0 Office - Costa Mesa, CA
Club Pilates Corporate
Sales and Operations 3 0 Office - Costa Mesa, CA
Club Pilates Corporate
Finance 1 0 Office - Costa Mesa, CA
Club Pilates Studio near
Pilates Class 0 1 the Corporate Office
Club Pilates Corporate
Staffing and HR Support 1 0 Office - Costa Mesa, CA
Club Pilates Corporate
Marketing 3 0 Office - Costa Mesa, CA
Training Re-Cap and Club Pilates Corporate
Summation 1 0 Office - Costa Mesa, CA
Club Pilates Corporate
Test 1 0 Office - Costa Mesa, CA
TOTAL 18 2
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accuracy of this information. Any action you take upon the information you find on this website (FranChimp.com), is strictly at your own risk. We will not be liable for any losses and/or damages in connection with the use of our website.
Orientation Program
Hours of Hours of
Subject Locabon
Classroom Training On-The-Job Training

Option 1 Club Pilates Corporate Office

On-line Educational in Costa Mesa, CA or Studio nearby
Training 2 0
Option 2 Remote attendance at your
Studio
Option 1 Club Pilates Corporate Office
in Costa Mesa, CA or Studio nearby
Workbook Training
Component 2 0
Option 2 Remote attendance at your
Studio
Option 1 Club Pilates Corporate Office
in Costa Mesa, CA or Studio nearby
Instructor Evaluation
Criteria 1 0
Option 2 Remote attendance at your
Studio
Option 1 Club Pilates Corporate Office
in Costa Mesa, CA or Studio nearby
Test 1 0
Option 2 Remote grading by
Franchisee at your Studio
TOTAL 6 0

Allison Beardsley, whose biography is listed in Item 2, is in charge of the training program She has 10
{+) years of experience m the fitness industry and has been with us or our affiliates since December 2007 We
normally conduct our training quarterly, as needed, but we reserve the right to change this schedule based on
(a) demand, and (b) the availability of our instructors Our primary instruction is through hands-on training,
videos, the Manual and other instructional materials we prepare specifically for the Initial Training Program The
Manual consists of 211 pages We may substitute other instructors to provide certain parts of the
Owner/Operator Module or Orientation Program, but these individuals will have all completed the appropriate
portion of the Initial Training Program on which they provide instruction

On-Site Grand Opening Assistance (Discretionary)

Around the time you first open your Studio, we may send one (1) or more representatives to your Studio
to (a) provide assistance and recommendations regarding your opening and initial operations, and/or (b) provide
additional or refresher training associated with the Owner/Operator Module and/or Orientation Program, as we
deem appropriate in our discretion If we determine to provide such on-site assistance, it will typically last
between 1-2 business days

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accuracy of this information. Any action you take upon the information you find on this website (FranChimp.com), is strictly at your own risk. We will not be liable for any losses and/or damages in connection with the use of our website.
Orientation Program for Instructors - Ongoing

In the event you have one (1) or more instructors at your Studio that have completed the Orientation
Program, then those individuals may assist in the provision of the Orientation Program (including reviewing and
grading the test associated with the Orientation Program) to any other Certified Pilates Instructors that you wish
to engage to serve as instructors at your Studio (Franchise Agreement, Section 6 3)

Teacher Training Program - Fees and Involvement of Franchisor

As part of the Approved Services, we will permit you to provide the Teacher Training Program at your
Franchised Business, provided you have a Certified Pilates Instructor that has (a) completed our Orientation
Program, and (b) otherwise met our then-current criteria to serve as a "Master Instructor" of the Teacher
Training Program (which, as previously disclosed, will be set forth in the Operations Manual or supplementary
Manuals) The Teacher Training Program typically involves approximately 450 to 500 hours of instruction,
including (i) 12 days of online "classroom/webinar" training (the "Webinar Training") that can be completed
remotely (at home or at your Franchised Business or other local Studio that is authorized to provide the Teacher
Training Program), and (ii) approximately 40 days of practical, "hands-on" training, some of which can be
completed at home and some of which must be completed at a Studio that is authorized to provide the Teacher
Training Program (Franchise Agreement, Section 6 3)

Presently, the Studios in our System typically charge a fee of $4,750 for an individual that signs up to
attend the Teacher Training Program As disclosed in Item 6, we receive $2,000 of that $4,750 fee as
consideration for that individual to have access to our proprietary Webinar Training (and any other materials we
determine appropriate in connection with the Teacher Training Program) The remaining $2,750 is paid to the
Studio where the individual obtains the rest of the Teacher Training Program instruction, which may be your
Franchised Business (provided we have approved one of your instructors as a "Master Instructor" or you retain
the services of a Club Pilates "Master Instructor" in your areas to conduct Teacher Training at your Studio)
(Franchise Agreement, Section 5 5)

While you could technically hire individuals to serve as instructors and have them go through the entire
Teacher Training Program, we expect and strongly recommend that you instead hire only Certified Pilates
Instructors that will only need to complete our Orientation Program before they can begin providing the
Approved Services at your Studio

Our standard franchise offering assumes that your initial instructor(s) will already be Certified Pilate
Instructors Please note, however, that (i) we will describe the proprietary Teacher Training Program that can
be provided as part of a Studio's Approved Services in our Operations Manual or other written materials that we
provide to you, and (ii) we may permit you to have one (1) or more instructors complete the Teacher Training
Program while you are securing an approved premises for your Studio and otherwise developing that Studio for
opening (but this may involve a higher investment than our standard franchise offering described in Item 7)

Additional Training in Connection with Operation of the Franchised Business

We may also provide, and require that you (and your Designated Operator and Designated Manager, as
appropriate) attend, up to five (5) days of additional training each year at our designated training facility We will
not charge any training fee in connection with such training that we require you to attend (Franchise Agreement,
Section 6 3)

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accuracy of this information. Any action you take upon the information you find on this website (FranChimp.com), is strictly at your own risk. We will not be liable for any losses and/or damages in connection with the use of our website.
You may request that we provide certain additional or refresher training to you, either at one (1) of our designated
training facilities or on-site at your Franchised Business We reserve the right to charge you our then-current
training fee based on the number of days of such training that we provide at your request (regardless of location)
(Franchise Agreement, Section 6 3)

You will be responsible for the costs and expenses associated with you and your designated personnel
attending any such additional training described in this Item (Franchise Agreement, Sections 5 5 and 6 3)

F Computer System - Hardware and Software

You must acquire a computer for use in the operation of the Studio You must record all of your receipts,
expenses, invoices, member lists, class and employee schedules, and other business information promptly in the
computer system and use the software that we specify or otherwise approve Currently, the approved and
required software for use m the Studio is "ClubReady," an online/web-based business management program
used for class scheduling, processing member credit and debit card payments, keeping your business records
and generating business reports among other things At this time, we have approved no other compatible
program but we reserve the right to do so at our sole discretion If the approved supplier for the required
software changes, you must migrate your operations to the new required software at our direction The details
of these standards and requirements will be described in the Manual or otherwise in writing and may be
modified in response to changes in marketing conditions, business operating needs, or technology (Franchise
Agreement, Sections 5 4, 5 7 and 10 3)

You must allow our approved supplier to upgrade the proprietary database configuration of the required
software for the computer in your Studio as we determine necessary Our approved supplier may provide you
periodic updates to maintain the software and may charge a fee for preparing the updates and maintaining the
software There are no limitations on the frequency and cost of the updates The system is designed to enable
us to have immediate, independent access to the information monitored by the system, and there is no
contractual limitation on our independent access or use of the information we obtain (Franchise Agreement,
Sections 5 4 and 10 3)

You must purchase or lease, and thereafter maintain, such computer hardware and software, dedicated
high speed communications equipment and services, dedicated telephone and power lines, modem(s),
printer(s), speakers, and other computer-related accessories or peripheral equipment as we may specify, for the
purpose of, among other functions, recording Studio sales, scheduling classes, and other functions that we
require You must provide such assistance as may be required to connect your computer system with a
computer system used by us We will have the right, on an occasional or regular basis, to retrieve such data and
information from your computer system as we, in our sole and exclusive discretion, consistent with consumer
privacy laws, deem necessary You must operate your computer system in compliance with certain security
standards specified by us, which may be modified at our discretion from time to time In view of the
interconnection of computer systems and the necessity that such systems be compatible with each other, you
expressly agree that you will strictly comply with our standards and specifications for all item(s) associated with
your computer system, and will otherwise operate your computer system in accordance with our standards and
specifications (Franchise Agreement, Sections 5 4 and 10 3)

To ensure full operational efficiency and optimum communication capability between and among
computer systems installed by you, us, and other Club Pilates franchisees, you agree, at your expense, to keep
your computer system in good maintenance and repair, and following our determination that it will be
economical or otherwise beneficial to the System to promptly install such additions, changes, modifications,

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accuracy of this information. Any action you take upon the information you find on this website (FranChimp.com), is strictly at your own risk. We will not be liable for any losses and/or damages in connection with the use of our website.
substitutions and/or replacement to your computer hardware, software, communications equipment and
services, telephone and power lines, and other computer-related facilities, as we direct

We reserve the right to require you to update or upgrade any computer hardware or software during
the term of the franchise, and if we choose to do so, there are no limitations on the cost and frequency of this
obligation The approximate cost of the Computer System including a computer or tablet computer, hardware
and software is approximately $1,200 but our Approved Supplier may permit you to pay this out over 12 months
There is no initial fee to obtain the software The approximate cost of any annual maintenance upgrades or
updates or maintenance support contracts varies widely from $0 to $1,500, which does not include the software
fee of $229 per month We have no obligation to provide ongoing maintenance, repairs, upgrades or updates,
and any such obligations would be those of the software licensors

ITEM 12 TERRITORY

Franchise Agreement

You will operate the Studio at a specific location approved by us Once you have secured the location
for the Studio, we will provide you a Designated Territory within which you will have certain protected rights
Your Designated Territory will typically be a two-mile radius around your Studio, unless your Studio is located in
a major metropolitan downtown area or similarly situated/populated central business district (a "Central
Business District") If your Studio is located in a Central Business District, your Designated Territory may be
limited to a geographic area comprised of anywhere from a radius of two blocks to two miles around your Studio,
as we deem appropriate in our discretion The size of your Designated Territory may vary from the territory
granted to other franchisees based on the location and demographics surrounding your Studio

The boundaries of your Designated Territory may be described in terms of zip codes, streets, landmarks
(both natural and man-made) or county lines, or otherwise delineated on a map The sources we use to
determine the population within your Designated Territory will be publicly available population information
(such as data published by the U S Census Bureau or other governmental agencies and commercial sources)

If you have been granted a Designated Territory, neither we nor our affiliates will operate or establish,
or authorize another Club Pilates franchisee to operate or establish, a Studio within your Designated Territory
For this reason, your Designated Territory is deemed "exclusive" under applicable franchise disclosure laws (but
please note our reserved rights described later in this Item)

Except as expressly provided in the Franchise Agreement, you have no right to exclude, control or
impose conditions on the location, operation or otherwise of present or future Studios, using any of the other
brands or Marks that we now, or in the future, may offer, and we may operate or license Studios or distribution
channels of any type, licensed, franchised or company-owned, regardless of their location or proximity to the
Premises and whether or not they provide services similar to those that you offer You do not have any rights
with respect to other and/or related businesses, products and/or services, in which we may be involved, now or
in the future

While you and other Club Pilates Studios will be able to provide the Approved Services to any potential
client that visits or otherwise reaches out to your Studio, you will not be permitted to actively solicit or recruit
clients outside your Designated Territory, unless we provide our prior written consent Likewise, other System
franchisees are not permitted to solicit and/or recruit prospective clientele within your Designated Territory
You will not be permitted to advertise and promote your Franchised Business via advertising that is directed at
those outside your Designated Territory without our prior written consent, which we will not unreasonably
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accuracy of this information. Any action you take upon the information you find on this website (FranChimp.com), is strictly at your own risk. We will not be liable for any losses and/or damages in connection with the use of our website.
withhold provided (a) the area you wish to advertise in is contiguous to your Designated Territory, and (b) that
area has not been granted to any third party m connection with a Club Piiates Studio (or Development
Agreement) of any kind

We may choose, in our sole discretion, to evaluate your Studio for compliance with the System Standards
using various methods (including, but not limited to, inspections, field service visits, surveillance camera
monitoring, member comments/surveys, and secret shopper reports) You must meet minimum standards for
cleanliness, equipment condition, repair and function, and customer service Your employees, including
independent contractors, must meet minimum standards for courteousness and customer service (Franchise
Agreement, Section 8 8A)

Unless waived by us due to unique market conditions, or your Studio's size, you must meet a certain
Minimum Member Quota If you fail to achieve and maintain 40 members per day (averaged over one week) by
the r' year anniversary of the opening of the Studio, 65 members per day (averaged over one week) by the end
of the 2"'' year anniversary, and 85 members per day (averaged over one week) by the end of the 3"' year
anniversary and each succeeding year thereafter, we may institute a corrective training program and/or require
you to perform additional local marketing If you fail to meet the Minimum Member Quota for thirty six (36)
consecutive months at any time during the Term of this Agreement, we may institute a mandatory corrective
training program or terminate the Franchise Agreement at our sole discretion (Franchise Agreement, Section
8 8B)

Development Agreement

If you are granted the right to open three or more Franchised Businesses under our form of Development
Agreement, then we will provide you with a Development Area upon execution of this agreement The size of
your Development Area will substantially vary from other System developers based on (i) the number of
Franchised Businesses we grant you the right to open and operate, and (ii) the location and demographics of the
general area where we mutually agree you will be opening these locations The boundaries of your Development
Area may be described in terms of zip codes, streets, landmarks (both natural and man-made) or county lines,
or otherwise delineated on a map attached to the Data Sheet

Each Franchised Business you timely open and commence operating under our then-current form of
franchise agreement will be operated (i) from a distinct site located within the Development Area, and (ii) within
Its own Designated Territory that we will define once the site for that Franchised Business has been approved

We will not own or operate, or license a third party the right to own or operate, a Studio utilizing the
Marks and System within the Development Area until the earlier of (i) the date we define the Designated
Territory of the final Franchised Business you were granted the right to operate under the Development
Agreement, or (ii) the expiration or termination of the Development Agreement for any reason Your
Development Area will be exclusive during this time period

Upon the occurrence of any one of the events described in the preceding paragraph, your territorial
rights within the Development Area will be terminated, except that each Franchised Business that you have
opened and are continuously operating as of the date of such occurrence will continue to enjoy the territorial
rights within their respective Designated Territories that were granted under the franchise agreement(s) you
entered into for those Franchised Business(es)

You must comply with your development obligations under the Development Agreement, including your
Development Schedule, in order to maintain your exclusive rights within the Development Area If you do not
33
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accuracy of this information. Any action you take upon the information you find on this website (FranChimp.com), is strictly at your own risk. We will not be liable for any losses and/or damages in connection with the use of our website.
comply with your Development Schedule, we may terminate your Development Agreement and any further
development rights you have under that agreement Otherwise, we will not modify the size of your Development
Area except by mutual written agreement signed by both parties

Reserved Rights

We and our affiliates reserve the exclusive right to conduct the following activities under the Franchise
Agreement and/or Development Agreement (as appropriate) (i) establish and operate, and license any third
party the right to establish and operate, other Studios and Franchised Businesses using the Marks and System
at any location outside of your Designated Territory(ies) and, if applicable. Development Area, (ii) market, offer
and sell products and services that are similar to the products and services offered by the Franchised Business
under a different trademark or trademarks at any location, within or outside the Designated Territory(ies) and,
if applicable, the Development Area, (iii) use the Marks and System, as well as other such marks we designate,
to distribute any Approved Products and/or Services in any alternative channel of distribution, within or outside
the Territory(ies) and Development Area (including the Internet, mail order, catalog sales, toll-free numbers,
wholesale stores, etc ), as further described below, (iv) to acquire, merge with, or otherwise affiliate with, and
after that own and operate, and franchise or license others to own and operate, any business of any kind,
including, without limitation, any business that offers products or services the same as or similar to the Approved
Products and Services (but under different marks), within or outside your Designated TerritorY(ies) and, if
applicable. Development Area, and (v) use the Marks and System, and license others to use the Marks and
System, to engage in any other activities not expressly prohibited in your Franchise Agreement and, if applicable,
your Development Agreement

Neither the Franchise Agreement nor Development Agreement grants you any right to engage in any of
the activities outlined in the preceding paragraph, or to share in any of the proceeds received by us, our affiliates
or any third party from these activities, unless we otherwise agree in writing Further, we have no obligation to
provide you any compensation for soliciting or accepting orders (via alternate channels of distribution) within
your Territory

Internet Sales / Alternative Channels of Commerce

We may sell products and services to members located anywhere, even if such products and services
are similar to what we sell to you and what you offer at your Studio We may use the internet or alternative
channels of commerce to sell CLUB PILATES brand products and services You may only sell the products and
services from your approved Studio location, and may only use the internet or alternative channels of commerce
to offer or sell the products and services, as permitted by us, in order to register members for classes We may
require you to submit samples of all advertising and promotional materials (and any use of the Marks and/or
other forms of commercial identification) for any media, including the Internet, World Wide Web or otherwise
We retain the right to approve or disapprove of such advertising, in our sole discretion Any use of social media
by you pertaining to the Studio must be in good taste and not linked to controversial, unethical, immoral, illegal
or inappropriate content We reserve the right to "occupy" any social media websites/pages and be the sole
provider of information regarding the Studio on such websites/pages (e g, a system-wide Facebook page) At
our request, you will promptly modify or remove any online communication pertaining to the Studio that does
not comply with the Franchise Agreement or the Manual You are not prohibited from obtaining members over
the Internet provided your internet presence and content comply with the requirements of the Franchise
Agreement

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accuracy of this information. Any action you take upon the information you find on this website (FranChimp.com), is strictly at your own risk. We will not be liable for any losses and/or damages in connection with the use of our website.
Additional Disclosures

Neither the Franchise Agreement nor the Development Agreement provides you with any right or option
to open and operate additional Franchised Businesses (other than as specifically provided for in your
Development Agreement if you are granted multi-unit development rights) Regardless, each Franchised
Business you are granted the right to open and operate must be governed by its own specific form of Franchise
Agreement

We have not established other franchises or company-owned outlets or another distribution channel
offering or selling similar products or services under a different trademark Neither we nor our affiliate have
established, or presently intend to establish, other franchised or company-owned businesses that sell our
Approved Products and Services under a different trade name or trademark, but we reserve the right to do so
in the future without your consent

ITEM 13 TRADEMARKS

We grant you the right to operate a Studio under the following Marks, we may authorize you to use
ancillary Marks as well The following Marks are registered and owned by us on the Principal Register or the
Supplemental Register of the United States Patent and Trademark Office

Mark Registration/ Registration or Class

Sena! No Application/Filing Date
CLUB PILATES Reg No 4,255,517 Reg Date December 4, 2012 41
(Word Mark) (Supplemental Register)

Reg No 4,190,273 Reg Date August 14, 2012 41

(Principal Register)

ClUB PILATES Reg No 4,406,173 Reg Date September 24, 2013 41

(Principal Register)

We assert common law rights with respect to the Marks since we, or our affiliates, were the first to use
the respective marks

When the "Club Pilates" word mark has acquired distinctiveness or secondary meaning, we intend to
amend the registration for such Mark and appeal the decision to register the Mark on the Supplemental Register

35
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2015 Franchise Disclosure Document (Amended)
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accuracy of this information. Any action you take upon the information you find on this website (FranChimp.com), is strictly at your own risk. We will not be liable for any losses and/or damages in connection with the use of our website.
A registration on the Supplemental Register grants us the right to use the registered ® symbol when the mark is
used with the Club Pilates Studio and any related products and services It will also block later-filed applications
from using confusingly similar marks for related goods A registration on the Supplemental Register does not
provide all the protections of a registration on the Principal Register For example, a Supplemental Registration
does not convey the presumptions of validity, ownership and exclusive rights to use the mark that attach with a
registration on the Principal Register A Supplemental Registration cannot be used to stop importation of
counterfeit products Also, a Supplemental Registration can never become incontestable

There are no presently effective determinations of the United States Patent and Trademark Office, the
Trademark Administrator of any State, or any court, nor any pending material litigation involving any of the
Marks which are relevant to their use in any State There are no pending interference actions or opposition or
cancellation proceedings that significantly limit our rights to use or license the use of the Marks in any manner
material to the System We have filed all required affidavits for the Marks and will continue to do so None of
the Marks' registrations have come up for renewal at this point so we have not yet renewed any of the Marks'
registrations

You must follow our rules when you use the Marks You cannot use our name or any of the Marks as
part of a corporate name or with modifying words, designs or symbols except for those which we license
to you You may not use the Marks in connection with the sale of an unauthorized product or service or in
a manner not authorized in writing by us You must not use any other trade names or trademarks in the
operation of the Studio without first obtaining our written consent You must not establish a website on the
Internet using any domain name containing the Marks or any variation thereof without our written consent We
retain the sole right to advertise on the Internet and create a website using the Marks as domain names

If It becomes advisable, in our sole discretion, for us to modify or discontinue use of any of the Marks,
or use one or more additional or substitute Mark, you must comply with our directions to modify or otherwise
discontinue the use of such Mark within a reasonable time after notice by us We will not be obligated to
compensate you for any costs you incur in connection with any such modification or discontinuance

You cannot seek to register, re-register, assert claim to ownership of, license or allow others to use or
otherwise appropriate to itself any of the Marks or any mark or name confusingly similar to them, except insofar
as such action inures to the benefit of Franchisor and has our prior written approval Upon the termination or
cancellation of the Franchise Agreement, you must discontinue use of the Marks, remove copies, replicas,
reproductions or simulations thereof from the premises and take all necessary steps to assign, transfer, or
surrender to us all Marks which you may have used in connection with the Franchise Agreement

You must immediately notify us of any apparent infringement of or challenge to your use of the
mark Although not obligated to do so, we will take any action deemed appropriate and will control any
litigation or proceeding You must cooperate with any litigation relating to the Marks which we or our Affiliates,
or the Licensor, might undertake

We are not aware of any prior superior rights or infringing uses that would materially affect your use of
the Marks But, there is always a possibility that there might be one or more businesses, similar to the business
covered by the Franchise, operating in or near the area(s) where you may do business, using a name, trademark
and/or trade dress similar to the Marks and with superior rights to the name and/or trademark We strongly
urge you to research this possibility, using telephone directories, local filings and other means, before you pay
any money, sign any documents or make any binding commitments If you do not research the possibility of
other trademarks in this business, you may be at risk

36
©2015 Club Pilates Franchise LLC
2015 Franchise Disclosure Document (Amended)
This document was downloaded from franchimp.com. All the information on this website is published in good faith and for general information purpose only. FranChimp.com does not make any warranties about the completeness, reliability, and
accuracy of this information. Any action you take upon the information you find on this website (FranChimp.com), is strictly at your own risk. We will not be liable for any losses and/or damages in connection with the use of our website.
There are no agreements currently m effect, which significantly limit our rights to use or license the use
of the Marks

ITEM 14 PATENTS, COPYRIGHTS AND PROPRIETARY INFORMATION

You do not receive the right to use any item covered by a patent or copyright, but you can use the
proprietary information in the Manual The Manuals are described in Item 11 Item 11 also describes the
limitations on the use of the Manual by you and your employees

We have no registered copyrights, nor are there any pending patent applications that are material to
the franchise However, we claim copyrights on certain forms, advertisements, promotional materials, software
source code and other Confidential Information as defined below

There currently are no effective determinations of the Copyright Office (or any court regarding any of
the copyrighted materials There are no agreements in effect which significantly limit our right to use or license
the copyrighted materials Finally, there are no infringing uses actually known to us that could materially affect
your use of the copyrighted materials in any state No agreement requires us to protect or defend any copyrights
or you in connection with any copyrights

In general, our proprietary information includes "Confidential Information" as defined in Section 12 of

the Franchise Agreement, some of which is contained in our Manual, and includes, among other things, all
information (current and future) relating to the operation of the Studio or the System, including, among other
things, all (i) manuals, training, techniques, processes, policies, procedures, systems, data and know how
regarding the development, marketing, operation and franchising of the Studios, (ii) designs, specifications and
information about products and services and (iii) all information regarding members and suppliers, including any
statistical and/or financial information and all lists We disclose to you Confidential Information needed for the
operation of a Club Pilates franchise, and you may learn additional information during the term of your franchise
We have all rights to the Confidential Information and your only interest in the Confidential Information is the
right to use it under your Franchise Agreement

Both during and after the term of your Franchise Agreement, you must use the Confidential Information
only for the operation of your Studio under a Club Pilates Franchise Agreement, maintain the confidentiality of
the Confidential Information, not make or distribute, or permit to be made or distributed, any unauthorized
copies of any portion of the Confidential Information, and (iii) follow all prescribed procedures for prevention of
unauthorized use or disclosure of the Confidential Information (Franchise Agreement, Section 12)

We have the right to use and authorize others to use all ideas, techniques, methods and processes
relating to the Studio that you or your employees conceive or develop

You also agree to fully and promptly disclose all ideas, techniques and other similar information relating
to the franchise business that are conceived or developed by you and/or your employees We will have a
perpetual right to use, and to authorize others to use, those ideas, etc without compensation or other
obligation

37
©2015 Club Pilates Franchise LLC
2015 Franchise Disclosure Document (Amended)
This document was downloaded from franchimp.com. All the information on this website is published in good faith and for general information purpose only. FranChimp.com does not make any warranties about the completeness, reliability, and
accuracy of this information. Any action you take upon the information you find on this website (FranChimp.com), is strictly at your own risk. We will not be liable for any losses and/or damages in connection with the use of our website.
ITEM 15 OBLIGATION TO PARTICIPATE IN THE ACTUAL OPERATION OF THE FRANCHISE BUSINESS

Under the Franchise Agreement, we do not require, but do recommend, that you (or the Designated
Operator) personally supervise the Studio You may appoint a Designated Manager we approve to manage daily
operations of your Studio We will not unreasonably withhold our approval of any Designated Manager you
propose, provided the individual has successfully completed the Owner/Operator Module of our Initial Training
Program and, if that individual will be providing any Approved Services, the Orientation Program (or, if necessary,
the full Teacher Training Program) Once approved, your Designated Manager may assist in the direct, day-to
day supervision of the operations of the Studio, or to be the on-premises supervisor if you choose not to
personally supervise the Studio If you are a business entity, your Designated Manager need not hold an
ownership interest in the business to be the on-premises supervisor

You are solely responsible for the hiring and management of the Studio employees, for the terms of
their employment and for ensuring their compliance with any training or other requirements established by us
You will keep us advised, in writing, of any Designated Manager involved in the operation of the Studio and their
contact information Your Franchised Business must, at all times, be managed by and staffed with at least one
(1) individual who has successfully completed the Owner/Operator Module of our Initial Training Program

You and your managers and employees must comply with the confidentiality provisions described in Item
14 You must execute a personal guaranty concurrently with the signing of the Franchise Agreement If you are a
legal entity, having more than one owner, all owners, shareholders, partners, joint venturers, and any other
person who directly or indirectly owns a 10% or greater interest in the franchised business must execute a
personal guaranty

ITEM 16 RESTRICTIONS ON WHAT THE FRANCHISEE MAY SELL

You must offer for sale and sell, only and all those Approved Products and Services, and deal only with
those suppliers, that we authorize or require, and have authorized (See Item 8) Principally, this means you must
purchase the amount and type of equipment, including Pilates Reformers, a Pilates Ballet Bar, Spring Boards,
EXO Chairs, TRX equipment and other Pilates apparatuses and exercise equipment, and offer only those types
of Pilates and exercise classes that we authorize Failure to comply with our purchasing restrictions may result
in the termination of your Franchise Agreement We may supplement, revise and/or modify our Approved
Products and Services as we deem appropriate from time to time, as well as our System standards and
specifications associated with the provision of these products/services These changes will be outlined in our
Manuals or otherwise in writing, and there are no contractual limitations on our right to make these types of
changes

If we discontinue any Approved Product or Service offered by the Franchised Business, then you must
cease offering or selling such product/service within a reasonable time, unless such product/service represents
a health or safety hazard (in which case you must immediately comply upon receipt of notice from us) You may
not use the location of your Franchised Business for any other business purpose other than the operation of
your Franchised Business

You may not advertise, offer for sale or sell, any products and/or services that we have not authorized
We reserve the right to change the types of authorized products and services at any time in our discretion You
agree to promptly undertake all changes as we require from time to time, without limit, except we will not
require you to thoroughly modernize or remodel the Studio any more often than once every 5 years You will
not make any material alterations to your Studio or its appearance as originally approved by us without our prior
written approval
38
©2015 Club Pilates Franchise LLC
2015 Franchise Disclosure Document (Amended)
This document was downloaded from franchimp.com. All the information on this website is published in good faith and for general information purpose only. FranChimp.com does not make any warranties about the completeness, reliability, and
accuracy of this information. Any action you take upon the information you find on this website (FranChimp.com), is strictly at your own risk. We will not be liable for any losses and/or damages in connection with the use of our website.
You must refrain from any merchandising, advertising, or promotional practice that is unethical or may be
injurious to our business and/or other franchised businesses or to the goodwill associated with the Marks
(Franchise Agreement, Section 4 2)

ITEM 17 RENEWAL, TERMINATION, TRANSFER AND DISPUTE RESOLUTION

THE FRANCHISE RELATIONSHIP

This table lists certain important provisions of the franchise and related agreements You should read
these provisions in the agreements attached to this Disclosure Document

Paragraph In
Provision Summary
Agreement
a Length of the franchise Franchise Agreement The term is 10 years from the date the Franchise
term Paragraph 3 1 Agreement is signed
b Renewal or extension of Franchise Agreement You have the option to extend the term for two
term Paragraph 3 2 consecutive 5 year periods
c Requirements for renewal Franchise Agreement You have complied with all of the Franchise
or extension Paragraphs 3 2,3 3, and Agreement provisions, you are not in default of
34 the Franchise Agreement, you have brought the
Studio into compliance with our current
standards, you have given us notice of renewal
no less than 90 days nor more than 180 days
prior to the end of the initial term, you have
signed a then-current form of Franchise
Agreement, which may contain materially
different terms than the ones contained in your
Franchise Agreement, you have signed a general
release in substantially the form of Exhibit F to
this Disclosure Document, and you pay us a
renewal fee equal to $10,000
d Termination by franchisee Franchise Agreement Not applicable
Not Applicable

e Termination by franchisor Franchise Agreement The Franchise Agreement does not provide for
without cause Not Applicable termination without cause
f Termination by franchisor Franchise Agreement We may terminate the Franchise Agreement
with cause Paragraph 15 1 upon delivery of notice to you if you default
under the terms of the Franchise Agreement, as
further outlined below
g "Cause" defined-curable Franchise Agreement The following constitute curable defaults you
defaults Paragraph 15 IB fail to comply with the Performance Standards,

39
©2015 Club Pilates Franchise LLC
2015 Franchise Disclosure Document (Amended)
This document was downloaded from franchimp.com. All the information on this website is published in good faith and for general information purpose only. FranChimp.com does not make any warranties about the completeness, reliability, and
accuracy of this information. Any action you take upon the information you find on this website (FranChimp.com), is strictly at your own risk. We will not be liable for any losses and/or damages in connection with the use of our website.
Paragraph In
Provision Summary
Agreement
or refuse to make payments due and do not cure
within 10 business days, or fail to comply with
any provision of the Franchise Agreement not
otherwise mentioned in (h) below or any
mandatory specification and do not cure within
the applicable cure period Some defaults have
10 calendar day cure periods and some have 30
calendar day cure periods
h "Cause" defined - Franchise Agreement The following events constitute non-curable
non-curable defaults Paragraph 15 lA defaults failure to properly establish and equip
the premises, failure to complete training, make
a material misrepresentation or omission in the
application for the franchise, conviction or plea
of no contest to a felony, or other crime or
offense that can adversely affect the reputation
of you, us or the Studio, make unauthorized
disclosure of confidential information,
abandonment of the business for 5 consecutive
days unless otherwise approved, surrender of
control of the business, unauthorized transfer,
you are adjudicated bankrupt, insolvent or make
a general assignment for the benefit of
creditors, your misuse of the Marks, failure on 3
occasions within any 12 consecutive month
period, or 4 occasions in any 24 consecutive
month period to pay amounts due, or otherwise
to comply with the Franchise Agreement, violate
any health, safety or sanitation law or conduct
your operation in a manner creating a safety
hazard, or violating the rights and restrictions of
your territory Operating a competing business
I Franchisee's obligation on Franchise Agreement Your obligations include stop operations of the
termination/non-renewal Paragraphs 12,13 and Studio, stop using the Marks and items bearing
15 3 the Marks, stop using "CLUB PILATES" in any
form as part of your corporate name, assign any
assumed names to Company, de-identify the
premises from any confusingly similar
decoration, design or other imitation of a Studio,
stop advertising as a Club Pilates franchise, pay
all sums owed, pay all damages and costs we
incur in enforcing the termination provisions of
the Franchise Agreement, return the Manual
and other confidential information to us, return
all signs to us, assign your telephone and
facsimile numbers, electronic mail and internet

40
©2015 Club Pilates Franchise LLC
2015 Franchise Disclosure Document (Amended)
This document was downloaded from franchimp.com. All the information on this website is published in good faith and for general information purpose only. FranChimp.com does not make any warranties about the completeness, reliability, and
accuracy of this information. Any action you take upon the information you find on this website (FranChimp.com), is strictly at your own risk. We will not be liable for any losses and/or damages in connection with the use of our website.
Paragraph In
Provision Summary
Agreement
addresses to us, sell to us, at our option, all
assets of the Studio, including inventory,
equipment, supplies and items bearing the
Marks, and comply with the covenants not to
compete

J Assignment of contract by Franchise Agreement We may sell or assign some or all of our business
franchisor Paragraph 14 6 to any subsidiary or affiliate of Club Pilates, any
purchaser of Club Pilates, or any purchaser of
the Marks and related business
k "Transfer" by franchisee Franchise Agreement You may sell or assign your business, but only
definition Paragraph 14 1 with our approval We have sole discretion over
whether to approve or disapprove an
assignment
1 Franchisor approval of Franchise Agreement We have the right to approve all your transfers
transfer by franchisee Paragraphs 14 1and 14 2 We may place reasonable conditions on our
approval of any transfer
m Conditions for franchisor Franchise Agreement You must be in compliance with all agreements,
approval of transfer Section 14 2 the Manual, all contracts with any party, and
transferee must assume all obligations under
these agreements, transferee meet our then-
current requirements and complete or agree to
complete our training program for new
franchisees, all sums due must be paid, all
obligations to third parties must be satisfied, the
Studio must be in full compliance with the
Manual and standards and specifications for
new Club Pilates Studios, the transferee must
satisfactorily complete training, and the
transferor must pay a $10,000 transfer fee
n Franchisor's right to acquire None There is no right for us to acquire your Studio
franchisee's business except as outlined below
o Franchisor's option to Franchise Agreement We have the option, exercisable by giving 30
purchase franchisee's Section 15 3 1 days written notice to purchase any and all
business inventory, equipment, furniture, fixtures, signs,
sundries and supplies owned by you and used in
the Studio, at the lesser of (i) your cost less
depreciation computed on a reasonable straight
line basis (as determined in accordance with
generally accepted accounting principles and
consistent with industry standards and customs)
or (ii) fair market value of such assets, less (in
either case) any outstanding liabilities of the

41
©2015 Club Pilates Franchise LLC
2015 Franchise Disclosure Document (Amended)
This document was downloaded from franchimp.com. All the information on this website is published in good faith and for general information purpose only. FranChimp.com does not make any warranties about the completeness, reliability, and
accuracy of this information. Any action you take upon the information you find on this website (FranChimp.com), is strictly at your own risk. We will not be liable for any losses and/or damages in connection with the use of our website.
Paragraph In
Provision Summary
Agreement
Studio In addition, we have the option to
assume your lease for the lease location of the
Studio, or if an assignment is prohibited, a
sublease for the full remaining term on the same
terms and conditions as your lease
p Death or disability of Franchise Agreement Must be transferred within six (6) months
franchisee Paragraph 14 4
q Non-competition covenants Franchise Agreement You must not have any interest in any
during the term of the Paragraph 13 competitive business specializing, in whole or in
franchise part, in the sale of franchises or products that
are the same as or similar to any product or
service provided through the Studio
Additionally, you must not employ or seek to
employ any person employed by us or by any of
our other franchisees, or otherwise directly or
indirectly induce or seek to induce such person
to leave his or her employment during the term
of the Franchise Agreement
r Non-competition covenants Franchise Agreement You must not operate a retail Studio similar to
after the franchise is Paragraph 13 the CLUB PILATES Studio from the premises for
terminated or expires 2 years after termination within a 10 mile radius
of any Club Pilates brand Studio Additionally,
for a period of 2 years after termination of the
Franchise Agreement, you must not shall not (i)
solicit business from customers of your former
Studio, (ii) contact any of our suppliers or
vendors for any competitive business purpose,
or (ill) solicit any of our other employees, or the
employees of Franchisor's affiliates or any other
System franchisee, to discontinue employment
s Modification of the Franchise Agreement The Franchise Agreement can be modified only
Franchise Agreement Paragraph 19 by written agreement between us and you We
can modify or change the System through
changes in the Manual

t Integration/merger clause Franchise Agreement Only the terms of the Franchise Agreement are
Paragraph 19 binding (subject to applicable state law) and may
only be modified to the extent required by an
appropriate court to make the Franchise
Agreement enforceable Any representations
or promises outside of this Disclosure Document
and other agreements may not be enforceable
u Dispute resolution by Franchise Agreement You must first submit all dispute and
arbitration or mediation Paragraph 16 controversies arising under the Franchise

42
©2015 Club Pilates Franchise LLC
2015 Franchise Disclosure Document (Amended)
This document was downloaded from franchimp.com. All the information on this website is published in good faith and for general information purpose only. FranChimp.com does not make any warranties about the completeness, reliability, and
accuracy of this information. Any action you take upon the information you find on this website (FranChimp.com), is strictly at your own risk. We will not be liable for any losses and/or damages in connection with the use of our website.
Paragraph In
Provision Summary
Agreement
Agreement to our management and make every
effort to resolve the dispute internally

At our option, all claims or disputes arising out

of the Franchise Agreement must be submitted
to non-binding mediation, which will take place
at our then-current headquarters If the matter
IS mediated, the parties will split the mediator's
fees and bear all of their other respective costs
of the mediation

Except for our right to seek injunctive relief in

any court of competent jurisdiction and as
otherwise described above, any claim arising out
of or relating to the Franchise Agreement or the
relationship of the parties, and any controversy
regarding the establishment of the fair market
value of assets of the Studio will be resolved in
binding arbitration before a single arbitrator in
Orange County, California (subject to applicable
state law)
V Choice of forum Franchise Agreement Any action that is not subject to arbitration must
Paragraph 17 4 be brought in state or federal court in Orange
County, California (subject to applicable state
law)
w Choice of law Franchise Agreement The Franchise Agreement is governed by the
Paragraph 17 3 laws of the state of California without reference
to this state's conflict of laws principles (subject
to state law), except that any disputes or actions
involving any non-competition covenants,
including the interpretation and enforcement
thereof, must be governed by the law of the
state where the Studio is located

[Remainder of Page Intentionally Left Blank]

43
©2015 Club Pilates Franchtse LLC
2015 Franchise Disclosure Document (Amended)
This document was downloaded from franchimp.com. All the information on this website is published in good faith and for general information purpose only. FranChimp.com does not make any warranties about the completeness, reliability, and
accuracy of this information. Any action you take upon the information you find on this website (FranChimp.com), is strictly at your own risk. We will not be liable for any losses and/or damages in connection with the use of our website.
DEVELOPMENT AGREEMENT

This table lists certain important provisions of the Development Agreement and related agreements
You should read these provisions in the agreements attached to this disclosure document

SECTION IN
DEVELOPMENT
PROVISION SUMMARY
AGREEMENT OR
OTHER AGREEMENTS
a Length of the term of the Section 1(B), Exhibit B The Development Schedule will dictate the
Development Agreement amount of time you have to open a specific
number of franchises, which will differ for each
Developer and will be specified in Exhibit B of
the Development Agreement
b Renewal or extension of the Not Applicable Not Applicable
term
c Requirements for developer to Not Applicable Not Applicable
renew or extend
d Termination by developer Not Applicable Not Applicable
e Termination by franchisor Not Applicable Not Applicable
without cause
f Termination by franchisor with Section 14 We may terminate your Development
cause Agreement with cause as described in (g)-(h) of
this Item 17 Chart
g "Cause" defined-curable Section 14(B) We may terminate your Development
defaults Agreement after providing notice and a 30-day
cure period (unless a different cure period is
specified below) if you fail to meet the
Development Schedule, you fail to develop,
open, and operate each Studio and execute
each Franchise Agreement in compliance with
the Development Agreement, you
misappropriate or misuse the Marks or impair
the goodwill of the Marks or System, fail to
make monetary payment under the
Development Agreement or any Franchise
Agreement to us or our affiliate, and fail to cure
within 14 days of receiving written notice from
us, fail to correct a deficiency of a health,
sanitation, or safety issue identified by a local,
state or federal agency or regulatory authority,
or you fail to comply with any other material
term or material condition of the Development
Agreement or any Franchise Agreement
h "Cause" defined - non-curable Section 14(A) We may terminate your Development
defaults Agreement automatically upon written notice if

44
©2015 Club Pilates Franchtse LLC
2015 Franchise Disclosure Document (Amended)
This document was downloaded from franchimp.com. All the information on this website is published in good faith and for general information purpose only. FranChimp.com does not make any warranties about the completeness, reliability, and
accuracy of this information. Any action you take upon the information you find on this website (FranChimp.com), is strictly at your own risk. We will not be liable for any losses and/or damages in connection with the use of our website.
SEaiON IN
DEVELOPMENT
PROVISION SUMMARY
AGREEMENT OR
OTHER AGREEMENTS
you become insolvent or make a general
assignment for the benefit of creditors, file a
bankruptcy petition or are adjudicated
bankrupt, a bill in equity or appointment of
receivership is filed in connection with you, a
receiver or custodian of your assets of property
IS appointed, a proceeding for a composition of
creditors is initiated against you, a final
judgment is entered against you and not
satisfied within 30 days, if you are dissolved,
execution is levied against you, a suit to
foreclose any hen or mortgage against any of
your Studios is levied, the real or personal
property of a Studio is sold after being levied
upon, you fail to comply with the non
competition covenants of the Development
Agreement, you or your principal discloses the
contents of the Manuals or other confidential
information, an immediate threat or danger to
public health or safety results from the
operation of a Studio operated by you, you or
your Principal has made a material
misrepresentation in the franchise application,
you fail on 3 or more occasions within a one (1)
year period to comply with a provision of the
Development Agreement, or you fail to comply
with the transfer conditions of the Development
Agreement
Developer's obligations on Section 14(D), Section Upon termination, you have no right to establish
termination/ non-renewal 15 or operate any Studio for which an individual
Franchise Agreement has not been executed by
us and delivered to you at the time of
termination All of your obligations under the
Development Agreement which expressly or by
their nature survive the expiration or
termination of the Agreement (including the
non-competition covenants of Section 11),
continue in full force and effect until they are
satisfied or by their nature expire

Assignment of contract by Section 16(A) We have the absolute right to transfer or assign
franchisor the Development Agreement and all or any part
of Its rights, duties or obligations to any person
or legal entity without your consent
45
©2015 Club Pilates Franchise LLC
2015 Franchise Disclosure Document (Amended)
This document was downloaded from franchimp.com. All the information on this website is published in good faith and for general information purpose only. FranChimp.com does not make any warranties about the completeness, reliability, and
accuracy of this information. Any action you take upon the information you find on this website (FranChimp.com), is strictly at your own risk. We will not be liable for any losses and/or damages in connection with the use of our website.
SECTION IN
DEVELOPMENT
PROVISION SUMMARY
AGREEMENT OR
OTHER AGREEMENTS
k "Transfer" by developer - Section 16(B) A transfer includes voluntarily, involuntarily,
defined directly or indirectly, assigning, selling,
conveying, pledging, sub-franchising or
otherwise transferring any of the rights created
by the Development Agreement or any
ownership interest in you
1 Franchisor approval of transfer Section 16(C) We must approve all transfers, but we will not
by developer unreasonable withhold our approval if you meet
our conditions
m Conditions for franchisor Section 16(C) Our conditions for approving a transfer include
approval of transfer all of you and your affiliates' money obligations
must be satisfied, you and your affiliates must
not be in material default of the Development
Agreement or any Franchise Agreement, you
must execute a general release in our favor, the
transferee must meet our then-current criteria
for Developers, the transferee must sign a
written assumption agreement assuming your
liabilities under the Development Agreement,
you must our then-current Transfer Fee, and
you must pay any referral fees or commissions
that may be due to any franchise broker, sales
agent, or any other third party
n Franchisor's right of first refusal Section 16(E) Except in certain circumstances
to acquire developer's business (death/disability or transfer from individual
franchisee to business entity), you must provide
us with a period of 30 days to match any third-
party offer to purchase any ownership interest
in the Development Agreement If we do not
exercise this right, then you will have 60 days to
effectuate the transfer to the third party that
made the offer on those exact terms - if the
transfer does not occur or the proposed terms
of the offer change in any way, then we will have
another 30 days to exercise our right of first
refusal
0 Franchisor's option to purchase Not Applicable Not Applicable
developer's business

p Death or disability of developer Section 16(F) You will have a period of 90 days to find a
suitable legal representative that we approve to
continue the operation of your Franchised
Business, provided that person completes our
46
©2015 Club Piiates Franchise LLC
2015 Franchise Disclosure Document (Amended)
This document was downloaded from franchimp.com. All the information on this website is published in good faith and for general information purpose only. FranChimp.com does not make any warranties about the completeness, reliability, and
accuracy of this information. Any action you take upon the information you find on this website (FranChimp.com), is strictly at your own risk. We will not be liable for any losses and/or damages in connection with the use of our website.
SECTION IN
DEVELOPMENT
PROVISION SUMMARY
AGREEMENT OR
OTHER AGREEMENTS
training program and executes either a personal
guaranty or a new Development Agreement

During this 90-day period, we may step in and

operate the Franchised Business on your behalf
and pay ourselves a reasonable amount to
reimburse our costs associated with this
operation on your behalf We are not under any
obligation to step in and operate your business
during this period
q Non-competition covenants Section 11(B)(1) Neither you, your principals, guarantors, owners
during the term of the franchise or key employees, nor any immediate family
member of you, your principals, guarantors,
owners or key employees, may (i) own,
operate, or otherwise be involved with.
Competing Business (as defined in the
Development Agreement), (ii) employ or seek to
employ any employees of us, our affiliates or
any other System franchisee/developer or
induce such persons to leave their employment,
or (ill) divert, or attempt to divert, any
prospective customer to a Competing Business
r Non-competition covenants Section 11(B)(2) For a period of two (2) years after the
after the franchise is terminated termination/expiration/transfer of your
or expires Development Agreement, neither you, your
principals, guarantors, owners, nor any
immediate family member of you, your
principals, guarantors, owners, may own,
operate or otherwise be involved with any
business that competes with us and is involved
in the licensing or franchising, or establishing of
joint ventures for the operation, of Competing
Businesses

Section 11(B)(3) For a period of two (2) years after the

termination/expiration/transfer of your
Franchise Agreement, neither you, your
principals, guarantors, owners, nor any
immediate family member of you, your
principals, guarantors, owners, may own,
operate or otherwise be involved with and
Competing Business (i) within the Development
Area, (ii) within a 40-mile radius of your
Development Area or any other designated
47
©2015 Club Pilates Franchise LLC
2015 Franchise Disclosure Document (Amended)
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accuracy of this information. Any action you take upon the information you find on this website (FranChimp.com), is strictly at your own risk. We will not be liable for any losses and/or damages in connection with the use of our website.
SECTION IN
DEVELOPMENT
PROVISION SUMMARY
AGREEMENT OR
OTHER AGREEMENTS
territory or designated area licensed by us to a
Studio as of the date of expiration/termination
of the Development Agreement through the
date you attempt to engage in any competitive
activity prohibited by this Section

During this two-year period, these parties are

also prohibited from (i) soliciting business from
customers of yourformer Studios, (ii) contacting
any of our suppliers/vendors for a competitive
business purpose, or (iii) soliciting any
employees of us, our affiliates or any other
System franchisee or developer to discontinue
their employment
s Modification of the Section 23(F) Your Development Agreement may not be
Development Agreement modified, except by a writing signed by both
parties
t Integration/ merger/clause Section 23(G) Only the terms of the Development Agreement
(and ancillary agreements) and this Disclosure
Document are binding (subject to state law)
Any representations or promises outside of the
Disclosure Document and this Agreement may
not be enforceable Nothing in this Agreement
or any related agreement is intended to disclaim
the representations made in this Disclosure
Document
Dispute resolution by arbitration Sections 22(A) - (C) You must first submit all dispute and
or mediation controversies arising under the Development
Agreement to our management and make every
effort to resolve the dispute internally

At our option, all claims or disputes arising out

of the Development Agreement must be
submitted to non-binding mediation, which will
take place at our then-current headquarters If
the matter is mediated, the parties will split the
mediator's fees and bear all of their other
respective costs of the mediation

Except for our right to seek injunctive relief in

any court of competent jurisdiction and as
otherwise described above, any claim arising
out of or relating to the Development

48
©2015 Club Pilates Franchise LLC
2015 Franchise Disclosure Document (Amended)
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accuracy of this information. Any action you take upon the information you find on this website (FranChimp.com), is strictly at your own risk. We will not be liable for any losses and/or damages in connection with the use of our website.
SECTION IN
DEVELOPMENT
PROVISION SUMMARY
AGREEMENT OR
OTHER AGREEMENTS
Agreement or the relationship of the parties,
and any controversy regarding the
establishment of the fair market value of assets
of the Studio will be resolved in binding
arbitration before a single arbitrator in Orange
County, California (subject to applicable state
law)
V Choice of forum Section 22(A) Any action that is not subject to arbitration must
be brought in state or federal court m Orange
County, California (subject to applicable state
law)
w Choice of law Section 21(A) The Development Agreement is governed by the
laws of the state of California without reference
to this state's conflict of laws principles (subject
to state law), except that any disputes or actions
involving any non-competition covenants set
forth in any agreement with us, including the
interpretation and enforcement thereof, must
be governed by the law of the state where the
Studio IS located

Applicable state law may require additional disclosures related to the information in this Disclosure Document
These additional disclosures appear in Exhibit G, entitled State Specific Addenda, to this Disclosure Document

ITEM 18 PUBLIC FIGURES

We do not currently use any public figure or personality to promote the franchise

ITEM 19 FINANCIAL PERFORMANCE REPRESENTATIONS

The FTC's Franchise Rule permits a franchisor to provide information about the actual or potential financial
performance of its franchised and/or franchisor-owned outlets, if there is a reasonable basis for the information,
and if the information is included in the disclosure document Financial performance information that differs
from that included in Item 19 may be given only if (1) a franchisor provides the actual records of an existing
outlet you are considering buying, or (2) a franchisor supplements the information provided in this Item 19, for
example, by providing information about possible performance at a particular location or under particular
circumstances

BACKGROUND

This Item 19 discloses the historical financial information regarding the eight (8) Studios that were (a) open and
operating for the entire 2014 calendar year (the "Measurement Period"), and (b) operating utilizing at least 12
reformers as required by our current franchise offering and System (collectively, the "Representative Studios")

49
©2015 Club Pilates Franchise LLC
2015 Franchise Disclosure Document (Amended)
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accuracy of this information. Any action you take upon the information you find on this website (FranChimp.com), is strictly at your own risk. We will not be liable for any losses and/or damages in connection with the use of our website.
Please be advised that five (5) of the Representative Studios were owned and operated by System franchisees
over the Measurement Period, with the remaining three (3) Representative Studios owned and operated by our
affiliate Of the 25 Studios we had operating as December 31, 2014, we excluded the information of (a) 10
Studios from this Item on the grounds that they were not open and operating throughout the entire
Measurement Period, and (b) seven (7) additional Studios from this Item on the grounds that they did not utilize
at least 12 reformers in their operations>as required under our current System standards and specifications (and
as part of our standard franchise offered under this Disclosure Document)

Part I of this Item discloses the average gross revenue amongst (a) the three (3) affihate-owned Representative
Studios over the Measurement Period, and (b) the five (5) franchisee-owned Representative Studios over the
Measurement Period (the "Total Revenue")

Part II of this Item contains a more detailed Chart disclosing certain information that we were able to obtain
from our affiliate regarding each of the three (3) Representative Studios that were owned and operated by this
affiliate over the Measurement Period, namely (a) the composition of the Total Revenue figure described in Part
I of this Item, (b) certain operating costs that each of these Representative Studios incurred over the
Measurement Period, (c) the remaining revenue generated by each of these Representative Studios over the
Measurement Period after deducting the operating expenses described above, and (d) the average amongst
these affiliate-owned Representative Studios with respect to each of the items described in this paragraph We
did not require our franchisees that own the other five (5) Representative Studios to provide us with their
operating cost information, and we did not otherwise have access to this information as of the Issue Date of this
Disclosure Document - as such, we are not able to present such data for these franchised Representative Studios
in Part II

Written substantiation of the data used in preparing this information will be made available upon reasonable
request, but please note that this information was provided to us by the respective owners of each of the
Representative Studios The figures set forth in this Item 19 are based on a compilation statement that a third-
party independent auditor prepared on our behalf in August 2015 We have not otherwise audited this
information or independently verified this information

The Representative Studios described above have sold and expended the amounts set forth in this Item below
There is no guarantee or assurance that your Franchised Business will sell as much or spend as much as the
Representative Studios disclosed in this Item

It IS important that you review the Explanatory Notes following each Table and General Notes at the end of this
Item 19, including those notes that may disclose actual or potential differences between the operation of one
(1) or more Representative Studios and the operation of a new Franchised Business, as part of your evaluation
of our franchise offering

50
©2015 Club Pilates Franchise LLC
2015 Franchise Disclosure Document (Amended)
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accuracy of this information. Any action you take upon the information you find on this website (FranChimp.com), is strictly at your own risk. We will not be liable for any losses and/or damages in connection with the use of our website.
PART I AVERAGE GROSS REVENUE AMONGST REPRESENTATIVE STUDIOS OVER THE MEASUREMENT PERIOD

Average Gross Revenue $465,857 67 Of the three (3) affiliate-owned Representative Studios,
for Affiliate-Owned one (1) (or 33%) of the Representative Studios generated
Representative Studios^ higher Gross Revenue over the Measurement Period than
the Average Gross Revenue of $465,857 67
Average Gross Revenue $241,408 34 Of the five (5) franchisee-owned Representative Studios,
for Franchisee-Owned two (2) (or 40%) of the Representative Studios generated
Representative Studios^ higher Gross Revenue over the Measurement Period than
the Average Gross Revenue of $241,408 34

Explanatory Notes to Part I of this Item 19

1 Gross Revenue The term "Gross Revenue" means the total revenue generated by each Representative
Studio over the Measurement Period, including all membership and class packages revenue, retail sales
and "teacher training" income (described in Explanatory Note No 2 following the Chart in Part II below)

[THE REST OF THIS PAGE HAS BEEN LEFT INTENTIONALLY BLANK

PART II OF THIS ITEM 19 BEGINS ON THE FOLLOWING PAGE]

51
©2015 Club Pilates Franchise LLC
2015 Franchise Disclosure Document (Amended)
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accuracy of this information. Any action you take upon the information you find on this website (FranChimp.com), is strictly at your own risk. We will not be liable for any losses and/or damages in connection with the use of our website.
PART II CERTAIN OPERATING EXPENSES AND RELATED INFORMATION REGARDING AFFIUATE-OWNED
REPRESENTATIVE STUDIOS
REP STUDIO NO 1 REP STUDIO NO 2 REP STUDIO NO 3 AVERAGE"
Amount %of Amount %of Amount %of Average %of
Total Total Total Amount Total
Revenue Revenue Revenue Revenue
Total Revenue^ $413,233 00 ICQ 00% $370,172 00 100 00% $614,168 00 100 00% $465,857 67 100 00%
- Teacher Training $71,250 GO 17 24% $95,000 00 25 66% $ 13 15% $82,333 33 17 67%
Revenue^ 80 750 00
- Traditional $341,983 00 82 76% $275 172 00 74 34% $533,418 00 86 85% $383,524 33 82 33%
Revenue^
Certain Operating
Expenses^
Estimated Rovaltv (on In $20,518 98 4 97% $16,510 32 4 46% $32,005 08 5 21% $23,011 46 4 94%
Studio Revenue Only)^
Estimated Fees Paid in $30 000 00 7 26% $40 000 00 10 81% $34 000 00 5 54% $34,666 67 7 44%
Connection with Teacher
Training Revenue®
Marketing Fund^ $3,419 83 0 83% $2 751 72 0 74% $5 334 18 0 87% $3,835 24 0 82%
Instructor Expense® $119,759 00 28 98% $95,444 00 25 78% $173,650 00 28 27% $129 617 67 27 82%
Bank Service Fees® $5,724 00 1 39% $4,903 00 132% $8,606 00 140% $6,411 00 138%
Merchant Account $9,247 00 2 24% $7,921 00 2 14% $13,902 00 2 26% $10,356 67 2 22%
Feesi®
Office Supplies" $708 00 0 17% $931 00 0 25% $932 00 0 15% $857 00 018%
General Supplies" $1,374 00 0 33% $266 00 0 07% $337 00 0 05% $659 00 014%
Cleaning" $2,899 00 0 70% $3,424 00 0 92% $5,520 00 0 90% $3,947 67 0 85%
Computer and Internet $430 00 0 10% $457 00 012% $509 00 0 08% $465 33 010%
Expenses"
Professional Fees" N/A N/A N/A N/A $110 00 0 02% $36 67 0 01%
Rent" $61,112 00 14 79% $38 517 00 10 41% $44,930 00 7 32% $48,186 33 10 34%
Fitness Accessories" $113 00 0 03% $113 00 0 03% $211 00 0 03% $145 67 0 03%
Repairs and $22,302 00 5 40% $2,265 00 0 61% $179 00 0 03% $8,248 67 1 77%
Maintenance"
Security" N/A N/A $294 00 0 08% $45 00 0 01% $113 00 0 02%
Insurance Premiums" $3 305 00 0 80% $2,720 00 0 73% $4,805 00 0 78% $3,610 00 0 77%
Towel Service^^ $2,602 00 0 63% $2,145 00 0 58% $3,968 00 0 65% $2,905 00 0 62%
Utilities" $5,709 60 1 38% $2,815 00 0 76% N/A N/A $2,841 53 0 61%
Water^® $620 00 0 15% $322 00 0 09% $851 00 0 14% $597 67 013%
Advertising/Promotion^* $343 00 0 08% $343 00 132% $343 00 0 06% $343 00 0 07%
Total of Certain $290,186 41 70 22% $222 142 04 60 01% $330,237 26 53 77% $280,855 24 60 29%
Operating Expenses" "

Total Revenue Less $123,046 59 29 78% $148,029 96 39 99% $283,930 74 46 23% $185,002 43 39 71%
Certain Operating
Expenses"

52
©2015 Club Pilates Franchise LLC
2015 Franchise Disclosure Document (Amended)
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accuracy of this information. Any action you take upon the information you find on this website (FranChimp.com), is strictly at your own risk. We will not be liable for any losses and/or damages in connection with the use of our website.
Explanatory Notes to Part II of this Item 19

1 Total Revenue For each Representative Studio, the term "Total Revenue" means the total revenue
generated through the offer, sale and provision of all services and products at, from or through that
Studio over the Measurement Period

2 Teacher Training Revenue For each Representative Studio, the term "Teacher Training Revenue" means
the revenue generated by that Studio over the Measurement Period in connection w/ith the sale and
provision of our proprietary Pilates instructor training program to its clientele (the "Teacher Training
Program"), which (a) is designed to provide education to third-party clientele in order for such clientele
to take the certifications necessary to become a Pilates instructor, (b) the affiliate-owned Representative
Studios made available to clientele over the Measurement Period at an approximate price of
$4,7S0/trainee, and (c) you will be authorized to offer and provide at your franchised Studio provided
you complete our Initial Training Program Please also see Explanatory Note No 6 below for additional
information on the costs associated with the Teacher Training Program

3 Traditional Revenue For each Representative Studio, the term "Traditional Revenue" means the
revenue generated at that Studio over the Measurement Period from the sale of memberships, class-
based packages and all other Approved Products and Services that these Studios are authorized to offer
and sell, other than the revenue generated by that Studio's provision of the Teacher Training Program
(which IS detailed in Explanatory Note No 2 above)

4 Certain Operating Expenses The term "Certain Operating Expenses" means the specific operating
expenses identified on the profit and loss statement for each affiliate-owned Representative Studio over
the Measurement Period (which are set forth in the rows immediately following this heading in the Chart
set forth in Part II of this Item 19)

5 Estimated Royalty For each Representative Studio, the term "Estimated Royalty" means the Royalty Fee
our affiliate would have had to pay us over the Measurement Period if that Studio was owned by a
franchisee and governed by our current form of Franchise Agreement (attached to this FDD as Exhibit
A), which would amount to six percent (6%) of the Traditional Revenue of that Studio over the
Measurement Period

a It IS important to note that the "Estimated Royalty" figures provided for each affiliate-owned
Representative Studio in this Part II Chart are only an estimate For clarification purposes, our
affiliate did not actually pay us this amount because they are not required to pay us any Royalty
in connection with operating its Studios We included an Estimated Royalty in this Chart for each
Representative Studio amounting to six percent (6%) of that Studio's Traditional Revenue over
the Measurement Period (i) because that is the amount you will be required to pay to us in
connection with the Traditional Revenue you generate at your Franchised Business, and (b) in a
good faith effort to provide you with an accurate picture of the type of expenses you might incur
in connection with your franchised Studio(s)

b Under your Franchise Agreement, the Royalty described in Item 6 of this Disclosure Document
will only apply to your Traditional Revenue You will be required to pay us the flat fee described
in Explanatory Note No 6 in connection with each client to whom your Studio provides the
Teacher Training Program

53
©2015 Club Pilates Franchise LLC
2015 Franchise Disclosure Document (Amended)
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accuracy of this information. Any action you take upon the information you find on this website (FranChimp.com), is strictly at your own risk. We will not be liable for any losses and/or damages in connection with the use of our website.
6 Estimated Fees Paid in Connection With Teacher Training Revenue Under your Franchise Agreement,
you will be required to pay us a flat fee amounting to $2,000 in connection with each client you sign up
to attend the Teacher Training Program Like the Estimated Royalty described in Explanatory Note No 5
above, however, the figures that are provided for each Representative Studio as the "Estimated Fees
Paid in Connection With Teacher Training Revenue" is only an estimate that is (a) calculated based on
the number of clients to whom that Studio provided the Teacher Training Program over the
Measurement Period, and (b) designed to provide you with an accurate picture of the type of expenses
you might incur in connection with your franchised Studio To be clear, our affiliate did not actually pay
the fee amounts disclosed in this Part II Chart for this line item expense-they do not have an agreement
with us that requires them to pay us these fees, but you will be required to pay such fees under your
Franchise Agreement

7 Marketing Fund For each Representative Studio, the term "Marketing Fund" means the amounts paid
by that Studio as a contribution to the Marketing Fund that we have established to benefit the CLUB
PILATES brand, Marks and System (as described more fully in Item 11 of this Disclosure Document)
Specifically, each affiliate-owned Representative Studio paid us a contribution amounting to one percent
(1%) of the Traditional Revenue generated by that Studio over the Measurement Period - which is the
amount we currently require our franchisees to pay under their respective franchise agreements

8 Instructor Expense For each Representative Studio, the term "Instructor Expense" means the amounts
that affiliate paid to third-party instructors that are employed or otherwise engaged to provide classes,
instruction and other Approved Products and Services at or through that Studio These figures do not
include any (a) salary or other draw for the owner of the Studio at issue, or (b) compensation that is paid
to a receptionist or other front-office personnel (as each affiliate-owned Representative Studio has
operated without the need for such a front-office staff, other than the instructors described in this
Explanatory Note) You may choose to engage one (1) or more individuals to serve as a receptionist
and/or otherwise provide front-office or administrative services - please be advised that engaging such
personnel may result in an increase in the operating costs associated with operating your franchised
Studio Our standard franchise offering expects and assumes that you (or, if you are an entity, your
Designated Operator) will handle these responsibilities directly or through the instructors you engage
to otherwise provide instruction/services at your Studio Please note that this amount includes
applicable payroll taxes paid by each Representative Studio over the Measurement Period in connection
with wages paid to employed instructors

9 Bank Service Fees For each Representative Studio, the term "Bank Service Fees" means the amount
expended by that Studio on fees charged by third-party banking institutions in connection with
operations over the Measurement Period

10 Merchant Account Fees For each Representative Studio, the term "Merchant Account Fees" means the
amounts expended by that Studio over the Measurement Period on fees charged in connection with
credit card processing by the designated software provider for the POS System that is used by that Studio
(and which you are required to use in connection with your franchised Studio as of the Issue Date of this
Disclosure Document)

11 Office Supplies For each Representative Studio, the term "Office Expenses" means that amount
expended by that Studio over the Measurement Period on basic office supplies such as paper clips,
staples, toilet paper, paper towels and other general office items This amount does not include cleaning
expenses or certain supplies necessary to maintain the reformers and other equipment used in

54
©2015 Club Pilates Franchise LLC
2015 Franchise Disclosure Document (Amended)
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accuracy of this information. Any action you take upon the information you find on this website (FranChimp.com), is strictly at your own risk. We will not be liable for any losses and/or damages in connection with the use of our website.
connection with these Representative Studios (please see Explanatory Note Nos 12 and 18, respectively,
for additional information on those costs)

12 General Supplies For each Representative Studio, the term "General Supplies" means the amount that
Studio expended over the Measurement Period on cleaning supplies (both for the Studio and equipment
located within the Studio), as well as replacement springs/pads for the reformers utilized at that Studio

13 Cleaning For each Representative Studio, the term "Cleaning" means the reported amount the owner
of that Studio expended on cleaning services at that Studio over the Measurement Period

14 Computer and Internet Expenses For each Representative Studio, the term "Computer and Internet
Expenses" means that amount expended by that Studio over the Measurement Period in connection
with (a) maintaining Internet access via a cable modem (or comparable device) through a local
telecommunications company, and (b) other fees associated with maintaining the computer system
used at that Studio

15 Professional Fees For each Representative Studio, the term "Professional Fees" means the reported
amount expended by that Studio on professional services (accountant, legal, etc) over the
Measurement Period

16 Rent For each Representative Studio, the term "Rent" means the cumulative amount that Studio
expended on rent, common area maintenance and other amounts due under the lease for the premises
of that Studio over the Measurement Period Please note that (i) none of the Representative Studios
received any "free rent" or "deferred rent" over the Measurement Period, and (ii) given that each of the
Representative Studios described in this Part 11 were open for some time as of the commencement of
the Measurement Period, none of these locations were required to pay their respective landlord any
security deposit or other amounts that might typically be due at the beginning of a landlord-tenant
relationship Please see Explanatory Note No 21 below for additional information on the Rent paid by
Representative Studio No 3 over the Measurement Period and what such payments included

17 Fitness Accessories For each Representative Studio, the term "Fitness Accessories" means the amount
expended by that Studio over the Measurement Period in connection with fitness items that is used by
clientele in connection with classes and memberships

18 Repairs and Maintenance For each Representative Studio, the term "Repairs and Maintenance" means
that amount expended by that Studio over the Measurement Period in connection with repair and
maintenance work on (a) the reformers and other equipment used by clientele at that Studio, and (b)
the Studio generally Please note that, as of the Issue Date of this Disclosure Document, Representative
Studio No 3 disclosed in the Part II Chart above has 21 reformers on-site at its location, which is
substantially more than you will be required to have on-site at your franchised Studio If you have more
than the required number of reformers at your franchised Studio, this may result in an increase in the
amount you expend in connection with repairing and maintaining such equipment Please also note that
the figures for this line item do not include any amounts necessary to actually obtain and install the
necessary reformers and other equipment at a new Studio (on the grounds that all of the Representative
Studios described in Part II were already open and operating for some time as of the commencement of
the Measurement Period)

19 Security For each Representative Studio, the term "Security" means the amount expended by that
Studio on monthly fees due in connection with a designated security system over the Measurement
55
©2015 Club Pilates Franchise LLC
2015 Franchise Disclosure Document (Amended)
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accuracy of this information. Any action you take upon the information you find on this website (FranChimp.com), is strictly at your own risk. We will not be liable for any losses and/or damages in connection with the use of our website.
Period Please be advised that (i) as of the issue Date of this Disclosure Document, new franchisees are
required to purchase and maintain a security system that is the same or substantially similar to the one
used by the Representative Studios described in this Item, and (ii) none of these Representative Studios
were required to expend any amounts on the initial acquisition of the security system hardware
components because these components were obtained prior to the Measurement Period

20 Insurance For each Representative Studio, the term "Insurance" means the amount expended by that
Studio over the Measurement Period in order to maintain the proper levels and coverages of insurance
required to operate that Studio Please note that each of the Representative Studios disclosed in this
Part II Chart purchase insurance (i) from the same third-party supplier that, as of the Issue Date of this
Disclosure Document, has been designated to serve as the supplier for our franchisees' respective
insurance coverages required under our Franchise Agreement and/or current Manuals, and (ii) in
amounts that are similar to that which you will be required to purchase under your Franchise
Agreement

21 Towel Service For each Representative Studio, the term "Towel Service" means the amount expended
by that Studio over the Measurement Period on laundry services for towels that are used by clients of
that Studio (including pickup and delivery services with respect to those towels)

22 Utilities For each Representative Studio, the term "Utilities" means the amount expended by that Studio
over the Measurement Period in connection with the utilities necessary to operate that Studio from its
premises, including electric, gas and trash Please note that Representative Studio No 3 has a lease
where these utilities are covered as part of the "Rent" paid under that lease (see Explanatory Note No
16 for additional information) These figures do not include the costs associated with having water (see
Explanatory Note No 23 below)

23 Water For each Representative Studio, the term "Water" means the amount expended by that Studio
over the Measurement Period in connection with having running water on-site at its premises

24 Advertising and Promotion For each Representative Studio, the term "Advertising and Promotion"
means that amount expended by that Studio over the Measurement Period in connection with other
advertising and promotional materials and efforts

25 Total of Certain Operating Expenses This figure is calculated by taking the sum of all the individual line
Items detailing specific operating expenses over the Measurement Period, which are discussed more
fully in Explanatory Note Nos 5 through 23 above It is important to note that this figure may not include
(a) every single item that could be considered an "operating cost" of the Representative Studios over
the Measurement Period, or (b) all the costs of goods you will incur in connection with the operation of
a new Franchised Business Specifically, among those operating costs/expenses that are not included
under Certain Operating Expenses are (i) salary, draw or other compensation for the owner of each
Representative Studio, (ii) meals and expenses incurred by the owner in connection with promoting the
Representative Studios, (in) automobile/vehicle expenses, (iv) third-party cleaning service or shipping
fees incurred over the Measurement Period, (v) certain taxes and related liabilities, (vi) telephone-
related expenses (as none of the Representative Studios in Part II incurred such expenses) or cell phone
charges for the owner/manager of the Representative Studios, (v) fees that might be charged by a third-
party provider in connection with payroll processing, or (vi) miscellaneous costs such as towel services,
travel expenses and/or uniform expenses (as of the Issue Date of this Disclosure Document we do not
have any branded-uniform requirements, but we reserve the right to implement such uniform policies
in the future)
56
©2015 Club Pilates Franchise LLC
2015 Franchise Disclosure Document (Amended)
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accuracy of this information. Any action you take upon the information you find on this website (FranChimp.com), is strictly at your own risk. We will not be liable for any losses and/or damages in connection with the use of our website.
26 We strongly recommenci that you speak to your business advisors to identify all types of operating costs
and expenses, including those related to marketing and advertising your Franchised Business, and
discuss them \with your business advisor before entering into any agreement with us to purchase a
franchise

27 Total Revenue Less Certain Operating Expenses For each Representative Studio, this figure is calculated
by taking the Total Revenue figure set forth in the Part II Chart for that Studio and deducting the Total
of Certain Operating Expenses figure for that Studio also set forth in that Chart This calculation is subject
to the figures in the Chart and the various Explanatory Notes set forth in this portion of Item 19

28 Average Each line item in the Part II Chart has an "Average" column, which is calculated as follows

a "Average Amount" for each revenue and operating cost line item disclosed in the Part II Chart is
calculated by taking the sum of all three (3) Representative Studios' amount for that given line
Item, and then dividing that cumulative figure by three (3), and

b "Avg % of Total Revenue" for each line item is calculated by taking the sum of all three (3)
Representative Studios' amount for that given line item, and then dividing that figure by the
cumulative Total Revenue of these three (3) Representative Studios over the Measurement
Period

Note Regarding Representative Studios and Item 19 Generally

1 When reviewing this Item 19 and evaluating our franchise offering generally, it is very important to
note the following characteristics of Representative Studios described in this Item 19 (as compared
to a new Franchised Business)

a The territory wherein each Representative Studio operates is located within the State of
California, where the CLUB PILATES brand has likely obtained more of a reputation and
garnered goodwill amongst the relevant target audience (as compared to another region of
the United States where there are no Studio locations),

b The affiliate-owned Representative Studios do not have a written franchise or other license
agreement with Franchisor, but each of these locations (as detailed more fully in Part II of
this item) does utilize the Marks and System in a manner similar to how you will be required
to use such intellectual property in the operation of a new Franchised Business,

c The affiliate-owned Representative Studios were not required to pay us or any other party
an Initial Franchise Fee or the other initial fees described in Item 5 of this Disclosure
Document At the same time, none of the affiliate-owned Representative Studios incurred
the various other pre-opening costs and expenses over the Measurement Period that you
are likely to incur in connection with the development of a new Franchised Business - this
IS because these Studios were all open and operating for some time as of the date the
Measurement Period commenced,

d Please note that two (2) of the affiliate-owned Representative Studios are smaller than
1,500 square feet in size, while one (2) of the affiliate-owned Representative Studios is larger

57
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2015 Franchise Disclosure Document (Amended)
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accuracy of this information. Any action you take upon the information you find on this website (FranChimp.com), is strictly at your own risk. We will not be liable for any losses and/or damages in connection with the use of our website.
than 1,500 square feet in size You will recall that our standard franchise offering expects
that your Franchised Business will be approximately 1,500 square feet in size, and

e Certain aspects of the Affiliate Representative Studios are primarily managed on a day-to-
day basis by a single individual that is engaged by the Affiliate Representative Studios on an
independent contractor basis While this engagement would be similar to you engaging a
"Designated Manager" or other third party to assist in managing certain aspects of your
Franchised Business, we do not expect that you will be engaging such a third party at the
outset of operating your new Franchised Business (unless you are a multi-unit owner)

2 Some outlets have sold and earned this amount Your individual results may differ There is no
assurance you'll sell or earn as much Your results may vary upon the location of your Franchised
Business Your results may also vary because you will be establishing and operating a start-up
business

3 The analysis above in this Item may not contain complete information concerning the operating
costs and expenses that you will incur in operating your Franchised Business Operating costs and
expenses may vary substantially from business to business

4 The figures provided in this Item exclude certain tax liabilities for which you will be responsible

5 The figures disclosed in this Item may not include all the professional fees or other administrative
expenses that you might incur in connection with opening and commencing operations of your
Franchised Business, including legal and accounting fees

6 Interest expense, interest income, depreciation, amortization and other income or expenses will
vary substantially from business to business, depending on the amount and kind of financing you
obtain to establish your Franchised Business You should consult with your tax advisor regarding
depreciation and amortization schedules and the period over which assets of your Franchised
Business may be amortized or depreciated, as well as the effect, if any, of any recent or proposed
tax legislation Please note that the figures set forth in this Item 19 do not involve any depreciation
or amortization

7 Expenses and costs, as well as the actual accounting and operational methods employed by a
franchisee, may significantly impact profits realized in any particular operation Actual results will
vary from Franchised Business to Franchised Business, and we cannot estimate the results of a
particular Franchised Business The revenues and expenses of your business will be directly affected
by many factors, such as (a) your Designated Territory's geographic location and population
demographics, (b) advertising effectiveness based on market saturation, (c) whether you operate
the business personally or hire a third party to serve as your Designated Manager, (d) your product
and service pricing, (e) vendor prices on materials, supplies and inventory, (f) personnel salaries and
benefits (life and health insurance, etc ), (g) insurance costs, (h) weather conditions, (i) ability to
generate customers, (j) customer loyalty, (k) employment conditions in the market, and (I) the
efforts you and your personnel put into your Franchised Business

8 We suggest strongly that you consult your financial advisor or personal accountant concerning
financial projections and federal, state and local income taxes and any other applicable taxes that
you may incur in operating a Franchised Business

SB
©2015 Club Pilates Franchise LLC
2015 Franchise Disclosure Document (Amended)
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accuracy of this information. Any action you take upon the information you find on this website (FranChimp.com), is strictly at your own risk. We will not be liable for any losses and/or damages in connection with the use of our website.
Other than the preceding financial performance representation, we do not make any financial performance
representations We also do not authorize our employees or representatives to make any such representations
either orally or in writing If you are purchasing an existing CLUB PILATES Studio, however, we may provide you
with the actual records of that outlet If you receive any other financial performance information or projections
of your future income, you should report it to the our management by contacting Shaun Grove at Club Pilates
Franchise, LLC, 3185 Pullman Street, Costa Mesa, CA 92626or via telephone at (949) 346-9794

ITEM 20 OUTLETS AND FRANCHISEE INFORMATION

TABLE 1
SYSTEMWIDE OUTLET SUMMARY
FOR YEARS 2012 TO 2014

OUTLETS AT THE OUTLETS AT THE END

OUTLET TYPE YEAR NETCHANGE
START OF THE YEAR OF THE YEAR
2012 0 1 +1
FRANCHISED 2013 1 10 +9
2014 10 20 +10
2012 2 4 +2
COMPANY-OWNED * 2013 4 5 +1
2014 5 5 0
2012 2 5 +3
TOTAL OUTLETS 2013 5 15 +10
2014 15 25 +10
*The Company-owned Outlets were owned and operated by our Affiliate, Club Pilates, LLC

TABLE 2
TRANSFER OF OUTLETS FROM FRANCHISEES TO NEW OWNERS
(OTHER THAN CLUB PILATES FRANCHISE, LLC)
FOR THE YEARS 2012 TO 2014

STATE YEAR NUMBER OF TRANSFERS

2012 0
CALIFORNIA 2013 0
2014 0
2012 0
ARIZONA 2013 0
2014 0
2012 0
MICHIGAN 2013 0
2014 0

59
©2015 Club Pilates Franchise LLC
2015 Franchise Disclosure Document (Amended)
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accuracy of this information. Any action you take upon the information you find on this website (FranChimp.com), is strictly at your own risk. We will not be liable for any losses and/or damages in connection with the use of our website.
STATE YEAR NUMBER OF TRANSFERS
2012 0
TOTAL OUTLETS 2013 0
2014 0

TABLE 3
STATUS OF SINGLE UNIT FRANCHISE OUTLETS
FOR YEARS 2012 TO 2014

CEASED OUTLETS
OUTLETS REACQUIRED
OUTLETS TERMI NON OPERATIONS AT END
STATE YEAR AT START BY
OPENED NATIONS RENEWALS -OTHER OF THE
OF YEAR FRANCHISOR
REASONS YEAR
2012 0 0 0 0 0 0 0
AZ 2013 0 1 0 0 0 0 1
2014 1 0 0 0 0 0 1
2012 0 1 0 0 0 0 1
CA 2013 1 7 0 0 0 0 8
2014 8 8 0 0 0 0 16
2012 0 0 0 0 0 0 0
CO 2013 0 0 0 0 0 0 0
2014 0 1 0 0 0 0 1
2012 0 0 0 0 0 0 0
Ml 2013 0 1 0 0 0 0 1
2014 1 0 0 0 0 0 1
2012 0 0 0 0 0 0 0
Wl 2013 0 0 0 0 0 0 0
2014 0 1 0 0 0 0 1
2012 0 0 0 0 0 0 0
TOTAL 2013 1 9 0 0 0 0 10
2014 10 10 0 0 0 0 20

60
©2015 Club Pilates Franchise LLC
2015 Franchise Disclosure Document (Amended)
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accuracy of this information. Any action you take upon the information you find on this website (FranChimp.com), is strictly at your own risk. We will not be liable for any losses and/or damages in connection with the use of our website.
TABLE 4
STATUS OF COMPANY-OWNED OUTLETS*
FOR YEARS 2012 TO 2014

STATE YEAR OUTLETS OUTLETS OUTLETS OUTLETS OUTLETS OUTLETS AT

AT START OPENED REACQUIRED CLOSED SOLD TO END OF THE
OF YEAR FROM FRANCHISEE YEAR
FRANCHISEE
CA 2012 2 2 0 0 0 4
2013 4 1 0 0 0 5
2014 5 0 0 0 0 5
TOTAL 2012 2 2 0 0 0 4
2013 4 1 0 0 0 5
2014 5 0 0 0 0 5
*The Company-Owned Outlets were owned and operated by our affiliate

TABLE 5
PROJECTED OPENINGS AS OF DECEMBER 31, 2014

STATE UNIT FRANCHISE AGREEMENTS PROJECTED NEW PROJECTED NEW COMPANY-

SIGNED BUT OUTLETS NOT FRANCHISED OUTLETS IN OWNED OUTLETS IN THE
OPENED THE NEXT FISCAL YEAR NEXT FISCAL YEAR

AL 1 1 0

AZ 1 1 0

CA 5 5 0

CO 1 1 0

FL 1 1 0

KS 1 1 0

TX 3 3 0

TOTAL 13 13 0

A list of the names, addresses and telephone numbers of our current franchisees as of the Issuance Date of this
Disclosure Document is attached as Exhibit H

A list of the names, addresses and telephone numbers of our franchisees who have had a franchise terminated,
canceled, not renewed or otherwise voluntarily or involuntarily ceased to do business under the franchise
agreement during the most recently completed fiscal year or who have not communicated with us within 10
weeks of the issuance date of this franchise disclosure document, is attached as Exhibit I

61
©2015 Club Pilates Franchise LLC
2015 Franchise Disclosure Document (Amended)
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In the last three fiscal years, none of our franchisees have entered any confidentiality agreements that restrict
their ability to speak openly about their experience with our franchise system

There are no trademark-specific franchisee organizations

If you buy the franchise offered in this disclosure document, your contact information may be disclosed to other
buyers when you leave the franchise system

ITEM 21 FINANCIAL STATEMENTS

We have not been in business for three years or more and cannot include all the financial statements
required by the Rule for our last three fiscal years Attached to this disclosure document as Exhibit C are our
audited financials for the period from March 12, 2015 (our inception) through April 15, 2015, and interim un
audited financials through August 31, 2015 Our fiscal year ends on December 31

ITEM 22 CONTRACTS

The following agreements are attached to this Disclosure Document

Exhibit A Franchise Agreement and Exhibits

Exhibit 1 Authorized Location Addendum
Exhibit 2 Electronic Funds Transfer Agreement
Exhibit 3 Electronic Debit Authorization
Exhibit 4 Guarantee
Exhibit 5 Addendum to Lease
Exhibit D Statement of Prospective Franchisee
Exhibit F Form of General Release
Exhibit G State Specific Addenda
Exhibit J Development Agreement

ITEM 23 RECEIPTS

Exhibit K to this Franchise Disclosure Document contains a detachable document, in duplicate,

acknowledging receipt of this Franchise Disclosure Document by a prospective franchisee You should sign both
copies of the Receipt You should retain one signed copy for your records and return the other signed copy to
our Chief Operating Officer at the following address Shaun Grove at Club Pilates Franchise, LLC, 3185 Pullman
Street, Costa Mesa, CA 92626, and at (949) 346-9794

62
©2015 Club Pilates Franchise LLC
2015 Franchise Disclosure Document (Amended)
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Exhibit A
To Franchise Disclosure Document

FRANCHISE AGREEMENT AND RELATED EXHIBITS

©2015 Club Pilates Franchise LLC

2015 Franchise Disclosure Document (Amended) Exhibits
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FRANCfflSE AGREEMENT AND RELATED EXHIBITS

® 2015 Club Pilates Franchise, LLC

2015 Franchise Agreement

1 GRANT OF FRANCfflSE, LOCATION 2

2 ACCEPTANCE BY FRANCfflSEE 3
3 TERM AND RENEWAL 4
4 TRADEMARK STANDARDS 5
5 FEES 7
6 FRANCfflSOR SERVICES 10
7 FACILITY STANDARDS, LEASE AND CONSTRUCTION 14
8 STUDIO IMAGE AND OPERATING STANDARDS 17
9 ADVERTISING AND MARKETING 21
10 FINANCIAL REPORTS, AUDITS, COMPUTER SYSTEM AND INSURANCE
REQUIREMENTS 24
11 RELATIONSHIP OF THE PARTIES, INDEMNIFICATION 26
12 CONFIDENTIAL INFORMATION 27
13 COVENANTS NOT TO COMPETE 28
14 TRANSFER OF INTEREST 30
15 DEFAULT AND TERMINATION OF AGREEMENT 32
16 RESOLUTION OF DISPUTES 37
17 MISCELLANEOUS PROVISIONS 41
18 ACKNOWLEDGMENTS 44
19 ENTIRE AGREEMENT 45

EXHIBITS

EXHIBIT 1 AUTHORIZED LOCATION ADDENDUM

EXHIBIT 2 ELECTRONIC FUNDS TRANSFER AGREEMENT
EXHIBIT 3 ELECTRONIC DEBIT AUTHORIZATION
EXHIBIT 4 GUARANTEE, INDEMNIFICATION AND ACKNOWLEDGEMENT
EXHIBIT 5 ADDENDUM TO LEASE

© 2015 Club Pilates Franchise, LLC

2015 Franchise Agreement

In a number of places in this Franchise Agreement, you are asked to initial certain items to
show that they have been fully discussed with you, and read, understood and agreed to by
you Initialing those areas does not lessen the importance of other areas or mean they are
not fully enforceable

This Club Pilates Franchise Agreement (this "Agreement") is entered into as of the
day of , 20 between Club Pilates Franchise, LLC, a Delaware
limited liability company, doing business as "Club Pilates" ("Franchisor") and
, or his/her/their assignee, if a partnership,
corporation or limited liability company is later formed ("Franchisee"), upon the following terms,
conditions, covenants and agreements

RECITALS

A Club Pilates Franchise, LLC, a Delaware limited liability company ("Licensor"), owns and
has developed and administers a system and franchise opportunity, including various fitness and
exercise techniques and methods, trade secrets, copyrights, confidential and propnetary
information and other intellectual property rights (collectively, the' System") for the establishment
and operation of Pilates fitness studios ( Club Pilates Studios") identified by the "Club Pilates"
trade name and other trademarks and service marks licensed hereunder (the "Marks")

B The System includes the Marks and trade secrets, proprietary methods and information and
procedures for the establishment and operation of Club Pilates Studios, including, without
limitation, confidential manuals (collectively, the "Manual"), training methods, fitness equipment,
furniture and fixtures, marketing, advertising and sales promotions, cost controls, accounting and
reportding procedures, personnel management, distinctive interior design and display procedures,
and color scheme and decor (collectively, the Trade Dress")

C Franchisor grants to qualified persons who are willing to undertake the required
investment and effort, a franchise to own and operate a Club Pilates Studio offenng (a) Pilates
instruction and related services that Franchisor authorizes (collectively, the "Approved Services"),
and (b) certain merchandise and other products Franchisor authorizes for sale in conjunction with
the Approved Services and Studio operations (collectively, the "Approved Products"), all while
utilizing the System and Marks

D Franchisee desires to obtam a franchise to use the System and Marks in the development
and operation of a Club Pilates Studio at the location specified in this Agreement (the ' Studio")

E Franchisee has independently investigated the business contemplated by this Agreement,

and recognizes that the nature of the business may change over time, that an investment in a Club
Pilates brand Studio involves business risks, and that the venture's success depends primarily upon
Franchisee's business abilities and efforts

©2015 Club Pilates Franchise, LLC A-1

1 GRANT OF FRANCfflSE, LOCATION

11 Grant You agree at all times faithfully, honestly and diligently to perform your
obligations under this Agreement and to use your best efforts to promote Club Pilates and your
Studio Accordingly, Franchisor grants to Franchisee the non-exclusive nght and license to

A Establish and operate a suigle Club Pilates Studio utilizing only the System and the
Club Pilates Marks, at a location that has been authorized by Franchisor (the "Authorized
Location"), in accordance with the provisions and for the term specified in this Agreement,

B Use only the Marks of Franchisor under the terms of this Agreement to identify and
promote the Studio offered hereunder, and

C Use the proprietary fitness and exercise methods and know-how, as set forth
penodically in Franchisor's operations manual, other manuals, training programs, or otherwise
communicated to Franchisee

12 Site Approval Process Before Franchisor considers approving a location for the Studio,
Franchisee must submit to Franchisor a complete report containmg all information Franchisor may
reasonably request concerning the proposed location, including, without limitation, population
density, demographics, proximity to other Studios, available parking, traffic flow and entrance to
and exit from the site (the "Location Report") Franchisor shall deliver to Franchisee written
approval or disapproval of a proposed location within 30 days after Franchisor receives the
Location Report Franchisor's approval of the proposed site shall be deemed to be a binding
addendum to this Agreement upon Franchisor and Franchisee's execution of Exhibit L which is
attached hereto and incorporated herein by reference, and which will set forth the Authorized
Location Franchisor agrees not to unreasonably withhold approval of a site that meets its site
critena Franchisee acknowledges that Franchisor's approval of a proposed site is permission only
and not an assurance or guaranty to Franchisee of the availability, suitability or success of a
location, and cannot create a liability for Franchisor While Franchisor will provide site selection
assistance as specified in Section 6 1 herein. Franchisee alone is ultimately responsible for
selecting and developing an acceptable location for the Studio Franchisee agrees to hold
Franchisor harmless with respect to the selection of the Authonzed Location by Franchisee
Franchisee must obtain lawful possession of an Authorized Location by lease, purchase or other
method and open for regular, continuous business within six (6) months of the date that Franchisor
accepts this Agreement The opening date may be extended an additional three (3) months in
certain instances, as explained in Section 2 2D, below Franchisor has the right to terminate this
Agreement if Franchisee fails to select a site for the Studio that meets Franchisor's approval, within
the time period allotted above

©2015 Club Pilates Franchise, LLC A-2

("Designated Market Area") Once the Authonzed Location for the Studio has been identified m
the Authonzed Location Addendum, attached hereto as Exhibit 1. Franchisor agrees that, so long
as Franchisee is in good standmg, neither it nor its affiliates will operate or establish, or authonze
another Club Pilates franchisee to operate or establish, a Studio using the Club Pilates System or
Marks within a certain geographical area surrounding the Authonzed Location ("Designated
Temtory") The Designated Temtory, if any, will be defmed in Exhibit 1. hereto

14 Ri2hts Reserved to Franchisor Notwithstandmg anything contained m this Agreement,

Franchisor and its affiliates hereby reserve the exclusive right to (i) open and operate, and license
third parties the right to open or operate, other Studios utilizmg the Marks and System outside the
Designated Temtory, (ii) market, offer and sell products and services similar to those offered by
the Franchised Business and other Studios (such as pnvate label products that Franchisor may
develop) through alternate channels of distribution, including without limitation, via the Internet
and other e-commerce channels; catalog sales, direct mail or wholesale, at any location, (in)
acquire, or be acquired by, any company, including a company operating one or more businesses
offering products or services sunilar to those offered by a Studio, located within or outside your
Designated Temtory, and subsequently operate (or license a third party the right to operate) these
locations, (iv) open and operate, or license third parties the right to open or operate, businesses
that offer products and services similar to the Franchised Business under marks other than the
Marks at any location, and (v) use, and license others the right to use, the Marks and System to
engage in any other activity not expressly prohibited by this Agreement
I have read Article 1, understand it, and agree to
comply with each of its Sections
Your Initials /

2 ACCEPTANCE BY FRANCHISEE

21 Acceptance bv Franchisee Franchisee accepts this Agreement and the license granted
herein and agrees to develop and operate the Studio on the terms and conditions specified herein
Franchisee agrees to follow the System requirements in the operation of its Studio, including,
without limitation, its facilities, staff, advertising, operations, and all other aspects of Franchisor's
business and the System now m effect and changed periodically If this is Franchisee's first Club
Pilates Studio, then Franchisee (or, if Franchisee is an entity, one of its operating principals) and/or
Its proposed manager must attend and complete Franchisor's initial training program to
Franchisor's satisfaction, as set forth in Section 6 3 of this Agreement

22 Conditions The rights being licensed herein are subject, without limitation, to the
following conditions

A Franchisee's business and the Studio shall be identified only by those Marks
approved in writing by Franchisor with at least one exterior sign as designated by Franchisor
©2015 Club Pilates Franchise, LLC A-3
2015 Franchise Agreement
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B Concurrently, with the signing of this Agreement, Franchisee must execute a
personal guaranty in the form attached hereto as Exhibit 4 ("Personal Guaranty") In the event
Franchisee is a legal entity having more than one owner, all owners, shareholders, partners, joint
venturers, and any other person who directly or indirectly owns a 10% or greater interest in
Franchisee (the "Owners") must execute the Personal Guaranty Any person or entity that at any
tune after the date of this Agreement becomes an Owner, pursuant to Section 14 or otherwise,
shall, as a condition of becoming an Owner, execute Franchisor's then-current form of Personal
Guaranty

C Franchisee shall submit the lease for the Studio to Franchisor for its written consent
before Franchisee executes the lease for the Authonzed Location The lease must contain the
provisions outlined in Section 7 2 and Exhibit 5 ( Lease Addendum")

D Franchisee agrees that it shall open the Studio for regular, continuous business no
later than six (6) months after this Agreement is signed by Franchisor If, through no fault of
Franchisee, the Studio has not opened after six (6) months. Franchisor may agree m wnting to
provide Franchisee with an additional three (3) months to open its Studio if Franchisee (a) has
already secured an approved premises for its Studio, and (b) is otherwise making diligent and
continuous efforts to buildout and otherwise prepare its Franchised Business for opening
throughout the six (6) month period following the execution of this Agreement

E Franchisee agrees at all times to comply with the Manual, standards, operating
systems, and other aspects of the System (collectively, the "System Standards") prescribed by
Franchisor, which are subject to change at Franchisor's discretion

I have read Article 2, understand it, and agree to

comply With each of its Sections
Your Initials /

3 TERM AND RENEWAL

31 Term The term of this Agreement shall be for a period of ten (10) years beginning on the
date this Agreement is accepted by Franchisor, unless sooner termmated under Section 15 The
conditions to obtam a renewal Club Pilates franchise agreement are those stated below in Section
32

32 Renewal Unless terminated at an earlier date, upon the expiration of the initial term,
Franchisee shall have the right to renew this Agreement for two (2) consecutive additional five (5)
year terms, subject to satisfaction of each of the followmg conditions

A Pnor to each such renewal. Franchisee shall execute Franchisor's standard form of
franchise agreement being offered at the time of each such renewal The provisions of each such
renewal franchise agreement may differ from and shall supersede this Agreement in all respects,
including, without limitation, changes in royalty and advertising fees, except that Franchisee shall
©2015 Club Pilates Franchise, LLC A-4
2015 Franchise Agreement
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accuracy of this information. Any action you take upon the information you find on this website (FranChimp.com), is strictly at your own risk. We will not be liable for any losses and/or damages in connection with the use of our website.
pay the renewal fee specified in Section 3 2 F , instead of the initial franchise fee Franchisee's
failure or refusal to execute and return Franchisor's then-current standard form Franchise
Agreement to Franchisor within thirty (30) days after receipt by Franchisee shall constitute
Franchisee's election not to renew,

B Franchisee shall demonstrate that it has the nght to remain in possession of the
Authorized Location for the duration of the renewal term, or that it has been able to secure and
develop an alternative site acceptable to Franchisor,

C In consideration of each such renewal of the franchise. Franchisee shall execute a

general release m the form and substance satisfactory to Franchisor, releasmg any and all claims
against Franchisor and its affiliates, officers, directors, employees and agents,

D Franchisee shall have completed or made arrangements to make, at Franchisee's

expense, such renovation and modemization of the Studio, including the interior and exterior of
the building, grounds, leasehold improvements, signs, fumishmgs, fixtures, equipment,
surveillance cameras, and decor as Franchisor reasonably requires so the Studio conforms with the
then-current standards and image of Franchisor,

E Franchisee, durmg the term of this Agreement, shall have substantially complied
with all of the provisions of this Agreement and all other agreements with Franchisor, and shall be
m compliance with the Manual and with Franchisor's policies, standards and specifications on the
date of the notice of renewal and at the expiration of the initial term,

F Franchisee shall pay to Franchisor a renewal fee equal to $10,000 for a successor
franchise, and

G Franchisee shall have given Franchisor written notice of renewal no less than 90
days or more than 180 days before expiration of the initial term

33 Franchisor's Refusal to Renew Franchise Franchisor may refuse to renew the franchise
if Franchisee is m default under this Agreement, or any other agreement with Franchisor or an
affiliate of Franchisor, or if Franchisee fails to satisfy any of the foregoing conditions Subject to
the above. Franchisor will not unreasonably deny renewal of a Franchise

34 Notice of Expiration Required bv Law If applicable law requires that Franchisor give a
longer period of notice to Franchisee than herein provided prior to the expiration of the mitial term
or any additional term. Franchisor will give such additional required notice If Franchisor does
not give such required additional notice, this Agreement shall remain in effect on a month-to-
month basis until Franchisee has received such required notice

I have read Article 3, understand it, and agree to

comply with each of its Sections
Your Initials /

4 TRADEMARK STANDARDS
©2015 Club Pilates Franchise, LLC A-5
2015 Franchise Agreement
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41 Name and Ownership Franchisee acknowledges the validity of the Mark "Club Pilates"
and all other Marks that now or in the future are or will be part of the System and agrees and
recognizes that the Marks are the sole and exclusive property of Franchisor and/or the affiliates of
Franchisor Franchisee further acknowledges that Franchisee's right to use the Marks is derived
solely from this Agreement and is limited to the conduct of a Studio pursuant to and in compliance
with this Agreement and all applicable standards, specifications and operating procedures
prescribed by Franchisor from time to time Any unauthorized use of the Marks by Franchisee
shall be a breach of this Agreement and an infnngement of the rights of Franchisor and its affiliates
Franchisee's use of the Marks inures to the benefit of Franchisor, which owns all goodwill now
and hereafter associated with the Marks Franchisee agrees not to contest ownership or registration
of the Marks Franchisor (and/or its affiliates) owns all right, title and interest in and to the Marks,
and Franchisee has and acquires hereby only the qualified license granted in this Agreement

42 Use

A Franchisee shall not use any Mark as part of any corporate or business name
with any prefix, suffix or other modifying words, terms, designs or symbols, or in any modified
form Franchisee shall display and use the Marks only in the manner and form prescribed or
authorized by Franchisor and shall conduct no other business than that prescribed by Franchisor
Franchisee shall not use any other mark, name, commercial symbol or logotype in connection with
the operation of the Studio and shall not market any product relating to the Studio without
Franchisor's written consent, and if such consent is granted, such product must be marketed in a
manner acceptable to Franchisor Franchisor may also permit Franchisee to use from time to time
other trademarks, service marks, trade names and commercial symbols as may be designated by
Franchisor in writmg

B Franchisee agrees to give such notices of trademark and service mark

registrations and copyrights as Franchisor specifies and to obtain such fictitious or assumed name
registrations as may be required under applicable law

C Franchisee is prohibited from using the Marks in advertising, promotion or

otherwise, without the appropriate "©" or ®" (copynght and registration marks) or the
designations "™" or' (trademark and service mark), where applicable

43 Litigation Franchisee agrees to notify Franchisor unmediately in writmg if it becomes

aware that any person who is not a licensee of Franchisor is using or infhnging upon any of the
Marks Franchisee may not communicate with any person other than Franchisor and its counsel
in connection with any such use or infringement Franchisor will have discretion to determine
what steps, if any, are to be taken in any instance of unauthorized use or infnngement of any of its
Marks and will have complete control of any litigation or settlement in connection with any claim
of an infringement or unfair competition or unauthorized use with respect to the Marks Franchisee
will execute any and all instruments and documents and will assist and cooperate with any suit or
other action undertaken by Franchisor with respect to such unauthorized use or infnngement such
as by giving testimony or furnishing documents or other evidence Franchisor will be responsible
for legal expenses incurred by Franchisor in connection with any litigation or other legal

©2015 Club Pilates Franchise, LLC A-6

44 Modification. Discontinuance or Substitution Franchisor reserves the nght, if

necessary in Franchisor's sole judgment, to change the principal Mark(s) of the System on a
national or regional basis, and upon reasonable notice. Franchisee shall at its expense adopt a new
principal Mark(s) designated by Franchisor to identify the Studio Franchisor shall have no
liability or obligation whatsoever with respect to Franchisee's change of any Mark

45 Franchisor's Revenues Franchisor and its affiliates may offer to sell to Franchisee at a
reasonable profit various goods and services, and reserve the right to receive fees or other
consideration m connection with sales promotion and advertising programs associated with the
Marks or from System vendors

I have read Article 4, understand it, and agree to

comply with each of its Sections
Your Initials /

5 FEES

51 Initial Franchise Fee Franchisee agrees to pay Franchisor an initial franchise fee in the
sum of Forty-Nine Thousand Five-Hundred Dollars ($49,500) for a single Studio upon execution
of this Agreement (the "Initial Franchise Fee") in the form of a cashier's check or bank wire The
Initial Franchise Fee shall be fully earned by Franchisor upon payment and is not refundable under
any circumstance

52 Royalty Fee Beginning on the day the Studio starts generating revenue from its business
operations, and continumg dunng the Term of this Agreement, Franchisee agrees to pay
Franchisor, weekly, without setoff, credit or deduction of any nature, a royalty fee equal to six
percent (6%) of the Gross Sales (as that term is defined in Section 5 3, below) generated by the
Studio over tlie immediately preceding week (the "Royalty" or "Royalty Fee")

53 Gross Sales Gross Sales means the total revenue generated by the Studio, mcluding all
revenue generated from the sale and provision of any and all gift cards and other approved products
and services at or through the Studio and all proceeds from any business interruption insurance
related to the non-operation of the Studio, whether such revenues are evidenced by cash, check,
credit, charge, account, barter or exchange "Gross Sales" does not mclude (a) any sales tax and
equivalent taxes that are collected by Franchisee for or on behalf of any governmental taxing
authority and paid thereto, or (b) the value of any allowance issued or granted to any client of the
Studio that IS credited in good faith by Franchisee in full or partial satisfaction of the price of the
approved products or services offered in connection with the Studio

54 Initial FFE Package and Proprietary Initial Inventory Kit. Studio Management
Software

©2015 Club Piiates Franchise, LLC A-7

B Franchisee further agrees to install at its expense and use the membership
accounting, cost control, point of sale ("PCS") and inventory control systems through the supplier
Franchisor designates The designated, or approved, supplier(s) for these services will be updated
in the Manuals as changes are made Over the term of this Agreement, Franchisee will also be
required to pay Franchisor's then-current designated provider for the software that Franchisor
prescribes for use in connection with the Studio and the PCS (the "Software Fee"), which may be
modified upon reasonable written notice to Franchisee

55 Overview of Training Programs and Fees The parties agree and acknowledge that (i)
Franchisee or, if Franchisee is an entity, at least one (1) of Franchisee's operating prmcipals (an
Operating Principal") must complete the Owner/Operator" Module and Franchisor's proprietary
initial training program (the "Initial Training Program"), as described more fully in Section 6 3 A
below, and (ii) each instructor that Franchisee engages to provide any of the Approved Services at
Its Studio must (a) have at least 450 hours of Pilates instruction and meet certain other standard
critena in the industry to become a certified Pilates instructor (the "Certified Pilates
Requirements"), and (b) complete Franchisor's proprietary' Orientation Program" that is designed
to provide instructors with additional guidelines and instruction for providing the Approved
Services in accordance with the System (the ' Orientation Program") The following fees are
associated with the foregoing training and any additional training that Franchisor or its designee
might provide in connection with the Studio

A Initial Training Program Franchisee will not be required to pay any training fee or
tuition in connection with any individuals (whether Franchisee, its Operating Principal and/or
Designated Manager, or any mstructor) attending the Initial Training Program prior to the opening
of the Studio, provided such individuals all attend at the same time For those individuals that wish
to complete the Initial Training Program at a time other than when Franchisee (or, if applicable.
Its Operating Principal) attends the Initial Training Program, Franchisor may charge such
individuals its then-current training fee (the "Training Fee") Franchisor may also designate a
third-party individual that it approves to manage the day-to-day operations of the Studio (a
'Designated Manager"), but any such individual must at least complete the Owner/Operator
Module of the Initial Training Program pnor to assuming any management responsibilities at the
Studio (with Franchisee paying the Training Fees associated therewith, if any)

B Orientation Program Each and every instructor that provides any of the Approved
Services at Franchisee's Studio must (i) meet the Certified Pilates Requirements and otherwise be
certified to provide Pilates mstruction (each, a' Certified Pilates Instructor"), and (ii) subsequently

©2015 Club Pilates Franchise, LLC A-8

2015 Franchise Agreement
This document was downloaded from franchimp.com. All the information on this website is published in good faith and for general information purpose only. FranChimp.com does not make any warranties about the completeness, reliability, and
accuracy of this information. Any action you take upon the information you find on this website (FranChimp.com), is strictly at your own risk. We will not be liable for any losses and/or damages in connection with the use of our website.
complete the Orientation Program, which may be completed (a) at the Initial Trammg Program if
the instructor is m attendance (at no additional cost to Franchisee or instructor), or (b) at any time
after Franchisee (or, if appropriate, its Operating Pnncipal or Designated Manager) attends the
Initial Training Program via remote instruction (video or webinar) or, if Franchisor determmes
appropriate, in-person mstruction at Franchisor's headquarters or the Studio There are no training
or other fees associated with the Onentation Program other than the costs and expenses, including
instructor wages, that Franchisee will be responsible for m connection with ensurmg that its
instructors attend and complete such Orientation Program prior to providing any Approved
Services at the Studio (whether as part of the Initial Training Program or otherwise)

C Teacher Training Program Franchisee will have the option of providmg a full
'teacher training" course to clientele of the Studio which includes both (i) the instruction
necessary to comply with the Certified Pilates Requirements, and (ii) the Orientation Program
(collectively, the ' Teacher Training Program") If an individual wishes to attend the Teacher
Training Program at the Studio, that individual will pay a single fee of $4,750, with (a) $2,000
being paid out to Franchisor for certam materials that it provides in connection with this training,
and (b) the balance of $2,750 paid out to Franchisee's Studio (or other Studio that is actually
providing the instruction to the client) In order to provide the Teacher Trammg Program at the
Studio, such training will need to be provided by an mstructor that (a) is a Certified Pilates
Instructor that has completed the Onentation Program, and (b) is otherwise approved by Franchisor
as a Master Instructor" (the cnteria for which will be set forth in the Manual or otherwise in
writing by Franchisor)

D Ongoing/Refresher Training Franchisor may provide or request that Franchisee

and certain of its management personnel attend and complete up to five (5) days of
additional/refresher trammg each year, but Franchisor will not charge Franchisee any Training Fee
in connection with such required training (but Franchisee will be responsible for the costs
associated with attending training at Franchisor's designated training facility) Franchisor does
reserve the right to charge its then-current Training Fee in connection with training that (a)
Franchisee requests Franchisor provide, or (b) Franchisor provides on-site at Franchisee's Studio

E No Training Fee for Minor, Day-to-Day Assistance Franchisor will not charge
Franchisee any fees in connection with minor, day-to-day assistance that Franchisor provides
remotely over the phone, via email/fax or other electronic channel of communication, which
Franchisee understands and acknowledges will be provided subject to the availability of
Franchisor's personnel
F Costs and Expenses Franchisee will be requu-ed to pay all costs and expenses
incurred in connection with any training that Franchisee or its personnel attends in connection with
Studio, including those costs related to travel, lodging, meals and (if appropriate) wages

56 Fund Contribution In the event Franchisor establishes a creative brand fund to promote
the System, Marks and CLUB PILATES brand generally (the "Fund"), Franchisee may be required
to contribute up to two percent (2%) of the Gross Sales of its Studio to this Fund (the "Fund
Contribution"), commencing once the Studio opens for operations The Fund Contribution will
typically be paid m the same manner and at the same interval that the Royalty Fee is collected
(based on the Gross Sales of the Studio over the immediately preceding reporting period)

©2015 Club Pilates Franchise, LLC A-9

A The Royalty Fee, Fund Contribution and any other fees owed to Franchisor or its
affiliates, will be automatically debited fi-om Franchisee's point-of-sale operating account
administered by the designated supplier of point-of-sale services on a weekly basis throughout the
Term, unless Franchisor provides reasonable written notice that Franchisor is modifying the
collection interval {e g, notifying Franchisee that Franchisor will be collecting Royalty Fee, Fund
Contribution and other recurring amounts due on a monthly rather than weekly basis, with such
monthly fees based on the Gross Sales of the Studio over the preceding calendar month)

B All amounts due to Franchisor for the purchase of products, services or otherwise
are due upon receipt of an invoice from Franchisor Any payment or report not actually received
by Franchisor on or before the due date is overdue

B Franchisee agrees to complete and execute an "Electronic Funds Transfer

Agreement" (attached as Exhibit 2 to this Agreement) and any other form, including, without
limitation, an "Electronic Debit Authorization" (attached as Exhibit 3 to this Agreement) for the
purpose of authorizing an electronic debit, and to submit any information required by Franchisor
for such authonzation

C Franchisee is required to use only the POS system provided by the designated
supplier and will pay the designated provider directly for all fees associated with the use of the
designated provider's software Franchisee is not allowed to use an unapproved external terminal
to process transactions

58 Interest and Late Charges Amounts due to Franchisor (except interest on unpaid
amounts due) not paid when due shall bear interest from the date due until paid at the lesser of one
and one-half percent (1 5%) per month, or the highest rate of interest allowed by law Franchisor
may also recover its reasonable attorneys' fees, costs and other expenses incurred in collecting
amounts owed by Franchisee
I have read Article 5, understand it, and agree to
comply with each of its Sections
Your Initials /

6 FRANCfflSOR SERVICES

61 Site Selection and Lease Negotiations Franchisee is solely responsible for locating,
obtaining and evaluating the suitability and prospects of the Studio location, for the review and
negotiation of its lease, and for hinng an attorney or other advisor to review and help negotiate the
lease The Authorized Location must meet Franchisor's then-current System standards and
specifications, as set forth in the Manuals or otherwise in writing by Franchisor Franchisor will,
at Franchisee's request, assist Franchisee in site selection and the review of Franchisee's lease by
furnishing Franchisee with Franchisor's confidential site evaluation criteria, by consulting with
and counseling Franchisee, and, at Franchisor's discretion, conducting field inspections of
proposed sites at mutually convenient times Franchisor reserves the right to charge a reasonable
©2015 Club Pilates Franchise, LLC A-10
2015 Franchise Agreement
This document was downloaded from franchimp.com. All the information on this website is published in good faith and for general information purpose only. FranChimp.com does not make any warranties about the completeness, reliability, and
accuracy of this information. Any action you take upon the information you find on this website (FranChimp.com), is strictly at your own risk. We will not be liable for any losses and/or damages in connection with the use of our website.
fee for performing any on-site evaluation to cover mcurred expenses, uicluding, but not lunited to,
travel, lodging, meals and wages Franchisor agrees not to unreasonably withhold approval of a
site that meets its site criteria

62 Unit Development Franchisor shall consult and advise Franchisee on the proper display
of the Marks, layout and design, procurement of Pilates/fimess equipment, reformers, sprmg
boards, chairs and other equipment, furniture, fixtures, surveillance cameras with audio, initial
inventories, recruitmg personnel, and managing construction or remodeling of the Studio After
Franchisee has executed a lease for the Authorized Location, Franchisor shall deliver to Franchisee
specifications and standards for buildmg, equipment, furnishings, fixtures, surveillance cameras
with audio, layout, design and signs relating to the Authorized Location and shall provide
reasonable consultation m connection with the development of the Studio Franchisee's architect
must make any layout, design and specifications provided by Franchisor site-specific Franchisee
agrees to make no changes, alterations or modifications whatsoever to the selected layout and
design without obtaining prior wntten consent from Franchisor

63 Training-Related Programs and Obligations Franchisee agrees and acknowledges that

the following training obligations and requirements must be strictly complied with and adhered to
at all times durmg the Term

A Initial Training Program Prior to opening the Studio, Franchisee must ensure that
(i) Franchisee (or, if an entity, its Designated Operator) and any Designated Manager complete the
owner/operator module of Franchisor's proprietary Initial Trammg Program (the "Owner/Operator
Module"), which will typically last two (2) to three (3) busmess days at Franchisor's corporate
headquarters or another training facility Franchisor designates, and (ii) at Franchisee's option, one
(1) or more individuals that are Certified Pilates Instructor(s) and that will be responsible for
providmg the Approved Services at Studio participate and complete the Onentation Program
component of the Initial Training Program If any of the individuals described in this Section fail to
complete the Owner/Operator Module of the Initial Training Program before the time Franchisee is
required to open the Studio hereunder, Franchisor may terminate this Agreement

B Instructor Training

(1) Any individual that wishes to provide Pilates mstruction or any of the other
Approved Services at the Studio must first (a) demonstrate that he/she has met all Certified Pilates
Requirements and is otherwise a Certified Pilates Instructor, and (b) complete the Onentation
Program (either as part of the Initial Training Program or at some pomt thereafter via the mstruction
matenals and test that Franchisor provides) Franchisor may terminate this Agreement upon wntten
notice to Franchisee m the event Franchisee permits the Approved Services to be provided by any
mdividual that does not meet the cntena in this Section

(2) Franchisee may elect to have certam of its initial mstructors and any
subsequent mstructors that wish to provide the Approved Services at the Studio participate in
completing the Orientation Program component of our Initial Training Program remotely via
webmar/video instruction, but Franchisor strongly recommends that at least one (1) of Franchisee's
initial mstructors come to the Initial Trammg Program with Franchisee (or Franchisee's Designated

©2015 Club Pilates Franchise, LLC A-11

(3) In the event an individual wishes to complete the Onentation Program at the
Studio (or other qualified Studio utilizmg the System) rather than as part of the Initial Traimng
Program, then Franchisee (or its Designated Manager) will be responsible for accurately gradmg the
test and ensunng that the mdividual at issue passed the test in accordance with System standards

(4) The Studio must have at least one (I) mdividual that is a Certified Pilates
Instructor and that has completed the Onentation Program on-site at the Studio at all times when any
Approved Services are being provided

(5) Once a Certified Pilates Instructor has successfully completed the Onentation
Program, that individual may assist in the provision of the Onentation Program to other mdividuals
at the Studio in the future (as well as provide the other Approved Services) It is up to Franchisee
whether or not it will charge Certified Pilates Instructors that wish to obtain the Onentation Program,
but Franchisee must ensure that he does not disclose or otherwise use the Orientation Program
matenals that Franchisor provides (including the test itself) for any purpose other than the
Onentation Program that is held on-site at the Studio

(6) Franchisee must otherwise ensure that any Onentation Program held at the
Studio IS performed m accordance with System standards and specifications

C Discretionary OnSite Assistance Around the time the Studio is openmg. Franchisor
may send one (I) or more representatives to the Studio to (i) provide assistance and
recommendations regarding the opening and initial operations of the Studio, and/or (ii) provide
additional or refresher training associated with the Owner/Operator Module and/or the Onentation
Program, all as Franchisor determines appropriate in its discretion (collectively, the' Discretionary
On-Site Assistance") In the event Franchisor notifies Franchisee that it will be providing the
Discretionary On-Site Assistance, such assistance typically lasts one (1) to two (2) days and
Franchisee must ensure that Franchisee (or its Operating Principal) and all other management
personnel are in attendance at the Studio during those days

D Teacher Training Program and Involvement of Franchisor Franchisee will be

permitted to provide the Teacher Training Program at the Studio as part of the Approved Services,
provided Franchisee has a Certified Pilates Instructor that (a) has completed our Orientation
Program, and (b) otherwise meets Franchisor's then-current cntena to serve as a "Master
Instructor" of the Teacher Training Program (which will be set forth m the Manual or in another
written directive from Franchisor)

(I) The Teacher Training Program typically involves approximately 450 to 500
hours of mstruction, including (i) certain online "classroom/webinar" training (the "Webinar
Training") that can be completed remotely (at home, at Franchisee's Studio, or at another local
Studio that IS authorized to provide the Teacher Training Program), and (ii) approximately 40 days
of practical, "hands-on" trainmg, some of which can be completed at home and some of which

©2015 Club Pilates Franchise, LLC A-12

(2) Any individuals that wish to provide Approved Services at the Studio that
have not completed the Certified Pilates Requu-ements will be required to (a) attend and complete
the Teacher Training Program, or (b) otherwise become a Certified Pilates Instructor and complete
the Onentation Program (as descnbed in Section 6 3 B(l) of this Agreement), all before that
individual can provide any Approved Services at the Studio Any violation of this Section will be
grounds for termination of this Agreement upon wntten notice by Franchisor

(3) Franchisee agrees and acknowledges that Franchisor is entitled to and will
receive the amounts descnbed in Section 5 5 C m connection with each individual that attends the
Teacher Training Program at Franchisee's Studio, which is consideration for the Webinar Training
materials and propnetary content developed therein This amount, once remitted to Franchisor, is
deemed fully earned and is not refundable under any circumstances

(4) Franchisee acknowledges that Franchisor's standard franchise offering

assumes that the mitial instructor(s) will already be Certified Pilate Instructors, but that Franchisor
may permit Franchisee to have one (1) or more instructors complete the Teacher Training Program
while Franchisee is securing an approved premises for, and otherwise developing, the Studio for
opening Franchisee specifically acknowledges, however, that if Franchisee chooses to take the
foregoing action, this may involve a higher investment than Franchisor's standard franchise
offenng described in Item 7 of the Franchise Disclosure Document that Franchisor timely and
properly disclosed to Franchisee prior to this Agreement being executed (the ' FDD")

E Ongomg/Refresher Training Franchisor may provide, and require that Franchisee,

as well as any of its management personnel attend, up to five (5) days of additional trainmg each
year at a trammg facility that Franchisor designates (without charging Franchisee any Traming Fee
as descnbed in Section 5 5 of this Agreement) Franchisee may also request that Franchisor provide
certain additional or refresher trammg to Franchisee, either at one (1) of Franchisor's designated
trammg facilities or on-site at Franchisee's Studio, but Franchisor reserves the right to charge
Franchisee its then-current Trammg Fee based on the number of days of such trammg that Franchisor
provides at Franchisee's request

F Costs and Expenses Franchisee will be responsible for the costs and expenses
associated with Franchisee and its personnel attendmg and completmg all of the trammg descnbed
m this Section, mcludmg without limitation, any costs related to travel, lodging, meals and (if
appropnate) wages/compensation for personnel

64 Operations Manual Franchisor will grant Franchisee online access to an electronic

version of the Manual dunng the term of this Agreement The Manual is anticipated to codify
existing mandatory and suggested specifications, standards and operating procedures currently
prescribed by Franchisor Franchisee acknowledges that Franchisor may from tune to time revise
Its Systems as well as the contents of the Manual, and Franchisee agrees to comply with each new
or changed standard and specification upon notice from Franchisor The Manual shall remain the
sole property of Franchisor and shall be kept confidential by Franchisee both during the Term of

©2015 Club Pilates Franchise, LLC A-13

65 Continuing Services Franchisor shall provide such continumg advisory assistance and
information to Franchisee in the development and operation of the Studio as Franchisor deems
advisable m its discretion Such assistance may be provided, in Franchisor's discretion, by
Franchisor's directives. System bulletins, meetings and seminars, telephone, computer, e-mail,
fax, personal visits, newsletters or manuals

66 Approved Lists Franchisor shall provide and from time to time, add to, alter or delete, at
Franchisor's discretion, lists of specifications, approved distributors and suppliers, approved
services and products, including, but not limited to, Pilates fitness equipment and gear, and other
materials and supplies used in the operation of the Studio Franchisor, or an affiliate of Franchisor,
may be a designated or approved supplier of certain equipment, gear, merchandise, apparel and
supplies

67 Pricing Club Pilates has developed an image that is based in part on affordable prices for
Pilates classes offered by the System To promote a consistent consumer experience, and to
maximize the value of the products and services Studios offer. Franchisor may require fixed
minimum pnces for any products or services offered by the System and Franchisee Franchisee
IS obligated to use the pricing required by Franchisor, unless Franchisor consents to changes in
local pricing offered by Franchisee in order to (i) allow Franchisee to respond to unique, local,
marketing conditions, competition, or expenses, or (ii) comply with changes or interpretations in
state or federal anti-trust laws Consistent with state or federal law. Franchisor reserves the right
to change or eliminate its pricing program in the future, or to move from a required to
recommended pricing structure

68 Fund As detailed in Section 9 1 of this Agreement, the Fund - if an when established -

will be maintained and administered by Franchisor with the assistance of the marketing fund
committee ("MFC") to meet the costs of conducting regional and national advertising and
promotional activities (including the cost of advertising campaigns, test marketing, marketing
surveys, public relations activities and marketing materials) which Franchisor and the MFC deem
beneficial to the System

69 Grand Opening Advertising Assistance Franchisor shall consult and advise Franchisee
on the advertising, marketing and promotion for the grand opening of the Studio

I have read Article 6, understand it, and agree to

comply with each of its Sections
Your Initials /

FACILITY STANDARDS, LEASE AND CONSTRUCTION

©2015 Club Pilates Franchise, LLC A-14
2015 Franchise Agreement
This document was downloaded from franchimp.com. All the information on this website is published in good faith and for general information purpose only. FranChimp.com does not make any warranties about the completeness, reliability, and
accuracy of this information. Any action you take upon the information you find on this website (FranChimp.com), is strictly at your own risk. We will not be liable for any losses and/or damages in connection with the use of our website.
71 Facility Specifications Franchisee's Studio shall meet the following conditions

A The Studio shall be laid out, designed, constructed or improved, equipped and
fumished m accordance with Franchisor's standards and specifications Equipment, fumishmgs,
fixtures, surveillance cameras with audio, decor and signs for the Studio shall be purchased from
suppliers approved or designated by Franchisor Franchisee may remodel or alter the Studio, or
change its equipment, furniture or fixtures, only with Franchisor's consent Franchisee must obtam
necessary permits, licenses and other legal or architectural requirements The Studio shall contain
or display only signage that has been specifically approved or designed by Franchisor

B The Studio and all fitness equipment shall be mamtained m accordance with
standards and specifications established by Franchisor or prescribed after inspection of the Studio
Franchisee shall promptly repair or replace defective or obsolete equipment, signage, fixtures or
any other item of the mterior or extenor that is in need of repair, refurbishing or redecorating in
accordance with such standards established (and updated from time to time) by Franchisor or as
may be required by Franchisee's lease

C Franchisee recognizes that the System will evolve The fitness industry must
respond to new fads, new forms of exercise, new equipment and new training techniques The
Club Pilates System must change to meet customer demands Franchisee further understands that
Pilates fitness equipment and other equipment wears out, breaks down, or becomes obsolete
Consequently, from time to time, as Franchisor requires. Franchisee must modernize and/or
replace items of the Trade Dress or Studio equipment as may be necessary for the Studio to
conform to the standards for new Studios Further, Franchisee will be required to thoroughly
modernize or remodel the Studio when requested by Franchisor, but no more than once every 5
years This may include replacing Pilates/fitness equipment and gear, and other updates and
improvements Franchisee acknowledges that this obligation could result in Franchisee making
extensive structural changes to, and significantly remodeling and renovating the Studio, and
Franchisee agrees to incur, without limitation, any capital expenditures required in order to comply
with this obligation and Franchisor's requirements Within 60 days after receiving written notice
from Franchisor, Franchisee shall have plans prepared according to the standards and
specifications that Franchisor prescribes and Franchisee must submit those plans to Franchisor for
Its approval Franchisee agrees to complete all work according to the plans that Franchisor
approves within the tune period that Franchisor reasonably specifies and in accordance with this
Agreement Franchisor, or its Affiliate, will hold themselves, and the Studios they operate (if any)
to the same high standard, and same frequency for replacement and renovation as is expected of
Franchisee

D The Studio shall contain signage prominently identifying Franchisee by name as an

independently owned and operated franchisee of Franchisor

E The Studio must have a surveillance camera with audio purchased from a
designated approved supplier installed in each classroom Typically, a Studio will have one to two
classrooms TTie camera(s) must be web accessible The camera(s) will be used by Franchisee to
monitor teacher performance, quality assurance and safety Franchisor has an absolute right to

©2015 Club Pilates Franchise, LLC A-15

72 Lease Franchisee is solely responsible for purchasing or leasing a suitable site for
the Studio Franchisee must submit the lease for the Studio to Franchisor for its written consent
before Franchisee executes the lease for the Authorized Location Franchisor will not withhold
consent arbitrarily, however, any lease must contain substantially the following provisions (1)
' The leased premises will be used only for the operation of a Club Pilates Franchise," (2) "The
employees of Franchisor will have the right to enter the leased premises to make any modifications
necessary to protect the System and proprietary marks thereof," (3) ' Lessee agrees that Lessor
may, upon request of Franchisor disclose to said Franchisor all reports, information or data in
Lessor's possession with respect to sales made in, upon or from the leased premises," and (4) a
conditional assignment clause to be contained in a lease rider in a form approved by Franchisor,
which shall provide that Franchisor (or its designee) may, upon termmation, expiration, non
renewal or proposed assignment of this Agreement, at Franchisor's sole option, take an assignment
of Franchisee's interest thereunder, without the consent of the Lessor or property owner, without
liability for accrued obligations, payment of additional consideration or increase in rent, and at any
time thereafter, reassign the lease to a new franchisee Franchisor's execution of this Agreement
IS conditioned upon the above-referenced lease addendum in the form attached hereto, as Exhibit
5 ("Lease Addendum"), which shall be signed by Franchisee and attached and made part of the
lease for the Studio Franchisee acknowledges that it has been advised to have any lease reviewed
by Franchisee's own legal counsel

73 Unit Development Franchisee agrees that after obtainmg possession of the Authonzed
Location, Franchisee will promptly, at Franchisee's sole expense

A Obtain any standard plans and/or specifications from Franchisor,

B Employ a qualified licensed architect, as required by state or local codes, to prepare

all drawings, designs, plans and specifications for the Studio, and submit same to Franchisor for
review and approval prior to commencing construction,

C Complete the construction or remodeling of the Studio in full and strict compliance
with plans and specifications approved by Franchisor, and in compliance with all applicable
ordinances, building codes and permit requirements,

D Purchase or lease, in accordance with Franchisor's standards and specifications, all

fitness equipment, fixtures, mventory, supplies and signs required for the Studio,

E Hire and tram the initial operating personnel according to Franchisor's standards
and specifications, and

F Complete development of and have the Studio open for business not later than six
(6) months after the date that Franchisor accepts this Agreement

©2015 Club Pilates Franchise, LLC A-16

2015 Franchise Agreement
This document was downloaded from franchimp.com. All the information on this website is published in good faith and for general information purpose only. FranChimp.com does not make any warranties about the completeness, reliability, and
accuracy of this information. Any action you take upon the information you find on this website (FranChimp.com), is strictly at your own risk. We will not be liable for any losses and/or damages in connection with the use of our website.
74 Franchisee's Responsibility Although Franchisor may provide Franchisee with various
standard or sample plans and specifications with respect to constructing and equipping the Studio,
It IS Franchisee's sole responsibility to construct and equip the Studio m compliance with all
applicable federal, state and local laws and regulations, including, without limitation, all building
codes, fire and safety codes, environmental laws. Occupational Safety and Health Administration
laws, health laws, sanitation laws, Americans with Disabilities Act and all other requirements that
may be prescnbed by any federal, state or local governmental agency Franchisee further
acknowledges and agrees that Franchisee is, and will continue to be at all times during the Term,
solely responsible for all employment decisions and to comply with all state, federal, and local
hiring laws and functions of the Studio, including without limitation, those related to hiring, firing,
traming, wage and hour requirements, compensation, promotion, record-keeping, supervision, and
discipline of employees, paid or unpaid, fiill or part-time Franchisee's employees must be
competent, conscientious, and properly trained Franchisee acknowledges that nothing m this
Agreement shall, or may be construed to, create any type of joint employer relationship involving
Franchisor in any matter

I have read Article 7, understand it, and agree to

comply with each of its sub-sections
Your Initials /

8 STUDIO IMAGE AND OPERATING STANDARDS

81 Compliance Franchisee acknowledges and agrees that every detail regarding the
appearance and operation of the Studio is important to Franchisor, Franchisee, the System and
other Club Pilates franchisees in order to maintain high and uniform operating standards, to
increase demand for the classes sold by all franchisees, and to protect Franchisor's reputation and
goodwill, and, accordmgly. Franchisee agrees to comply strictly at all times with the requirements
of this Agreement and Franchisor's standards and specifications (whether contained in the Manual
or any other written or oral communication to Franchisee by Franchisor) relating to the appearance
or operation of the Studio Franchisee acknowledges that other Studios may operate under
different forms of agreement with Franchisor, and that the nghts and obligations of the parties to
other agreements may differ from those hereunder

82 Franchisor's Right to Inspection To determine whether Franchisee is complying with

this Agreement and Franchisor's standards and specifications. Franchisor reserves the right to
supervise, determine and approve the standards of appearance, quality and service pertinent to the
Studio including, without limitation, the right at any reasonable time and without prior notice to
Franchisee to (1) inspect and examine the busmess premises, fitness equipment, facilities and
operation of the Studio in person or by web accessible surveillance cameras with audio, which are
required to be installed in each classroom in the Studio, (2) interview Franchisee and Franchisee's
employees, including any independent contractors, (3) interview Franchisee's members and
customers, suppliers and any other person with whom Franchisee does business, (4) confer with
members and staff of government agencies with authority over Franchisee about matters relevant
to the Studio, and (5) use "mystery shoppers," who may pose as customers and evaluate Franchisee
and Franchisee's operations
©2015 Club Pilates Franchise, LLC A-17
2015 Franchise Agreement
This document was downloaded from franchimp.com. All the information on this website is published in good faith and for general information purpose only. FranChimp.com does not make any warranties about the completeness, reliability, and
accuracy of this information. Any action you take upon the information you find on this website (FranChimp.com), is strictly at your own risk. We will not be liable for any losses and/or damages in connection with the use of our website.
83 Personnel Franchisee agrees to employ in the operation of the Studio only persons of
high character and ability who maintain and exhibit traits of enthusiasm, cleanliness, neatness,
friendliness, honesty and loyalty, it being recognized by Franchisee that such persons are necessary
in order to promote and maintain customer satisfaction and the goodwill of the System Franchisee
agrees to staff the Studio at all times with a sufficient number of qualified, competent personnel
who have been tramed in accordance with Franchisor's standards Franchisee shall be considered
the employer of all employees and independent contractors of the Studio It is the sole
responsibility of Franchisee to hire, discipline, discharge and establish wages, hours, benefits,
employment policies and other terms and conditions of employment for its employees and
independent contractors Franchisee is responsible for obtaining its own independent legal advice
regarding the employment of employees and independent contractors, and complying with any and
all applicable laws pertaining thereto Franchisor shall have no responsibility for the terms and
conditions of employment of Franchisee's employees and/or independent contractors Franchisee
shall engage m no discnminatory employment practices and shall in every way comply with all
applicable laws, rules and regulations of federal, state and local governmental agencies, including,
without limitation, all wage-hour, civil rights, immigration, employee safety and related
employment and payroll related laws Franchisee shall make all necessary filings with, and pay
all taxes and fees due to, the Internal Revenue Service and all other federal, state and local
governmental agencies or entities to which filings and payments are required

84 Products and Services to be Offered for Sale

A Franchisee acknowledges that the presentation of a uniform image to the public and
the offering of uniform services and products is an essential element of a successful franchise
system In order to insure consistency, quality and uniformity throughout the System, Franchisee
agrees (1) to sell or offer for sale only the services or products that have been expressly approved
for sale by Franchisor, (2) to sell or offer for sale all services and products required by Franchisor,
(3) not to deviate from Franchisor's standards and specifications, and (4) to discontinue selling and
offenng for sale any services or products that Franchisor may, in its discretion, disapprove at any
time Franchisor shall supply Franchisee with a list of suppliers from which Franchisee is required
to purchase fitness equipment, Pilates items, products or services for the Studio Franchisor may
change this list from tune to time, and upon notification to Franchisee, Franchisee shall only
purchase fitness equipment, Pilates items, products or services from approved suppliers as
specified on the changed list Franchisor, or an affiliate of Franchisor, may be a designated or
approved supplier of certam equipment, gear, merchandise, apparel and supplies Franchisee
agrees to keep the Studio and fitness equipment in clean condition, with all equipment well-
maintained and operational, and be able at all times dunng business hours to provide members
with all services and products specified by Franchisor

B Franchisee agrees that all exercise equipment must be purchased exclusively from
approved suppliers, must be maintained according to manufacturer or Franchisor specifications,
as applicable

C Franchisee and those it employs must teach Club Pilates classes exactly as specified
in the Manual and in other training materials provided by Franchisor Franchisee agrees not to add

©2015 Club Pilates Franchise, LLC A-18

D If Franchisee proposes to offer for sale any products, classes or services that have
not been approved by Franchisor, Franchisee shall first notify Franchisor in writmg and submit
sufficient mfoimation, specifications and samples concerning such product, classes and/or supplier
and/or service for a determination by the Franchisor whether such product, classes or supplier of
service complies with the Franchisor's specifications and standards and/or whether such supplier
meets the Franchisor's approved supplier criteria Franchisor shall, within ninety (90) days, notify
Franchisee in writing whether or not such proposed product, class and/or supplier or service is
approved, as determined in Franchisor's discretion Franchisor reserves the right to charge
Franchisee reasonable costs in connection with Franchisor's review, evaluation and approval of
alternative suppliers These charges may include reunbursement for travel, accommodations, meal
expenses, and personnel wages Franchisor may from time to time prescribe procedures for the
submission of requests for approved products and/or suppliers or services and obligations that
approved suppliers must assume (which may be mcorporated in a written agreement to be executed
by approved suppliers) Franchisor reserves the right to revoke its approval of a previously
authorized supplier, product, class or service when Franchisor determines in its discretion that such
supplier, product, class or service is not meeting the specifications and standards established by
Franchisor If Franchisor modifies its list of approved products, classes and/or suppliers and/or
services. Franchisee shall not, after receipt m writing of such modification, reorder any product or
utilize any supplier, product, class or service that is no longer approved

E Franchisee acknowledges and agrees that Franchisor is (or may at any time m future
become) an approved or designated supplier for certain Pilates/fitness equipment, other equipment,
products, logo Items, signage and artwork, that Franchisor may derive income from the sale of
such Items, and that the price charged by Franchisor may reflect an ordinary and reasonable profit
consistent with a business of the kind that produces and/or supplies such items

F Franchisee acknowledges and agrees that Franchisor may sell products and services
to members located anywhere, even if such products and services are similar to what Franchisor
sells to Franchisee and what Franchisee offers at the Studio Franchisor may use the internet or
alternative channels of commerce to sell Club Pilates brand products and services Franchisee may
only sell the products and services from the Studio's approved location, and may only use the
internet or alternative channels of commerce to offer or sell the products and services, as permitted
by Franchisor, m order to register members for classes Nothing m the foregoing shall prohibit
Franchisee from obtaining members over the Internet provided Franchisee's internet presence and
content comply with the requirements of this Agreement

G Except as provided elsewhere in this Agreement, Franchisee, other Club Pilates

franchisees. Franchisor and its affiliates are not prohibited from soliciting prospective members
wherever they live or work As such. Franchisee is not prevented from soliciting members who
live or work inside the protected territones granted to other Club Pilates franchisees, or temtones
held by Franchisor or its affiliates Similarly, other Club Pilates franchisees. Franchisor and its
affiliates are not prohibited from soliciting members who live or work within Franchisee's

©2015 Club Pilates Franchise, LLC A-19

H Unless Franchisor directs or agrees otherwise in wnting. Franchisee agrees not to

sell vitamins, supplements or other nutntional products or food items, other than bottled water, at
the Studio

85 Compliance with Laws Franchisee agrees to comply with all federal, state and local
laws, rules, and regulations and shall as soon as practicable, but in any event prior to the opening
for business of the Studio, obtain all municipal and state permits, certificates or licenses necessary
to operate the Studio and shall file and publish, if required by applicable law, a certificate of doing
business (whether under a fictitious name or otherwise) Franchisee acknowledges and agrees that
It has the sole responsibility to investigate and comply with any applicable laws in the state where
the Studio IS located that are specific to the operation of a health/fitness studio For example, some
states requu-e that health/fitness facilities have a staff person available dunng all hours of operation
that IS certified in basic cardiopulmonary resuscitation or other specialized medical trauiing Some
state or local laws may also require that health/fitness facilities have an automated external
defibrillator and/or other first aid equipment on the premises Franchisee shall operate and
maintain the Studio in strict compliance with all employment laws, building codes, fire and safety
codes, environmental laws. Occupational Safety and Health Administration laws, health and safety
laws, sanitation laws, Amencans with Disabilities Act and any other requirements that may be
prescribed by any federal, state or local governmental agency Franchisee agrees to immediately
provide Franchisor with a copy of any notice received by Franchisee from any state, local or
governmental agency pertaming to compliance with any codes or requirements, or the failure to
comply with any codes or requirements, at the Studio Franchisee hereby certifies and represents
that Franchisee, and any of its affiliates, any of its partners, members, shareholders or other equity
owners, and their respective employees, officers, directors representatives or agents, are not acting,
directly or indirectly, for or on behalf of any person, group, entity or nation named by any
Executive Order or the United States Treasury Department as a terrorist, "Specially Designated
National and Blocked Person," or other banned or blocked person, entity, nation or transaction
pursuant to any law, order, rule or regulation that is enforced or administered by the Office of
Foreign Assets Control Franchisee hereby agrees to defend, indemnify and hold harmless
Franchisor from and against any and all claims, damages, losses, risks, liabilities and expenses
(including attorneys' fees and costs) arising from or related to any breach of the certifications set
forth in this paragraph

86 Operational Efforts Franchisee may designate a manager to assist in the direct, day-to-
day, supervision of the operations of the Studio The manager must complete the initial training
requirements and all additional training reasonably required by Franchisor Franchisee agrees to
keep Franchisor advised, in wnting, of any manager and all teachers mvolved in the operation of
the franchised business and their contact information Franchisee agrees to keep the Studio open
for the hours stated in the Manual and as deemed appropriate by Franchisor

87 Good Standing Franchisee will be considered in "Good Standing" if Franchisee is not in

default of any obligation to Franchisor or any of Franchisor's affiliates, whether arising under this

©2015 Club Pilates Franchise, LLC A-20

88 Performance Standards Franchisee and Franchisor have a shared interest m the Studio
performing at or above the System Standards, and meeting a minunum member quota ("Mmimum
Member Quota") Franchisor would not have entered mto this franchise relationship if Franchisor
had anticipated that Franchisee would not meet these Performance Standards

A System Standards Franchisor may choose, in its sole discretion, to evaluate the
Studio for compliance with the System Standards usmg various methods (including, but not limited
to, inspections, field service visits, surveillance camera monitoring, member comments/surveys,
and secret shopper reports ) Franchisee must meet minimum standards for cleanlmess, equipment
condition, repair and function, and customer service Franchisee's employees, including any
independent contractors, must meet minimum standards for courteousness and customer service

B Mmimum Member Quota Unless waived by Franchisor due to unique market

conditions or the Studio's size. Franchisee must meet a certain Mmimum Member Quota If
Franchisee fails to achieve and maintain 40 members per day (averaged over one week) by the 1^
year anniversary of the opening of the Studio, 65 members per day (averaged over one week) by
the end of the 2"'' year anniversary, and 85 members per day (averaged over one week) by the end
of the 3^'' year anniversary and each succeeding year thereafter. Franchisor may institute a
corrective training program and/or require Franchisee to perform additional local marketing If
Franchisee fails to meet the Minimum Member Quota for 36 consecutive months at any time
during the Term of this Agreement, Franchisor may institute a mandatory corrective training
program or terminate this Agreement at its sole discretion
I have read Article 8, understand it, and agree to
comply With each of its Sections
Your Initials /

9 ADVERTISING AND MARKETING

91 Fund

A Franchisee will be requu-ed to pay the appropriate Fund Contribution to Franchisor

as described m Section 5 6 of this Agreement, if and when Franchisor establishes the Fund In the
event Franchisor mcreases the Fund Contnbution from what it is as of the date this Agreement is
signed. Franchisor will provide at least 60 days' written notice of such mcrease in the Fund
Contribution

B The Fund is administered by Franchisor with the assistance and advice provided by
the Fund Committee (the ' MFC") pursuant to a charter agreement among Franchisor and the
members of the MFC, which serves in an advisory capacity only Under the current charter, which
IS subject to change. Franchisor franchisees elect 2 members to the MFC to serve for a one-year
term corresponding to the calendar year and Franchisor selects 2 members to serve for a one-year
term corresponding to the calendar year The 4-member MFC will, by a majority vote, assist us
in determining the selection and placement of regional and national advertising Each MFC
©2015 Club Pilates Franchise, LLC A-21
2015 Franchise Agreement
This document was downloaded from franchimp.com. All the information on this website is published in good faith and for general information purpose only. FranChimp.com does not make any warranties about the completeness, reliability, and
accuracy of this information. Any action you take upon the information you find on this website (FranChimp.com), is strictly at your own risk. We will not be liable for any losses and/or damages in connection with the use of our website.
member has one vote If the MFC is deadlocked, our President will break the deadlock with the
deciding vote, which shall be bmding The Fund is maintained and operated by Franchisor with
the assistance of the MFC to meet the costs of conducting regional and national advertising and
promotional activities which are deemed most beneficial to the System

C The MFC shall represent Franchisee and advise Franchisor with regard to all
advertising, marketing and public relations programs and activities financed by the Fund, including
the creative concepts, materials and endorsements used and the geographic market, media
placement and allocation The MFC will be purely advisory m nature and will have no operational
or ultimate decision-making authority You agree that the Fund may be used to pay the costs of
preparing and producing associated materials and programs as Franchisor may determine,
including the use of social media, video, audio and written advertising materials employmg
advertising agencies, sponsorship of sporting, charitable or similar events, administering regional,
national and multi-regional advertising programs mcluding purchasing direct mail and other media
advertising, website development/operation and to pay Internet, Intranet, URL, 800 or similar
number, and other charges, fees and/or expenses, including employing advertising agencies to
assist with marketing efforts, and supporting public relations, market research and other
advertising, promotional and marketing activities A brief statement regarding the availability of
Club Pilates franchises may be included in advertising and other items produced using the Fund

D Franchisor may spend in any calendar year more or less than the total Advertising
Contributions to the Fund in that year Franchisor may cause the Fund to invest any surplus for
future use by the Fund Franchisor may borrow from Franchisor or other lenders on behalf of the
Fund to cover deficits of the Fund

E Franchisor and/or any Franchisor-Related Persons/Entities can provide goods,

services, materials, etc (includmg administrative services and/or ' in-house advertising agency"
services) and be compensated and/or reimbursed for the same by the Fund, provided that any such
compensation must be reasonable in amount Franchisor can arrange for goods, services,
materials, etc (mcluding administrative services) to be provided by independent
persons/companies and all related costs, fees, etc will be paid by the Fund

F The Fund will be accounted for separately from Franchisor's other funds and
Franchisor will not use the Fund for its general operating expenses All taxes of any kind incurred
in connection with or related to the Fund, its activities, contributions to the Fund and/or any other
Fund aspect, whether imposed on Franchisor, the Fund or any other related party, will be the sole
responsibility of the Fund Franchisor will retam independent certified public accountants to
prepare an annual audit of the Fund, at the expense of the Fund, and send a copy of the audit to
Franchisee upon wntten request All interest earned on monies contnbuted to, or held m, the Fund
will be remitted to the Fund and will be subject to the restrictions of the relevant Franchise
Agreement(s)

G You acknowledge that the Fund Contnbutions are intended to maximize general
public recognition of and the acceptance of the Intellectual Property for the benefit of the System
as a whole Notwithstanding the foregomg. Franchisor undertakes no obligation, in administering
the Fund Contributions to make expenditures for you that are equivalent or proportionate to your

©2015 Club Pilates Franchise, LLC A-22

H Franchisor maintains the right to terminate the collection and disbursement of the
Fund Contributions and the Fund Upon termination, Franchisor will disburse the remaining funds
for the purposes authorized under this Agreement

I In the event Franchisor or any Affiliate of Franchisor owns and operates a Studio
utilizing the System, these ' company-owned" Studios will contribute to the Fund on the same
basis that franchised Studios in the System are required to contnbute

92 Local Marketing Activities

A Franchisee is responsible for local marketing activities to attract members to the

Studio

B Franchisee's advertising will be in good taste and conform to ethical and legal
standards and our requirements Franchisor may require Franchisee to submit samples of all
advertising and promotional materials (and any use of the Marks and/or other forms of commercial
identification) for any media, including the Internet, World Wide Web or otherwise Franchisor
retains the right to approve or disapprove of such advertising, in its sole discretion Franchisee
agrees not to use any materials or programs disapproved by Franchisor

C Franchisor must approve any form of co-branding, or advertising with other brands,
products or services, in writing, in advance

93 Social Media Activities As used in this Agreement, the term "Social Media" is
defined as a network of services, including, but not limited to, blogs, microblogs, and social
networking sites (such as Facebook, Linkedln and MySpace), video-sharmg and photo-sharing
sites (such as YouTube and Flickr), review sites (such as Yelp and Urbanspoon), marketplace sites
(such as eBay and Craigslist), Wikis, chat rooms and virtual worlds, that allows participants to
communicate online and form communities around shared interests and experiences While it can
be a very effective tool for building brand awareness, it can also be devastating to a brand if used
improperly Therefore, Franchisee must strictly follow the Social Media guidelines, code of
conduct, and etiquette as set forth m the Manual Any use of Social Media by Franchisee
pertaining to the Studio must be in good taste and not linked to controversial, unethical, immoral,
illegal or inappropriate content Franchisor reserves the right to "occupy" any Social Media
websites/pages and be the sole provider of information regarding the Studio on such
websites/pages (e g, a system-wide Facebook page) At Franchisor's request. Franchisee will
promptly modify or remove any online communication pertaining to the Studio that does not
comply with this Agreement or the Manual

94 Franchisee Marketing Groupfs) ("Co-Ops") Franchisor may decide to form one or

more associations and/or sub-associations of Club Pilates Studios to conduct various marketing-
related activities on a cooperative basis (a "Co-Op") If one or more Co-Ops (local, regional and/or
national) are formed covering Franchiisee's area, then Franchisee must join and actively

©2015 Club Pilates Franchise, LLC A-23

I have read Article 9, understand it, and agree to

comply With each of its Sections
Your Initials /

10 FINANCIAL REPORTS, AUDITS, COMPUTER SYSTEM AlVD INSURANCE

REQUIREMENTS

10 1 Records and Reports Franchisee shall maintain and preserve for four (4) years or such
penod as may be required by law (whichever is greater) from the date of their preparation such
financial mformation relating to the Studio as Franchisor may periodically require, including
without limitation. Franchisee's sales and use tax returns, register tapes and reports, sales reports,
purchase records, and full, complete and accurate books, records and accounts prepared in
accordance with generally accepted accounting principles and in the form and manner prescribed
by Franchisor Franchisee agrees that its financial records shall be accurate and up-to-date at all
times Franchisee agrees to promptly furnish any and all financial information, including tax
records and returns, relating to the Studio to Franchisor on request

10 2 Right to Conduct Audit or Review Franchisor shall have the right, in its sole
determination, to require a review by such representative(s) as Franchisor shall choose, of all
information pertaining to the Studio including, without limitation financial records, books, tax
returns, papers, and business management software programs of Franchisee at any time during
normal business hours without prior notice for the purpose of accurately tracking unit and System-
wide sales, sales increases or decreases, effectiveness of advertising and promotions, and for other
reasonable business purposes Such review will take place at the Studio or Franchisee's head
office (if different), or both, and Franchisee agrees to provide all information pertaining to the
Studio requested by Franchisor during its review If the review is done because of a failure by
Franchisee to furnish reports, supporting records or other required mformation or to fiimish the
reports and information on a timely basis. Franchisee shall reunburse Franchisor for all costs of
the audit or review including, without limitation, travel, lodging, wage expense and reasonable
accounting and legal expense The foregoing remedies shall be in addition to any other remedies
Franchisor may have under this Agreement or applicable law

10 3 Computer System and Software Franchisee must acquire a computer for use in the
operation of the Studio Franchisee agrees to record all of its receipts, expenses, invoices, member
lists, class and employee schedules and other business information promptly in the computer
system and use the software that Franchisor specifies or otherwise approves Franchisor reserves
the right to change the computer system, and the accounting, business operations, customer service
and other software at any time Data, including names, addresses, contact information, and credit
card or payment information of members of the Studio will be captured on the required software,
and will become the joint property of Franchisee and Franchisor during the Term of this
Agreement Franchisee will provide Franchisor with any passwords necessary to access the
©2015 Club Pilates Franchise, LLC A-24
2015 Franchise Agreement
This document was downloaded from franchimp.com. All the information on this website is published in good faith and for general information purpose only. FranChimp.com does not make any warranties about the completeness, reliability, and
accuracy of this information. Any action you take upon the information you find on this website (FranChimp.com), is strictly at your own risk. We will not be liable for any losses and/or damages in connection with the use of our website.
business information for the Studio that is stored on the required software and online Franchisor
may use such information to communicate directly to the members of the Studio, and to provide
updates, information, newsletters, and special offers to the members Franchisee must upgrade
and maintain the computer system and software in the Studio, as required by Franchisor from time
to time, and pay any fees associated with such upgrades Upon expiration or termination of this
Agreement, Franchisee shall have no further access or nghts to the member information and
Franchisor shall be the sole owner of such information

10 4 Insurance

A Prior to opening the Studio for business and throughout the entire term of this
Agreement, Franchisee will keep in force at Franchisee's own expense and by advance payment of
the premium, the followmg msurance coverages

(1) Workers' Compensation and Employer's Liability Insurance as well as such

other insurance, with statutory limits, as required by law in the jurisdiction where the franchised
business is located Employers Liability or Stop Gap" msurance, with limits of not less than
$1,000,000 each accident,

(2) Commercial General Liability Insurance, Occurrence form, including a per

location or project aggregate, with the following coverages owners and contractors protective
liability, broad form property damage, contractual liability, severability of interest clause, personal
and advertising mjury, and products/completed operations, medical payments and fire damage
liability, insuring you and us against all claims, suits, obligations, liabilities and damages,
including attorneys' fees, based upon or arising out of actual or alleged personal mjuries or
property damage resulting from or occurring in the course of, or on or about or otherwise relating
to the Franchised Busmess including general aggregate coverage in the following limits

Required Coverage Minimum Limits of Coverage

General Aggregate $2,000,000
Products/Completed Operations Aggregate $2,000,000
Personal and Advertising Injury $1,000,000
Each Occurrence $1,000,000
Damage to Rented Premises (each occurrence) $100,000
Medical Expense (any one person) $2,500

(3) "ALL RISK" or special property coverage of not less than current
replacement cost of the Studio's glass, equipment, fixtures and leasehold improvements sufficient
in the amount to restore the Studio to full operations, and

(4) Business interruption msurance with coverage for at least twelve (12)
months for actual losses (For purposes of this Agreement, "Gross Sales" shall include any
proceeds received by Franchisee m connection with a "business interruption" msurance claim)

©2015 Club Pilates Franchise, LLC A-25

C Franchisor reserves the right, from time to time, m its discretion, to upgrade the
insurance requu-ements or lower the required amounts as to policy limits, deductibles, scope of
coverage, or rating of carriers m response to current industry standards, market conditions and/or
landlord requirements Within sixty (60) days of receipt of notice from Franchisor, Franchisee
agrees to revise its coverage, as specified in any notice from Franchisor

D Franchisee's obligation to obtain and maintain insurance shall not be lunited by

reason of any insurance that may be mamtained by Franchisor nor relieve Franchisee of liability
under the indemnity provisions set forth in this Agreement All insurance shall name Franchisor
as an additional msured, waive any subrogation rights or other rights to assert a claim back agamst
Franchisor and shall contain a clause requiring notice to Franchisor thirty (30) days in advance of
any cancellation or material change or cancellation to any such policy Franchisee shall give
Franchisor certificates of coverage at least annually Failure to obtain or the lapse of any of the
required insurance coverage shall be grounds for the immediate termmation of this Agreement
pursuant to Section 15 1, and Franchisee agrees that any losses, claims or causes of action arising
after the lapse of or termination of insurance coverage will be the sole responsibility of Franchisee
and that Franchisee will hold Franchisor harmless from all such losses, claims and/or causes of
action In addition, but not to the exclusion of the foregoing remedy, if Franchisee fails to procure
or maintam the required insurance. Franchisor shall have the right and authority, but not the
obligation, to procure immediately the insurance and Franchisee shall reimburse Franchisor for the
cost of the insurance plus reasonable expenses immediately upon wntten notice Franchisee is
required to submit to Franchisor a copy of a Certificate of Insurance, with Franchisor as an
additional insured, showing compliance with the foregoing requirements at least thirty (30) days
before Franchisee commences operation of the Studio Franchisor shall have a secunty interest
in all insurance proceeds to the extent Franchisee has any outstanding obligations to Franchisor

I have read Article 10, understand it, and agree to

comply with each of its Sections
Your Initials /

11 RELATIONSHIP OF THE PARTIES, INDEMNIFICATION

II I Independent Contractor The only relationship between Franchisor and Franchisee

created by this Agreement is that of independent contractor The business conducted by Franchisee
IS completely separate and apart from any business that may be operated by Franchisor and nothing
in this Agreement shall create a fiduciary relationship between them or constitute either party as
agent, legal representative, subsidiary, joint venturer, partner, employee, servant or fiduciary of
the other party for any purpose whatsoever Franchisee shall hold itself out to the public as an
independent contractor operating the business pursuant to a license from Franchisor, and
Franchisee agrees to take such action including exhibiting a notice to that effect in such content,
form and place as Franchisor may specify It is further specifically agreed that Franchisee is not
©2015 Club Pilates Franchise, LLC A-26
2015 Franchise Agreement
This document was downloaded from franchimp.com. All the information on this website is published in good faith and for general information purpose only. FranChimp.com does not make any warranties about the completeness, reliability, and
accuracy of this information. Any action you take upon the information you find on this website (FranChimp.com), is strictly at your own risk. We will not be liable for any losses and/or damages in connection with the use of our website.
an affiliate of Franchisor and that neither party shall have authority to act for the other in any
manner to create any obligations or indebtedness that would be binding upon the other party
Neither party shall be in any way responsible for any acts and/or omissions of the other, its agents,
servants or employees and no representation to anyone will be made by either party that would
create an implied or apparent agency or other similar relationship by and between the parties

11 2 Indemnification Franchisee, as a material part of the consideration to be rendered to

Franchisor, agrees to mdemnify, defend and hold Franchisor, as well as Franchisor's directors,
officers, pnncipals/owners, managers, shareholders, affiliates, subsidianes, employees, servants,
agents, successors and assignees (collectively, the "Indemnitees"), harmless from and against any
and all losses, damage, clauns, demands, liabilities and causes of actions of every kind or character
and nature, as well as costs and expenses incident thereto (mcluding reasonable attorneys' fees and
court costs), that are brought against any of the Indemnitees (collectively, the' Claims") that arise
out of or are otherwise related to Franchisee's (a) breach or attempted breach of, or
misrepresentation under, this Agreement or in connection with the offer/sale of the Studio prior to
the execution of this Agreement, and/or (b) ownership, construction, development, management,
or operation of the Studio m any manner Notwithstanding the foregoing, at Franchisor's option.
Franchisor may choose to engage counsel and defend against any such Claim and may require
immediate reimbursement from the Franchisee of all expenses and fees mcurred in cormection
with such defense
I have read Article 11, understand it, and agree to
comply with each of its Sections
Your Initials /

12 CONFIDENTIAL INFORMATION

12 1 Franchisor's Confidential Information

A Franchisee acknowledges and agrees that all information relating to the System and
to the development and operation of the Studio, includmg, without lunitation, the Manual,
Franchisor's training program, members and supplier lists, or other information or know-how
distinctive to a Club Pilates Franchise (all of the preceding information is referred to herein as the
' Confidential Information") are considered to be proprietary and trade secrets of Franchisor
Franchisee agrees that all Confidential Information is to be held m the stnctest of confidence
during and after the term of this Agreement and is not to be divulged to anyone directly or
indirectly at any time, except to Franchisee's Studio employees, including any independent
contractors, with a need to know the information m order to operate the Studio Upon Franchisor's
request. Franchisee shall require the Studio's employees and any independent contractors to
execute a nondisclosure and non-competition agreement in a form satisfactory to Franchisor
Franchisee shall not acquire any interest m the Confidential Information other than the right to
utilize It m the Studio and agrees not to copy, duplicate, record or otherwise reproduce any
Confidential Information, in whole or in part, nor otherwise make them available to any
unauthorized person, nor use them in any other business or in any manner not specifically
authorized or approved in writing by Franchisor Franchisee shall adopt and implement all
reasonable procedures to prevent unauthorized use, duplication or disclosure of Franchisor's
Confidential Information If Franchisee or Franchisee's employees or any independent contractors
©2015 Club Pilates Franchise, LLC A-27
2015 Franchise Agreement
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accuracy of this information. Any action you take upon the information you find on this website (FranChimp.com), is strictly at your own risk. We will not be liable for any losses and/or damages in connection with the use of our website.
leam about an unauthorized use of any trade secret or confidential materials, Franchisee must
promptly notify Franchisor Franchisor is not obligated to take any action, but will respond to the
information as it deems appropriate If Franchisee at any time conducts, owns, consults with, is
employed by or otherwise assists a similar or competitive business to that franchised hereunder,
the doctrme of' mevitable disclosure" will apply, and it will be presumed that Franchisee is in
violation of this covenant, and m such case, it shall be Franchisee's burden to prove that Franchisee
IS not in violation of this covenant

B Franchisee agrees that any new concept, process or improvement in the operation
or promotion of the Studio developed by or on behalf of Franchisee that relates to or enhances the
Club Pilates Operating System, or any aspect of Franchisor's business, shall be the sole property
of Franchisor, and Franchisee shall promptly notify Franchisor and shall provide Franchisor with
all necessary information and execute all necessary documents with respect thereto, without
compensation Franchisee acknowledges that Franchisor may utilize or disclose such information
to other Franchisees

12 2 No Other Interests Franchisee further acknowledges that Franchisor would be unable to

protect Its Confidential Information against unauthorized use or disclosure and would be unable to
encourage a free exchange of ideas and information among Club Pilates franchisees if its
franchisees were permitted to hold an interest in other fitness or Pilates Studio businesses and
otherwise to compete with Franchisor Therefore, dunng the term of this Agreement, Franchisee
must comply with the competitive covenant provisions of Article 13 herein

12 3 Iniunctive Relief Franchisee expressly agrees that the existence of any claims it may
have against Franchisor, whether or not arising out of this Agreement, shall not constitute a defense
to the enforcement of this Article 12 Franchisee acknowledges and agrees that any failure to
comply with the requirements of this Article 12 will cause Franchisor irreparable mjury for which
no adequate remedy at law is available, and Franchisee accordingly agrees that Franchisor shall be
entitled to injunctive relief as specified in Section 16 2 herein to enforce the terms of this Article
12 Franchisee shall pay all costs and expenses, including, without limitation, reasonable
attorneys' fees, incurred by Franchisor in connection with the enforcement of this Article 12 The
foregoing remedies shall be in addition to any other remedies Franchisor may have under this
Agreement or applicable law

1 have read Article 12, understand it, and agree to

comply With each of its Sections
Your Initials /

13 COVENANTS NOT TO COMPETE

13 I Non-Competition Covenants of Franchisee

A During the Term of this Agreement Neither Franchisee, its pnncipals, owners, or
guarantors, nor any immediate family of Franchisee, its principals, owners, or guarantors
(' Restricted Parties"), may, directly or indirectly, for themselves or through, on behalf of, or in
conjunction with any other person, partnership or corporation own, maintain, engage in, be
©2015 Club Pilates Franchise, LLC A-28
2015 Franchise Agreement
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accuracy of this information. Any action you take upon the information you find on this website (FranChimp.com), is strictly at your own risk. We will not be liable for any losses and/or damages in connection with the use of our website.
employed or serve as an officer, director, or principal of, lend money or extend credit to,
lease/sublease space to, or have any interest in or involvement with any fitness or exercise
business, any fitness or exercise marketing or consulting business, any business offenng products
of a similar nature to those of the Studio, or in any business or entity which franchises, licenses or
otherwise grants to others the right to operate such aforementioned businesses ("Competmg
Business") Furthermore, the Restricted Parties shall not divert, or attempt to divert, any
prospective customer to a Competing Business m any manner

B After the Term of this Agreement For two (2) years after the expiration, termination
or non-renewal (by Franchisor or by Franchisee for any reason) of this Agreement or after
Franchisee has assigned its interest m this Agreement, the Restricted Parties shall not own,
maintain, engage in, be employed as an officer, director, or principal of, lend money to, extend
credit to, lease/sublease space to, or have any interest in or involvement with, any other Competing
Business within a ten (10) mile radius of any Club Pilates brand Studio whether ffanchised or
owned by Franchisor or any of Franchisor's affiliates

13 2 Non-Solicitation Covenants

A During the Term of this Agreement With the exception of teachers who have
completed the Club Pilates Teacher Training Program, Franchisee agrees not to employ or seek to
employ any person employed by Franchisor or by any other franchisee of Franchisor, or otherwise
du-ectly or indirectly induce or seek to mduce such person to leave his or her employment during
the term of this Agreement Teachers who have completed the Club Pilates Teacher Training
Program may teach at more than one Studio Franchisee acknowledges that Franchisor has the
nght to offer to sell or to sell a Club Pilates fi-anchise to any employee of Franchisee

B After the Term of this Agreement For two (2) years after the expiration, termination
or non-renewal (by Franchisor or by Franchisee for any reason) of this Agreement or after
Franchisee has assigned its mterest m this Agreement, the Restricted Parties shall not (i) solicit
business from customers of Franchisee's former Studio, (ii) contact any of Franchisor's suppliers
or vendors for any competitive business purpose, or (in) solicit any of Franchisor's other
employees, or the employees of Franchisor's affiliates or any other System franchisee, to
discontinue employment

13 3 Enforcement of Covenants

A Franchisee expressly agrees that the existence of any claims it may have against
Franchisor, whether or not arising out of this Agreement, shall not constitute a defense to the
enforcement of the covenants in this Article 13 Franchisee acknowledges and agrees that in view
of the nature of the System and the business of Franchisor, the restnctions contained in this Article
13 are reasonable and necessary to protect the legitimate interests of the System and Franchisor
Franchisee further acknowledges and agrees that Franchisee's violation of the terms of this Article
13 will cause irreparable injury to Franchisor for which no adequate remedy at law is available,
and Franchisee accordmgly agrees that Franchisor shall be entitled to preliminary and permanent
injunctive relief and damages, as well as, an equitable accountmg of all earnings, profits, and other
benefits arising from such violation, which remedies shall be cumulative and in addition to any

©2015 Club Pilates Franchise, LLC A-29

2015 Franchise Agreement
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accuracy of this information. Any action you take upon the information you find on this website (FranChimp.com), is strictly at your own risk. We will not be liable for any losses and/or damages in connection with the use of our website.
other nghts or remedies to which Franchisor shall be entitled Franchisee agrees to waive any
bond that may be required or imposed in connection with the issuance of any preliminary or
provisional relief Franchisee shall pay all costs and expenses, mcludmg, without limitation,
reasonable attorneys' fees, incurred by Franchisor in connection with the enforcement of this
Article 13 If Franchisee violates any restnction contained in this Article 13, and it is necessary
for Franchisor to seek equitable relief, the restrictions contained herem shall remain in effect until
two (2) years after such relief is granted If Franchisee contests the enforcement of Article 13 and
enforcement is delayed pendmg litigation, and if Franchisor prevails, the period of non
competition shall be extended for an additional period equal to the period of time that enforcement
of this Article 13 is delayed

B Franchisee agrees that the provisions of this covenant not to compete are
reasonable If, however, any court should find this Article 13 or any portion of this Article 13 to
be unenforceable and/or unreasonable, the court is authonzed and directed to reduce the scope or
duration (or both) of the provision(s) in issue to the extent necessary to render it enforceable and/or
reasonable and to enforce the provision so revised

C Franchisor shall have the right, in Franchisor's discretion, to reduce the scope of
any covenant not to compete set forth in this Agreement, or any portion thereof, without
Franchisee's consent, effective immediately upon receipt by Franchisee of written notice thereof,
and Franchisee shall comply with any covenant as so modified

I have read Article 13, understand it, and agree to

comply With each of its Sections
Your Initials /

14 TRANSFER OF INTEREST

14 1 Franchisor's Approval Required All rights and interests of Franchisee arising from this
Agreement are personal to Franchisee and except as otherwise provided in this Article 14,
Franchisee shall not, without Franchisor's prior written consent, voluntarily or involuntarily, by
operation of law or otherwise, sell, assign, transfer, pledge or encumber its interest in this
Agreement, in the license granted hereby, in the assets of the Studio, any of its rights hereunder,
or in the lease for the premises at which the Studio is located, and any purported sale, assignment,
transfer, pledge or encumbrances shall be null and void If Franchisee is a corporation, limited
liability, partnership, or an individual or group of mdividuals, any assignment (or new issuance),
directly or indirectly, occumng as a result of a single transaction or a senes of transactions that
alters the Percentage of Ownership Interest reflected m Section 17 5 of this Agreement must
promptly be reported to Franchisor and is a "transfer" within the meaning of this Article 14

14 2 Conditions for Approval of Transfer Franchisor shall not unreasonably withhold its
approval of a proposed transfer, provided that die prospective transferee, in Franchisor's
reasonable judgment, is of good moral character and reputation, has no conflicting interests, has a
good credit rating and sufficient and competent business expenence, aptitude and financial
resources acceptable to Franchisor's then-current standards for franchisees, and that the following
©2015 Club Pilates Franchise, LLC A 30
2015 Franchise Agreement
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accuracy of this information. Any action you take upon the information you find on this website (FranChimp.com), is strictly at your own risk. We will not be liable for any losses and/or damages in connection with the use of our website.
conditions are met (1) Franchisee pays Franchisor a transfer fee in an amount equal to $10,000,
(2) Franchisee signs a general release of all claims m Franchisor's standard form, (3) the Studio
and equipment must be upgraded, refurbished or repaired if Franchisor, in its sole discretion,
decides it is necessary, and (4) the transferee (a) completes (or has its Operating Pnncipal and/or
Designated Manager complete) the Owner/Operator Module of the Initial Training Program, and
(b) has at least one (1) Certified Pilates Instructor that has completed the Orientation Program -
or an individual that has completed the Teacher Training Program -prior to resuming the provision
of Approved Services at the Studio

14 3 Permitted Transfers to a Corporation or LLC or Affiliate Company If Franchisee is

an individual or partnership, and desires to assign and transfer its rights, assets and obligations
under this Agreement to a corporation or limited liability company that is wholly-owned by
Franchisee and formed for the convenience of ownership, it may do so without approval from
Franchisor, and without payment of a transfer fee, so long as the terms and conditions of this
Agreement remain unchanged, and the Franchisee shall own and control all of the equity and
voting power of all issued and outstanding stock of the transferee corporation or all of the equity
and voting power of the limited liability company and, if Franchisee is more than one individual,
each individual shall have the same proportionate ownership interest in the corporation or limited
liability company as he or she had in Franchisee prior to the transfer

14 4 Death or Disability of Franchisee In the event of the death or disability of Franchisee,

if an individual, or of a stockholder of a corporate Franchisee, or of a partner of a Franchisee which
is a partnership, or a member of a Franchisee which is a limited liability company, the transfer of
Franchisee's or the deceased stockholder's, partner's or member's interest in this Agreement to
his or her heirs, trust, personal representative or conservators, as applicable, must occur within six
(6) months of the death or disability, but, shall not be deemed a transfer by Franchisee (provided
that the responsible management employees or agents of Franchisee have been satisfactorily
trained at Franchisor's Initial Training) nor obligate Franchisee to pay any transfer fee If
Franchisor determines (i) there is no imminent transfer to a qualified successor or (ii) there is no
heir or other principal person capable of operating the Studio, Franchisor shall have the right, but
not the obligation, to immediately appoint a manager and commence operating the Studio on behalf
of Franchisee Franchisee shall be obligated to, and shall pay to Franchisor all reasonable costs
and expenses for such management assistance, including without limitation, the manager's salary,
room and board, travel expenses and all other related expenses of the Franchisor appointed
manager Operation of the Studio during any such period shall be for and on behalf of Franchisee,
provided that Franchisor shall only have a duty to utilize reasonable efforts and shall not be liable
to Franchisee or its owners for any debts, loses or obligations incurred by the Studio, or to any
creditor of Franchisee for any supplies, inventory, equipment, furniture, fixtures or services
purchased by the Studio dunng any penod in which it is managed by a Franchisor appointed
manager Franchisor may, in its sole discretion, extend the six (6) month period of time for
completing a transfer contemplated by this Section

14 5 Relocation Except m cases when Franchisee is in default of its lease. Franchisee may
identify a new Authonzed Location withm the same site selection area in which the Studio was
located, subject to the written consent and approval of Franchisor

©2015 Club Pilates Franchise, LLC A-31

I have read Article 14, understand it, and agree to

comply with each of its Sections
Your Initials /

15 DEFAULT AND TERMINATION OF AGREEMENT

15 1 Termination of Franchise by Franchisor Franchisor shall have the right to terminate

this Agreement for "good cause" upon delivering notice of termination to Franchisee For
purposes of this Agreement, "good cause" shall include, without limitation (i) a material breach
of this Agreement or any other agreement between Franchisee and Franchisor or any of
Franchisor's affiliates, (ii) intentional, repeated or continuous breach of any provision of this
Agreement or any other agreement between Franchisee and Franchisor or any of Franchisor's
affiliates, and (in) the breaches set forth below

A Immediate Termination Franchisee shall be deemed to be in default and

Franchisor may terminate this Agreement and all rights granted hereunder, without affording
Franchisee any opportunity to cure the default, effective immediately upon receipt of notice by
Franchisee, and such termination shall be for good cause where the grounds for termination are

(1) Franchisee has made any matenal misrepresentation or omission in

applying for the franchise or in executing or performmg under this Agreement or any other
agreement between Franchisee and Franchisor or any of Franchisor's affiliates,

(2) Franchisee becomes insolvent by reason of Franchisee's inability to pay

debts as they become due, or makes an assignment for the benefit of creditors or makes an
admission of Franchisee's inability to pay obligations as they become due,

(3) Franchisee files a petition in bankruptcy, or an involuntary petition in

bankruptcy is filed agamst Franchisee or a receiver is appointed for Franchisee's busmess, or a
final judgment remams unsatisfied or of record for 30 days or longer, or if Franchisee is a
corporation, limited liability company or partnership. Franchisee is dissolved,

(4) Franchisee voluntarily or otherwise abandons the Studio For purposes of

this Agreement, the term abandon" means (i) failure to actively operate the Studio for more than
two (2) business days without Franchisor's prior written consent, or (ii) any other conduct on the
part of Franchisee or its pnncipals that Franchisor determines mdicates a desire or intent to
discontinue operating the Studio m accordance with this Agreement or the Manual,

(5) Franchisee or any of its principal officers, directors, partners or managing

members is convicted of or pleads no contest to a felony or other crime or offense that adversely
affect the reputation of the System or the goodwill associated with the Marks,

©2015 Club Pilates Franchise, LLC A-32

(7) Franchisee falsifies any financial reports or records required to be provided

by Franchisee to Franchisor under this Agreement,

(8) Franchisee's (i) disclosure, utilization, or duplication of any portion of the

System, the Manual or other propnetary or Confidential Information relating to the Studio that is
contrary to the provisions of this Agreement, or (ii) matenal misuse of the Marks in any manner
not expressly authorized by Franchisor,

(9) Franchisee violates any health or safety law, ordinance or regulation or

operates the Studio in a manner that presents a health or safety hazard to its members or to the
public,

(10) Franchisee fails to obtam lavvdlil possession of an acceptable location and to

open for business as a Club Pilates Studio within six (6) months after this Agreement is accepted
by Franchisor, unless Franchisor agrees otherwise in wnting,

(11) Franchisee defaults under the lease agreement or otherwise loses the nght
to possess the premises at the location at which the Studio is located,

(12) Franchisee fails to comply with the covenants not to compete as required in
Article 13 herein, or

(13) Franchisee, after curing a default pursuant to Section 15 IB herein, commits

the same act of default agam within any twelve (12) consecutive month period whether or not such
default is cured after notice thereof is delivered to Franchisee, or if Franchisee received three (3)
or more default notices from Franchisor within any twelve (12) consecutive monthly period
whether or not such defaults were related to the same problem or were cured after notice thereof
was delivered to Franchisee

B Termination with Notice In addition to the provisions of Section 15 lA, if

Franchisee shall be in default under the terms of this Agreement and the default shall not be cured
or remedied (to Franchisor's satisfaction) within thirty (30) days after receipt of written notice
from Franchisor (or 10 days' prior notice m the event of a default that is described in Subsections
(6), (7) or (8) below), in addition to all other remedies available to Franchisor at law or in equity.
Franchisor may immediately terminate this Agreement If any such default is not cured within the
specified cure penod, this Agreement shall termmate without further notice to Franchisee effective
immediately upon expiration of the cure period Franchisee shall be in default, and each of the
following shall constitute good cause for termination under this Agreement

©2015 Club Pilates Franchise, LLC A-33

(2) Franchisee's failure to comply with any provision of this Agreement that
does not otherwise provide for immediate termination, or Franchisee's bad faith in carrymg out the
terms of this Agreement,

(3) Failure by Franchisee to maintain books and financial records for the Studio
suitable for proper fmancial audit or failure by Franchisee to permit Franchisor to carry out its
nghts to conduct an inspection or audit as provided in this Agreement or failure by Franchisee to
submit as required by this Agreement all reports, records and information of the Club Pilates
firanchised business,

(4) Franchisee, or if Franchisee has elected not to directly supervise "on-

premises" the day-to-day Studio operations, then Franchisee's management employee, fails to
complete, to Franchisor's satisfaction, the initial training program as provided m this Agreement,

(5) Franchisee fails to pay when due any amount owing to Franchisor or its
affiliates under this Agreement or any other agreement, or is unable to obtam adequate financing
to cover all costs of developing, opening and operating the Studio,

(6) Franchisee fails to pay when due any amounts owing to any person or entity
in connection with the construction, leasing, financing, operation or supply of the Studio,

(7) Franchisee closes any bank account without completing all of the following
after such closing (i) immediately notifying Franchisor in writing, (ii) immediately establishing
another bank account, and (in) executing and delivering to Franchisor all documents necessary for
Franchisor to begin and continue making withdrawals from such bank account by electronic funds
transfer as Exhibit 2 to this Agreement permits,

(8) Franchisee fails to maintain or suffers cancellation of any insurance

coverage required under this Agreement,

(9) Franchisee allows classes to be taught or training to be conducted by

teachers who have not successfully completed the Club Pilates Teacher Training Program or our
Onentation Program,

(10) Any transfer or attempted transfer by Franchisee or any partner, member or

shareholder in Franchisee of any rights or obligations under this Agreement to any third party
without the prior written consent of Franchisor,

(11) Franchisee offers in conjunction with the operation of the Studio products
or services that have not been approved by Franchisor,

(12) Franchisee fails to abide by the pertinent marketing and advertising

requirements and procedures and participate in marketmg programs for the busmess as established

©2015 Club Pilates Franchise, LLC A-34

(13) Franchisee fails to comply with the Performance Standards as set forth in
the provisions of this Agreement, as prescnbed by Franchisor, or in the Manual, including, but not
limited to, the System Standards for cleanliness, customer service, equipment maintenance, and
any other System Standards which effect or enhance the member expenence at the Studio, and the
Minimum Member Quota

15 2 Cross-Default If there are now, or hereafter shall be, other franchise agreements or any
other agreements in effect between Franchisee and Franchisor and/or any of Franchisor's affiliates,
a default by Franchisee under the terms and conditions of this or any other such agreement, shall
at the option of Franchisor, constitute a default under all such agreements

15 3 Obligations of Franchisee upon Termination, Expiration or Non-Renewal

Immediately upon termination, expiration or non-renewal of this Agreement for any reason

A All rights, privileges and licenses granted by Franchisor to Franchisee shall

immediately cease and be null and void and of no further force and effect, and all such rights,
privileges and licenses shall immediately revert to Franchisor,

B Franchisee shall cease to be an authonzed Club Pilates franchise oivner, and shall
immediately, at its own expense, remove all signs, obliterate or remove all letterheads, labels or
any other item or form of identification that would m any way link or associate Franchisee, its
goods and/or services with Franchisor, and shall unmediately cease to use, in any manner, the
Marks, System and any other copyrighted information or materials or any confidential mformation
Franchisee obtained as a result of the franchise granted to Franchisee,

C Franchisee shall immediately termmate all advertising and promotional efforts and
any other act that would in any way indicate that Franchisee is or was ever an authorized Club
Pilates franchisee,

D Franchisee shall cancel any assumed name of Franchisee or equivalent registration

that contains any Proprietary Mark, and Franchisee shall furnish Franchisor with evidence
satisfactory to Franchisor of compliance with this obligation within five (5) days after termination,
expiration or non-renewal of this Agreement,

E Franchisee agrees not to use any reproduction, counterfeit, copy, or colorable

imitation of the Marks that is likely to cause confusion, mistake or deception, or that is likely to
dilute Franchisor's nghts in and to the Marks, and further agrees not to use any trade dress or
designation of origin or description or representation that falsely suggests or represents an
association or connection with Franchisor,

F Franchisee shall pay all sums owing to Franchisor and its approved suppliers for
outstanding amounts owed under the Franchise Agreement and otherwise in connection with the
Studio In the event of termination for any default of Franchisee, such sums shall include all

©2015 Club Pilates Franchise, LLC A-35

G Franchisee shall comply with the covenants set forth in Articles 12 and 13 of this
Agreement, and

H Franchisee shall, at Franchisor's option, assign to Franchisor any interest that

Franchisee has m any lease for the premises of the Studio,

I Franchisor shall have the option, exercisable by giving written notice thereof withm
thirty (30) days from the date of such termination, expiration or non-renewal to purchase any and
all equipment, furniture, fixtures, signs, sundries and supplies owned by Franchisee and used in
the Studio, at the lesser of (i) Franchisee's cost less depreciation computed on a reasonable straight
line basis (as determined in accordance with generally accepted accounting pnnciples and
consistent with industry standards and customs) or (ii) fair market value of such assets, less(in
either case) any outstanding liabilities of the Studio In addition. Franchisor shall have the option
to assume Franchisee's lease for the lease location of the Studio, or if an assignment is prohibited,
a sublease for the full remaining term on the same terms and conditions as Franchisee's lease No
value will be attributed to the value of the Marks or the System or to the assignment of the lease
(or sublease) for the premises or the assignment of any other assets used m conjunction with the
Studio, and Franchisor will not be required to pay any separate consideration for any such
assignment or sublease

If the parties cannot agree on fair market value within thirty (30) days of
Franchisor's notice of intent to purchase, fair market value shall be determined by an experienced,
professional and impartial third party appraiser without regard to goodwill or going concern value,
designated by Franchisor and acceptable to Franchisee, whose determination shall be final and
binding on both parties The cost of such appraisal shall be borne equally by Franchisor and
Franchisee If the parties cannot agree upon an appraiser one shall be appointed by the American
Arbitration Association, upon petition of either party

Franchisor shall have the nght to withhold from the purchase price funds sufficient
to pay all outstanding debts and liabilities of Franchisee and the Studio and to pay such debts and
liabilities from such funds

J Termination, expiration or non-renewal of this Agreement shall not affect, modify

or discharge any claims, rights, causes of action or remedies, which Franchisor may have against
Franchisee, whether under this Agreement or otherwise, for any reason whatsoever, whether such
claims or rights anse before or after termmation

15 4 Franchisor's Rights and Remedies in Addition to Termination

A If Franchisee shall be in default in the performance of any of its obligations or

breach any term or condition of this Agreement, m addition to Franchisor's nght to terminate this
Agreement, and without limiting any other nghts or remedies to which Franchisor may be entitled
at law or in equity. Franchisor may, at its election, immediately or at any tune thereafter, and

©2015 Club Pilates Franchise, LLC A-36

B As an alternative to Franchisor's exercising its rights under Section 15 5A, above,

and only in the event of a premature termination of this Agreement, Franchisee shall pay
Franchisor liquidated damages in an amount equal to the sum of the royalties paid to Franchisor
for the twenty four (24) months prior to the termination of this Agreement, provided, however
exercise of this nght shall not preclude Franchisor's right to seek injunctive relief as outlined in
Section 16 5 Franchisee's payment to Franchisor would not be a penalty for breaching this
Franchise Agreement, but rather a reasonable estimate of the losses Franchisor would incur in the
event of the closure of Franchisee's franchised business Should Franchisor elect to enforce its
right to liquidated damages under this Section, Franchisee's obligation to pay such damages would
be in addition to Franchisee's obligations to (i) pay all amounts still owed to Franchisor, and (ii)
adhere to Franchisee's other post-termmation obligations Franchisor's right to payment of
liquidated damages would be in addition to all other post-termmation remedies available to
Franchisor under the law

I have read Article 15, understand it, and agree to

comply with each of its Sections
Your Initials /

16 RESOLUTION OF DISPUTES

16 1 Governing Law This Agreement shall be governed by and construed in accordance with
the laws of the State of Califomia, without reference to this state's conflict of laws principles
Notwithstandmg the foregoing, the parties specifically agree and acknowledge that all claims,
causes of actions or disputes related to Franchisee's covenants not to compete set forth in Section
13 of this Agreement, including the interpretation, validity and enforcement thereof, shall be
governed by the laws of the state where the Studio is located

16 2 Internal Dispute Resolution Franchisee must first bring any claim or dispute between
Franchisee and Franchisor to Franchisor's management and make every effort to resolve the
dispute internally Franchisee must exhaust this internal dispute resolution procedure before
Franchisee may bring Franchisee s dispute before a third party This agreement to first attempt
resolution of disputes internally shall survive termination or expu-ation of this Agreement

16 3 Mediation At Franchisor's option, all claims or disputes between Franchisee and

Franchisor (or its affiliates) arising out of, or in any way relating to, this Agreement or any other
agreement by and between Franchisee and Franchisor (or its affiliates), or any of the parties'
respective rights and obligations ansmg from such agreement, which are not first resolved through
the internal dispute resolution procedure set forth in Section 16 1 above, will be submitted first to
©2015 Club Pilates Franchise, LLC A-37
2015 Franchise Agreement
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mediation to take place at Franchisor's then-current corporate headquarters under the auspices of
the American Arbitration Association ( AAA"), in accordance with AAA's Commercial
Mediation Rules then in effect Before commencmg any legal action against Franchisor or its
affiliates with respect to any such claim or dispute, Franchisee must submit a notice to Franchisor,
which specifies, in detail, the precise nature and grounds of such claim or dispute Franchisor will
have a period of thirty (30) days following receipt of such notice within which to notify Franchisee
as to whether Franchisor or its affiliates elects to exercise its option to submit such claim or dispute
to mediation Franchisee may not commence any action against Franchisor or its affiliates with
respect to any such claim or dispute m any court unless Franchisor fails to exercise its option to
submit such claim or dispute to mediation, or such mediation proceedings have been termmated
either (i) as the result of a written declaration of the mediator(s) that further mediation efforts are
not worthwhile, or (ii) as a result of a written declaration by Franchisor Franchisor's rights to
mediation, as set forth herein, may be specifically enforced by Franchisor Each party will bear its
own cost of mediation and Franchisor and Franchisee will share mediator fees equally This
agreement to mediate will survive any termination or expiration of this Agreement The parties
will not be required to first attempt to mediate a controversy, dispute, or claim through mediation
if such controversy, dispute, or claim concerns an allegation that a party has violated (or threatens
to violate, or poses an imminent risk of violating) (a) any federally protected mtellectual property
rights in the Marks, the System, or in any Confidential Information or other confidential
information, (b) any of the restrictive covenants contamed m this Agreement, and (c) any of
Franchisee's payment obligations under this Agreement

16 4 Mandatory Binding Arbitration Except as provided in Section 16 5 of this Agreement,

Franchisee and Franchisor agree that any claim, dispute, suit, action, controversy, or proceeding
of any type whatsoever includmg any claim for equitable relief and/or where either party is acting
as a "private attorney general," suing pursuant to a statutory claim or otherwise, between or
involving Franchisee and Franchisor on whatever theory and/or facts based, and whether or not
arising out of this Agreement, ("Claim") will be processed in the following manner

A Franchisee and Franchisor each expressly waives all nghts to any court proceeding,
except as expressly provided in Section 16 5 below,

B All Claims shall be submitted to and resolved by binding arbitration that will take
place at Franchisor's headquarters or other location that Franchisor designates in Orange County,
California, before and m accordance with the arbitration rules of the American Arbitration
Association Judgment upon the award rendered by the arbitrator shall be entered m any Court
havmg jurisdiction thereof

C Franchisor and Franchisee agree that any arbitration between Franchisor and
Franchisee shall be of Franchisee's individual claim and that the claim subject to arbitration shall
not be arbitrated on a class-wide basis

D This arbitration provision shall be deemed to be self-executing, and m the event

either party fails to appear at any properly noticed arbitration proceeding, an award may be entered
agamst such party notwithstanding said failure to appear

©2015 Club Pilates Franchise, LLC A-38

F Any arbitration proceeding involvmg this Agreement or the Studio generally,

including all demands, other filings and evidence submitted m connection with such proceeding,
must be kept strictly confidential by Franchisee and its representatives, unless Franchisor agrees
otherwise in writing

16 5 Other Proceedings (Ri2ht to Iniunctive Relief) Franchisee acknowledges and agrees

that irreparable harm could be caused to Franchisor by Franchisee's violation of certain provisions
of this Agreement and, as such, in addition to any other relief available at law or equity. Franchisor
shall be entitled to obtain in any court of competent jurisdiction, without bond, restraining orders
or temporary or permanent injunctions in order to enforce, among other items, the provisions of
this Agreement relating to (i) Franchisee's use of the Marks and Confidential Information
(including any proprietary software used in connection with the Studio), (ii) the in-term covenant
not to compete, as well as any other violations of the restrictive covenants set forth in this
Agreement, (iii) Franchisee's obligations on termination or expiration of this Agreement, (iv)
disputes and controversies based on or arising under the Lanham Act, or otherwise involving the
Marks, as now or hereafter amended, (v) disputes and controversies involving enforcement of the
Franchisor's rights with respect to confidentiality under this Agreement, and (vi) the prohibition
of any act or omission by Franchisee or its employees that constitutes a violation of applicable
law, threatens Franchisor's franchise system or threatens other franchisees of Franchisor
Franchisee's only remedy if such an injunction is entered will be the dissolution of the mjunction,
if appropriate, and Franchisee waives all damage claims if the injunction is wrongfully issued

16 6 Choice of Forum

A Franchisee acknowledges and agrees that this Agreement is entered into in

California and that, except for those actions described in Section 16 5 above, any action brought
by either party against the other for the purpose of enforcing the terms and provisions of this
Agreement (provided such action is not subject to the arbitration proceeding pursuant to the terms
of this Agreement or applicable law) shall be instituted solely in a state or federal court having
subject matter jurisdiction thereof only in California in the judicial district in which Franchisor has
Its principal place of business and in no other court and that Franchisee irrevocably waives any
objection Franchisee may have to the exclusive jurisdiction or the exclusive venue of such court

B If Franchisee institutes any arbitration or other legal proceedings in any venue or

other court other than those specified, Franchisee shall assume all of Franchisor's costs in
connection therewith, including, without limitation, reasonable attorney fees regardless of the
outcome of such arbitration or legal proceedings

C Franchisee acknowledges that Franchisor may bring an action in any other court of
competent jurisdiction to seek and obtain injunctive relief as set forth in Section 16 5 above,
including to enforce Franchisee's non-compete obligations hereunder

©2015 Club Pilates Franchise, LLC A-39

2015 Franchise Agreement
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16 7 Waiver of Punitive Damages Franchisee hereby waives to the fullest extent permitted by
law, any right to or claim for any punitive, exemplary, incidental, indirect, special or consequential
damages (including, without limitation, lost profits) against Franchisor ansmg out of any cause
whatsoever (whether such cause be based in contract, negligence, stnct liability, other tort or
otherwise) and agrees that in the event of a dispute, that Franchisee's recovery is limited to actual
damages If any other term of this Agreement is found or determmed to be unconscionable or
unenforceable for any reason, the foregoing provisions shall continue in full force and effect,
includmg, without limitation, the waiver of any nght to claim any consequential damages Nothing
in this Section or any other provision of this Agreement shall be construed to prevent Franchisor
from claimmg and obtaining expectation or consequential damages, including lost future royalties
for the balance of the term of this Agreement if it is termmated due to Franchisee's default, which
the parties agree and acknowledge Franchisor may claim under this Agreement

16 8 WAIVER OF JURY TRIAL THE PARTIES HEREBY AGREE TO WAIVE TRIAL

BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM, WHETHER AT LAW
OR EQUITY, REGARDLESS OF WHICH PARTY BRINGS SUIT THIS WAIVER SHALL
APPLY TO ANY MATTER WHATSOEVER BETWEEN THE PARTIES HERETO WHICH
ARISES OUT OF OR IS RELATED IN ANY WAY TO THIS AGREEMENT, THE
PERFORMANCE OF EITHER PARTY, AND/OR FRANCHISEE'S PURCHASE FROM
FRANCHISOR OF THE FRANCHISE AND/OR ANY GOODS OR SERVICES

16 9 WAIVER OF CLASS ACTIONS THE PARTIES AGREE THAT ALL

PROCEEDINGS ARISING OUT OF OR RELATED TO THIS AGREEMENT, OR THE SALE
OF THE FRANCHISED BUSINESS, WILL BE CONDUCTED ON AN INDIVIDUAL, NOT A
CLASS-WIDE BASIS, AND THAT ANY PROCEEDING BETWEEN FRANCHISEE,
FRANCHISEE'S GUARANTORS AND FRANCHISOR OR ITS
AFFILIATES/OFFICERS/EMPLOYEES MAY NOT BE CONSOLIDATED WITH ANY
OTHER PROCEEDING BETWEEN FRANCHISOR AND ANY OTHER THIRD PARTY

16 10 Attornevs' Fees and Costs

A If legal action or arbitration is necessary to enforce the terms and conditions of this
Agreement, the prevailing party shall be entitled to recover reasonable compensation for
preparation, investigation, court costs, arbitration costs (if applicable) and reasonable attorney's
fees, from the non-prevailing party as fixed by an arbitrator or court of competent jurisdiction

B Separate and distinct from the nght of a prevailmg party to recover expenses, costs
and fees in connection with any legal proceeding or arbitration, the prevailing party shall also be
entitled to receive all expenses, costs and reasonable attorneys' fees incurred in connection with
the enforcement of any arbitration award or judgment entered Furthermore, the nght to recover
post-arbitration award and post-judgment expenses, costs and attorney's fees shall be severable
and shall survive any award or judgment and shall not be deemed merged into such judgment

16 11 No Withholdine of Pavments Franchisee shall not withhold all or any part of any
payment to Franchisor or any of its affiliates on the grounds of Franchisor's alleged

©2015 Club Pilates Franchise, LLC A-40

16 12 Limitation of Actions Franchisee further agrees that no cause of action arising out of or
under this Agreement may be maintained by Franchisee against Franchisor unless brought before
the expiration of one (1) year after the act, transaction or occurrence upon which such action is
based or the expiration of one year after the Franchisee becomes aware of facts or circumstances
reasonably mdicatmg that Franchisee may have a claim against Franchisor hereunder, whichever
occurs sooner, and that any action not brought within this penod shall be barred as a claim,
counterclaim, defense, or set-off Franchisee hereby waives the nght to obtain any remedy based
on alleged fi-aud, misrepresentation, or deceit by Franchisor, including, without limitation,
rescission of this Agreement, in any mediation, judicial, or other adjudicatory proceeding ansing
hereunder, except upon a ground expressly provided in this Agreement, or pursuant to any right
expressly granted by any applicable statute expressly regulating the sale of franchises, or any
regulation or rules promulgated thereunder

16 13 Third Party Beneficiaries Franchisor's officers, directors, shareholders, agents and/or

employees are express third-party beneficiaries of the provisions of this Agreement, includmg the
dispute resolution provisions set forth in this Section 21, each having authority to specifically
enforce the right to mediate/arbitrate claims asserted agamst such person(s) by Franchisee

I have read Article 16, understand it, and agree to

comply with each of its Sections
Your Initials /

17 MISCELLANEOUS PROVISIONS

17 1 Severability Except as provided in Section 13 4, each article, section, paragraph, term

and provision of this Agreement, or any portion thereof, shall be considered severable and if, for
any reason, any such portion of this Agreement is held by an arbitrator or by a court of competent
jurisdiction to be unenforceable due to any applicable existing or future law or regulation, such
portion shall not impair the operation of or have any effect upon, the remaining portions of this
Agreement which will remain m full force and effect No right or remedy conferred upon or
reserved to Franchisor or Franchisee by this Agreement is intended to be, nor shall be deemed,
exclusive of any other right or remedy herein or by law or equity provided or permitted, but, each
shall be cumulative of every other right or remedy

17 2 Waiver and Delay No failure, refusal or neglect of Franchisor to exercise any right,
power, remedy or option reserved to it under this Agreement, or to insist upon strict compliance
by Franchisee with any obligation, condition, specification, standard or operating procedure in this
Agreement, shall constitute a waiver of any provision of this Agreement and the right of Franchisor
to demand exact compliance with this Agreement, or to declare any subsequent breach or default
or nullify the effectiveness of any provision of this Agreement Subsequent acceptance by
Franchisor of any payment(s) due it under this Agreement shall not be deemed to be a waiver by

©2015 Club Pilates Franchise, LLC A-41

17 3 Designation of Responsible Parties Franchisee represents and warrants to Franchisor

that the list below states (i) the name, mailing address and equity interest of each person holding
any shares or other form of ownership, or security interest convertible mto an equity mterest, in
Franchisee, showmg percentage of ownership held by each and (ii) the name and mailing address
of the individual(s) who will be the Operating Pnncipal(s) of the Studio Each Operating Principal
named below has the authonty to act for Franchisee in all matters relatmg to the franchised Studio
granted hereunder, including voting responsibilities Only those individuals who are party to this
Agreement and have an ownership interest in the franchise entity may be listed as an Operating
Principal Franchisee shall promptly notify Franchisor of any change in any such information
Any change in the Operating Principal(s), or in ownership information of Franchisee, is subject to
Article 14 and the training requirements of this Agreement

Franchisee is a • , organized under the laws of

, or • Franchisee is an individual or group of individuals, and
hereby represents and warrants that the information stated below is true and accurate as of the date
set forth below

Shareholder, Partner, Member Percentage of

or Individual Name and Address Ownership Interest

Operating Principal (may also be referred to as the "Designated Operator''

the FDD)

17 4 Franchisor's Discretion Except as otherwise specifically referenced herein, all acts,

decisions, determinations, specifications, prescriptions, authorizations, approvals, consents and
similar acts by Franchisor may be taken or exercised m the sole and absolute discretion of
Franchisor, regardless of the impact upon Franchisee Franchisee acknowledges and agrees that
when Franchisor exercises its discretion or judgment, its decisions may be for the benefit of
Franchisor or the Club Pilates franchise network and may not be in the best interest of Franchisee
as an individual franchise owner

17 5 Notices

A All notices which the parties hereto may be required or permitted to give under this
Agreement shall be in writmg and shall be personally delivered or mailed by certified or registered
mail, return receipt requested, postage paid, or by reliable overnight delivery service, addressed as
follows

©2015 Club Pilates Franchise, LLC A-42

If to Franchisee

B The addressees herein given for notices may be changed at any time by either party
by written notice given to the other party as herein provided Notices delivered by certified or
registered mail shall be deemed to have been given three (3) business days after postmark by
United States Postal Service, or the next business day after deposit with reliable overnight delivery
service or when delivered by hand

17 6 No Recourse Against Nonparty Affiliates All claims, obligations, liabilities, or causes

of action (whether in contract or in tort, in law or in equity, or granted by statute) that may be
based upon, in respect of, arise under, out or by reason of, be connected with, or relate in any
manner to this Agreement, or the negotiation, execution, or performance of this Agreement
(including any representation or warranty made in, in connection with, or as an inducement to this
Agreement, but not including separate undertakings such as guarantees of performance, personal
guaranties, or corporate guarantees), may be made only against (and are those solely of) the entities
that are expressly identified as parties m the preamble to this Agreement ("Contracting Parties")
No Person who is not a Contracting Party, includmg without limitation any director, officer,
employee, mcorporator, member, partner, manager, stockholder, affiliate, agent, attorney, or
representative of, and any financial advisor or lender to, any of the foregoing ("Nonparty
Affiliates"), shall have any liability (whether in contract or m tort, in law or in equity, or granted
by statute) for any claims, causes of action, obligations, or liabilities arising under, out of, in
connection with, or related in any manner to this Agreement or based on, in respect of, or by reason
of this Agreement or its negotiation, execution, performance, or breach, and, to the maximum
extent permitted by law, each Contracting Party hereby waives and releases all such liabilities,
clauns, causes of action, and obligations against any such Nonparty Affiliates, unless such
liabilities, claims, causes of action, and obligations arise from deliberately fraudulent acts
Without limiting the foregoing, to the maximum extent permitted by law, (a) each Contracting
Party hereby waives and releases any and all rights, claims, demands or causes of action that may
otherwise be available at law or in equity, or granted by statute, to avoid or disregard the entity
form of a Contracting Party or otherwise impose liability of a Contracting Party on any Nonparty
Affiliate, whether granted by statute or based on theories of equity, agency, control,
instrumentality, alter ego, domination, sham, single business enterprise, piercing the veil,
unfairness, undercapitalization, or otherwise, and (b) eachiContracting Party disclaims any reliance
upon any Nonparty Affiliates with to the performance of this Agreement or any representation or
warranty made m, in connection with, or as an inducement to this Agreement Nothmg herein is
mtended to prevent a Contracting Party from pursuing any distinct legal rights it may have against

©2015 Club Pilates Franchise, LLC A-43

1 have read Article 17, understand it, and agree to

comply With each of its Sections
Your Initials /

18 ACKNOWLEDGMENTS

18 1 THE SUBMISSION OF THIS AGREEMENT DOES NOT CONSTITUTE AN OFFER

AND THIS AGREEMENT SHALL BECOME EFFECTIVE ONLY UPON THE EXECUTION
HEREOF BY THE FRANCHISOR AND THE FRANCHISEE THE DATE OF EXECUTION
BY THE FRANCHISOR SHALL BE CONSIDERED TO BE THE DATE OF EXECUTION OF
THIS AGREEMENT

IS 2 THIS AGREEMENT SHALL NOT BE BINDING ON THE FRANCHISOR UNLESS

AND UNTIL IT SHALL HAVE BEEN ACCEPTED AND SIGNED BY AN AUTHORIZED
OFFICER OF THE FRANCHISOR

18 3 FRANCHISEE ACKNOWLEDGES THAT IT RECEIVED A COMPLETE COPY OF

THIS AGREEMENT FOR A PERIOD NOT LESS THAN FOURTEEN (14) CALENDAR
DAYS, DURING WHICH TIME FRANCHISEE CONDUCTED AN INDEPENDENT
INVESTIGATION OF THE BUSINESS LICENSED HEREUNDER TO THE EXTENT OF
FRANCHISEE'S DESIRE TO DO SO FRANCHISEE RECOGNIZES AND
ACKNOWLEDGES THAT THE BUSINESS VENTURE CONTEMPLATED BY THIS
AGREEMENT INVOLVES BUSINESS RISKS, AND THAT ITS SUCCESS WILL BE
LARGELY DEPENDENT UPON THE ABILITY OF THE FRANCHISEE AS AN
INDEPENDENT BUSINESSPERSON FRANCHISOR EXPRESSLY DISCLAIMS THE
MAKING OF, AND FRANCHISEE ACKNOWLEDGES THAT IT HAS NOT RECEIVED,
ANY WARRANTY OR GUARANTEE, EXPRESS OR IMPLIED, THAT FRANCHISEE WILL
BE SUCCESSFUL IN THIS VENTURE OR THAT THE BUSINESS WELL ATTAIN ANY
LEVEL OF SALES VOLUME, PROFITS, OR SUCCESS FRANCHISEE ACKNOWLEDGES
THAT THIS AGREEMENT, THE FRANCHISE DISCLOSURE DOCUMENT ("FDD"), AND
THE EXHIBITS HERETO CONSTITUTE THE ENTIRE AGREEMENT OF THE PARTIES
THIS AGREEMENT TERMINATES AND SUPERSEDES ANY PRIOR AGREEMENT
BETAVEEN THE PARTIES CONCERNING THE SAME SUBJECT MATTER

18 4 FRANCHISEE AGREES AND ACKNOWLEDGES THAT FULFILLMENT OF ANY

AND ALL OF FRANCHISOR'S OBLIGATIONS WRITTEN IN THIS AGREEMENT OR
©2015 Club Pilates Franchise, LLC A-44
2015 Franchise Agreement
This document was downloaded from franchimp.com. All the information on this website is published in good faith and for general information purpose only. FranChimp.com does not make any warranties about the completeness, reliability, and
accuracy of this information. Any action you take upon the information you find on this website (FranChimp.com), is strictly at your own risk. We will not be liable for any losses and/or damages in connection with the use of our website.
BASED ON ANY ORAL COMMUNICATIONS WHICH MAY BE RULED TO BE BINDING
IN A COURT OF LAW SHALL BE FRANCHISOR'S SOLE RESPONSIBILITY AND NONE
OF FRANCHISORS AGENTS, REPRESENTATIVES, NOR ANY INDIVIDUALS
ASSOCIATED WITH FRANCHISOR'S FRANCHISE COMPANY SHALL BE PERSONALLY
LIABLE TO FRANCHISEE FOR ANY REASON THIS IS AN IMPORTANT PART OF THIS
AGREEMENT FRANCHISEE AGREES THAT NOTHING THAT FRANCHISEE BELIEVES
FRANCHISEE HAS BEEN TOLD BY FRANCHISOR OR FRANCHISOR'S
REPRESENTATIVES SHALL BE BINDING UNLESS IT IS WRITTEN IN THIS
AGREEMENT THIS IS AN IMPORTANT PART OF THIS AGREEMENT DO NOT SIGN
THIS AGREEMENT IF THERE IS ANY OUESTION CONCERNING ITS CONTENTS OR
ANY REPRESENTATIONS MADE

I have read Article 18, understand it, and agree to

comply with each of its Sections
Your Initials /

19 ENTIRE AGREEMENT

This Agreement, the documents referred to herein, and the exhibits hereto, constitute the entire
and only agreement between the parties concerning the granting, awarding and Iicensmg of
Franchisee as an authorized Club Pilates Franchisee at the Studio location, and supersede all prior
and contemporaneous agreements There are no representations, inducements, promises,
agreements, arrangements or undertakings, oral or written, between the parties other than those set
forth herein Except for those permitted to be made unilaterally by Franchisor hereunder, no
amendment, change or variance from this Agreement shall be binding on either party unless
mutually agreed to by the parties and executed by their authorized officers or agents in wnting
This Agreement does not alter agreements between Franchisor and Franchisee for other locations
Nothing in this Agreement or in any related agreement, however, is intended to disclaim the
representations Franchisor made in the FDD that Franchisor furnished to Franchisee

IN WITNESS WHEREOF, the parties have executed this Agreement on the dates set forth below
to be effective upon execution by Franchisor

[THE REST OF THIS PAGE HAS BEEN LEFT INTENTIONALLY BLANK

SIGNATURES ON THE FOLLOWING PAGE]

©2015 Club Pilates Franchise, LLC A-45

If Franchisee is an individual

By Signature

Date
Title

Signature

Accepted Date

[Signatures continued on next page ]

If Franchisee is a corporation or other entity

[Name of Franchisee]

Title

Date

By .

Title

Date

©2015 Club Pilates Franchise LLC

2015 Franchise Agreement Exhibits
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accuracy of this information. Any action you take upon the information you find on this website (FranChimp.com), is strictly at your own risk. We will not be liable for any losses and/or damages in connection with the use of our website.
EXfflBIT 1 TO
CLUB PILATES FRANCfflSE AGREEMENT

AUTHORIZED LOCATION ADDENDUM

This Addendum is made to the Club Pilates Franchise Agreement (the Franchise Agreement") between
Club Pilates Franchise, LLC ("Franchisor"), and (' Franchisee'), dated
,20_

1 Preservation of Agreement Except as specifically set forth m this Addendum, the Franchise
Agreement shall remain in ftill force and effect in accordance with its terms and conditions This
Addendum is attached to and upon execution becomes an integral part of the Franchise Agreement

2 Authorized Location The parties hereto agree that the Authonzed Location referred to in
Section 1 3 of the Franchise Agreement shall be the following

3 Designated Territory, if any Pursuant to Section 1 3 of the Franchise Agreement, Franchisee's

Designated Temtory will be defined as follows (if identified on a map, please attach map and reference
attachment below)

This Addendum is agreed to and accepted by the parties this day of , 20

FRANCHISOR

Title

FRANCHISEE

Title

By _

Title

©2015 Club Pilates Franchise LLC

ELECTRONIC FUNDS TRANSFER AGREEMENT

This Electronic Funds Transfer Agreement (the "Agreement") is made on this day of
, 20 by and between Club Pilates Franchise, LLC ("Franchisor"),
and or their assignee, if a partnership, corporation or limited
liability company is later formed (' Franchisee")

Whereas, Franchisor and Franchisee are parties to a Club Pilates Franchise Agreement executed
on even date herewith (the "Franchise Agreement") and desire to enter into an Addendum to the
Franchise Agreement,

Now, therefore in consideration of the mutual promises contamed herein and as an inducement
to Franchisor to execute the Franchise Agreement, the parties agree as follows

A Franchisee shall pay any and all fees and other charges in connection with this Addendum and
the Franchise Agreement (including, without limitation, the Royalty Fees, contributions to the Fund and
any other payments due to Franchisor by Franchisee, and any applicable late fees and interest charges)
by electronic, computer, wire, automated transfer, ACH debiting, and bank clearing services
(collectively "electronic funds transfers" or "EFT"'), and Franchisee shall undertake all action necessary
to accomplish such transfers

B Upon execution and delivery of this Agreement, Franchisee shall execute and deliver two (2)
originals of the ' Electronic Debit Authorization" attached as Exhibit 3 to the Franchise Agreement,
which authorizes Franchisee's bank or other financial institution to accept debit originations, electronic
debit entries, or other EFT, and electronically deposit fees and contributions owing Franchisor directly
to Franchisor's bank account(s) Upon Franchisor's request. Franchisee shall deliver to Franchisor all
additional mformation that Franchisor deems necessary (including, without limitation, financial
institution of origin and relevant accounts and ABA/transit numbers for any new bank accounts that
Franchisee opens after the date of this Addendum) in connection with such EFT

C By executing this Addendum, Franchisee authorizes Franchisor to withdraw funds at such days
and times as Franchisor shall determine via EFT from Franchisee's bank account for all fees and other
charges in connection with the Franchise Agreement and this Addendum, as described in the first
sentence of this paragraph Franchisee authorizes weekly ACH debits via EFT based on an amount equal
to the total weekly amount due Franchisor, as set forth in Section 5 of the Franchise Agreement

D Franchisee is responsible for paymg all service charges and other fees imposed or otherwise
resulting from action by Franchisee's bank in connection with EFT by Franchisor, includmg, without
limitation, any and all service charges and other fees arising in connection with any EFT by Franchisor
not being honored or processed by Franchisee's bank for any reason and a Fifity Dollar ($50) charge by
Franchisor for processing the EFT Upon written notice by Franchisor to Franchisee, Franchisee may
be required to pay any amount(s) due under the Franchise Agreement and/or this Addendum directly to
Franchisor by check or other non-electronic means in lieu of EFT at Franchisor's discretion It shall be
a non-curable event of default under Article 15 of the Franchise Agreement if Franchisee closes any
©2015 Club Pilates Franchise LLC
2015 Franchise Agreement Exhibits
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accuracy of this information. Any action you take upon the information you find on this website (FranChimp.com), is strictly at your own risk. We will not be liable for any losses and/or damages in connection with the use of our website.
bank account without completing all of the following forthwith after such closmg (1) immediately
notifying Franchisor thereof m writing, (2) immediately establishing another bank account, and (3)
executmg and dehvenng to Franchisor all documents necessary for Franchisor to begm and continue
making withdrawals from such bank account by EFT as this Addendum permits

E Except as specifically set forth m this Addendum, the Franchise Agreement shall remain in full
force and effect in accordance with its terms and conditions This Addendum is attached to and upon
execution becomes an integral part of the Franchise Agreement

F Wherefore, the parties have set forth their hand and seal on the day and date first above written

FRANCHISOR

Title

FRANCHISEE

Title

By .

Title

©2015 Club Pilates Franchise LLC

ELECTRONIC DEBIT AUTHORIZATION

FRANCHISOR Club Pilates Franchise, LLC

FRANCHISOR ED NUMBER

The undersigned hereby authorizes Club Pilates Franchise, LLC (the "Franchisor"), to initiate debit
entries to the undersigned's checkmg account indicated below and the depository named below (the
"Depository"), to debit the same to such account

Depository Name
Branch
City State and Zip Code

Transit/ABA No
Account Number

This authority is to remain in fiill force and effect until the underlymg obligations under the Franchise
Agreement have been satisfied m full or released m writing by Franchisor

This authonzation further confirms my understanding of Exhibit 2 to the Franchise Agreement signed
by me/us in which I/we expressly agree that this authorization shall apply to any and all Depositories
and bank aecounts with which I/we open accounts during the term of the Franchisee Agreement and any
renewals Without limiting the generality of the forgoing, I/we understand that if I/we close any bank
account, I/we are obligated immediately to (i) notify Franchisor thereof in writing, (ii) establish another
bank account, and (in) execute and deliver to Franchisor all documents necessary for Franchisor to begin
and continue making withdrawals from such bank account/depository by ACH debiting or other
electronic means I/we specifically agree and declare that this Authorization shall be the only written
authorization needed from me/us in order to mitiate debit entries/ACH debit onginations to my/our bank
account(s) established with any Depository in the future

DATE

ID NUMBER

PRINT NAME(S) SIGNATURE(S)

©2015 Club Pilates Franchise LLC

GUARANTEE, INDEMNIFICATION AND ACKNOWLEDGEMENT

For value received, and in consideration for, and as an inducement to Club Pilates Franchise, LLC (the
"Franchisor") to execute the Club Pilates Franchise Agreement (the "Franchise Agreement"), of even
date herewith, by and between Franchisor and or his assignee, if a
partnership, corporation or limited liability company is later formed (the "Franchisee"),
(the "Guarantor(s)"), jointly and severally, hereby unconditionally
guarantee to Franchisor and its successors and assigns the full and timely performance by Franchisee of
each obligation undertaken by Franchisee under the terms of the Franchise Agreement, including all of
Franchisee's monetary obligations arising under or by virtue of the Franchise Agreement

Upon demand by Franchisor, Guarantor(s) will immediately make each payment required of Franchisee
under the Franchise Agreement Guarantor(s) hereby waive any nght to require Franchisor to (a)
proceed against Franchisee for any payment required under the Franchise Agreement, (b) proceed
against or exhaust any security from Franchisee, or (c) pursue or exhaust any remedy, including any
legal or equitable relief, against Franchisee Without affecting the obligations of Guarantor(s) under this
Guarantee, Indemnification and Acknowledgment, Franchisor may, without notice to Guarantor(s),
extend, modify, or release any indebtedness or obligation of Franchisee, or settle, adjust or compromise
any claims against Franchisee

Guarantor(s) waive notice of amendment of the Franchise Agreement and notice of demand for
payment by Franchisee, and agree to be bound by any and all such amendments and changes to
the Franchise Agreement

Guarantor(s) hereby agree to defend, indemnify and hold Franchisor harmless against any and all losses,
damages, liabilities, costs, and expenses (including, without limitation, reasonable attorney's fees,
reasonable costs of investigations, court costs, and arbitration fees and expenses) resulting from,
consisting of, or arising out of or m connection with any failure by Franchisee to perform any obligation
of Franchisee under the Franchise Agreement, any amendment, or any other agreement executed by
Franchisee referred to therein

Guarantor(s) hereby acknowledge and agree to be individually bound by all obligations and covenants
of Franchisee contained in the Franchise Agreement, mcludmg those related to non-competition and
confidentiality

This Guarantee shall terminate upon the expiration or termination of the Franchise Agreement, except
that all obligations and liabilities of Guarantor(s) that anse fi-om events that occurred on or before the
effective date of such termmation shall remain in full force and effect until satisfied or discharged by
Guarantor(s), and all covenants that by their terms continue in force after termination or expiration of
the Franchise Agreement shall remain in force according to their terms Upon the death of an individual
Guarantor, the estate of such Guarantor will be bound by this Guarantee, but only for defaults and
obligations existing at the time of death, and the obligations of the other Guarantor(s) will continue in
full force and effect

The validity of this Guarantee and the obligations of Guarantor(s) hereunder shall in no way be
terminated, restricted, diminished, affected or impaired by reason of any action that Franchisor might
©2015 Club Pilates Franchise LLC
2015 Franchise Agreement Exhibits
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accuracy of this information. Any action you take upon the information you find on this website (FranChimp.com), is strictly at your own risk. We will not be liable for any losses and/or damages in connection with the use of our website.
take or be forced to take against Franchisee, or by reason of any waiver or failure to enforce any of the
rights or remedies reserved to Franchisor in the Franchise Agreement or otherwise

The use of the singular herein shall include the plural Each term used in this Guarantee, unless otherwise
defined herein, shall have the same meaning as when used in the Franchise Agreement

This Guarantee is to be performed m Orange County, California and shall be governed by and construed
in accordance with the laws of the State of California Notwithstanding the foregoing, the undersigned
specifically agree and acknowledge that any claims, causes of action or disputes arising out of or related
to Franchisee's or any of Guarantor's covenants not to compete (set forth in the Franchise Agreement or
this Guaranty), including the interpretation, validity and enforcement thereof, shall be governed by the
laws where the Studio is located Guarantor(s) specifically agree that the provision of the Franchise
Agreement related to dispute resolution (internal dispute resolution, non-binding mediation and
arbitration), injunctive relief, waivers, attomeys' fees and other enforcement of the Franchise Agreement
shall apply equally with respect to all claims or causes of action arising out of or related to this Guaranty
in any manner (including the interpretation thereof) Franchisor and Guarantor(s) agree that any dispute
under this Guarantee shall be resolved by arbitration as set forth in the Franchise Agreement (subject to
the exceptions described therein)

In connection therewith, each of the undersigned hereby appoints the Secretary of State for the State of
Califomia as his agent for service of process to receive summons issued by the court in connection with
any such litigation Franchisor and Guarantor(s) agree that any dispute under this Guarantee shall be
resolved by arbitration pursuant to Article 16 of the Franchise Agreement (except as otherwise provided
in Article 16 of the Franchise Agreement)

IN WITNESS WHEREOF, each of the undersigned has signed this Guarantee as of the date of the
Franchise Agreement

WITNESS GUARANTOR(S)

By _

ss#

DOB

©2015 Club Pilates Franchise LLC

ADDENDUM TO LEASE

This Addendum to Lease (this "Addendum") modifies and supplements that certam lease dated
and entered into by Tenant and Landlord concerning the Location at
(the "Lease")

Landlord and Tenant, intending that Club Pilates Franchise, LLC, a Delaware limited liability company,
("Franchisor") (and its successors and assigns) be a third-party beneficiary of this Addendum, agree as
follows

(1) Landlord shall, durmg the term of the Lease and thereafter, provide Franchisor all sales
and other information it may have, whether provided by Tenant or otherwise, related to the operation of
Tenant's Studio as Franchisor may reasonably request,

(2) Tenant may display the trademarks, service marks and other commercial symbols owned
by Franchisor and used to identify the service and/or products offered at the Studio, including the name
"Club Pilates," the Studio design and image developed and owned by Franchisor, as it currently exists
and as it may be revised and further developed by Franchisor from time to time, and certam associated
logos in accordance with the specifications required by the Club Pilates Manual, subject only to the
provisions of applicable law and in accordance with provisions in the Lease no less favorable than those
applied to other tenants of Landlord,

(3) Tenant shall not, and the Landlord shall not permit the tenant to, sublease or assign all or
any part of the Lease or the Premises, or extend the term or renew the Lease, without Franchisor's prior
written consent,

(4) Landlord shall concurrently provide Franchisor with a copy of any written default notice
sent to Tenant and thereupon grant Franchisor the right (but not the obligation) to cure any deficiency or
default under the Lease, should Tenant fail to do so, within five (5) days after the expiration of the period
in which Tenant may cure the default,

(5) The Premises shall be used only for the operation of a Club Pilates Studio,

(6) Tenant may, without Landlord's consent (but subject to providing Landlord with written
notice thereof), at any time assign this Lease or sublease the whole or any part of the Premises to
Franchisor or any successor, subsidiary or affiliate of Franchisor,

(7) In the event of an assignment of the Lease to Franchisor as described m (6) above.
Franchisor may further assign this Lease, subject to Landlord's consent, such consent not to be
unreasonably withheld based on the remaming obligations of assignee under the Lease, to a duly
authonzed franchisee of Franchisor, and thereupon Franchisor shall be released from any further liability
under the Lease,
©2015 Club Pilates Franchise LLC
2015 Franchise Agreement Exhibits
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accuracy of this information. Any action you take upon the information you find on this website (FranChimp.com), is strictly at your own risk. We will not be liable for any losses and/or damages in connection with the use of our website.
(8) Until changed by Franchisor, notice to Franchisor shall be sent as follows

Club Pilates Franchise, LLC

3185 Pullman Street
Costa Mesa, CA 92626
Attn Shaun Grove

(9) None of the provisions in this Addendum or any rights granted Franchisor hereunder,
may be amended absent Franchisor's prior written consent
(10)

AGREED

TENANT LANDLORD

By By

Its Its

Date Date

©2015 Club Pilates Franchise LLC

UST OF STATE AGENTS FOR SERVICE OF PROCESS

AND STATE ADMINISTRATORS

O2015 Club Pilates Franchise LLC

CALIFORNIA ILLINOIS
Commissioner of Business Oversight Franchise Bureau
One Sansome Street Illinois Attorney General
Suite 600 500 South Second Street
San Francisco, CA 94104 Springfield, Illinois 62706
Tel (415)972-8559 (217) 782-4465
Fax (415)972-8590
Toll Free (866)275-2677 INDIANA
(for service of process)
CONNECTICUT Indiana Secretary of State
Department of Banking 201 State House
Securities and Business Investments Division Indianapolis, Indiana 46204
260 Constitution Plaza
Hartford, Connecticut 06103-1800 (state agency)
Tel (860)240-8230 Securities Commissioner
Indiana Secretary of State
FLORIDA Securities Division, Franchise Section
Tom Kenny, Regulatory Consultant 302 West Washington Street,
Department of Agriculture & Consumer Services Room E-111
Division of Consumer Services Indianapolis, Indiana 46204
PC Box 6700 Tel (317)232-6681
Tallahassee, Florida 32314
Tel (850)488-2221 IOWA
Fax (850)410-3804 Dennis Britson
Director of Regulated Industries Unit
HAWAII Iowa Securities Bureau
(for service of process) 340 Maple
Commissioner of Securities of the State of Hawaii Des Moines, Iowa 50319-0066
Department of Commerce and Consumer Affairs Tel (515)281-4441
Business Registration Division Fax (515)281-3059
Securities Compliance Branch email iowasec@iid state la us
335 Merchant Street, Room 203
Honolulu, Hawaii 96813 MARYLAND
(for service of process)
(state agency) Maryland Securities Commissioner
Department of Commerce & Division of Securities
Consumer Affairs 200 St Paul Place
King Kalakaua Building Baltimore, Maryland 21202-2020
335 Merchant Street, Rm 203
Honolulu, Hawaii 96813 (state agency)
Tel (808)586-2722 Office of the Attorney General
Fax (808)587-7559 Division of Securities
200 St Paul Place
Baltimore, Maryland 21202-2020
Tel (410)576-6360

©2015 Club Pilates Franchise LLC

2015 Franchise Disclosure Document (Amended) - Exhibits
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accuracy of this information. Any action you take upon the information you find on this website (FranChimp.com), is strictly at your own risk. We will not be liable for any losses and/or damages in connection with the use of our website.
MICHIGAN NEW YORK
(for service of process) (state agency)
Michigan Department of Consumer and Industry Services Office of the New York State Attorney
Bureau of Commercial Services General
Corporations Division Investor Protection Bureau
PO Box 30054 Franchise Section
Lansing, Michigan 48909 120 Broadway, 23rd Floor
Tel (517)241-6470 New York, NY 10271-0332
(212)416-8236 Phone
MICHIGAN (212)416-6042 Fax
(state agency)
Department of the Attorney General NORTH DAKOTA
Consumer Protection Division (for service of process)
Antitrust and Franchise Section North Dakota Securities Commissioner
670 Law Building North Dakota Securities Department
Lansing, Ml 48913 600 East Boulevard, 5th Floor
Tel (517)373-7117 Bismarck, North Dakota 58505-0510

MINNESOTA (state agency)

Commissioner of Commerce North Dakota Securities Department
85 Seventh Place East, Suite 500 600 East Boulevard, 5th Floor
St Paul, MN 55101-2198 Bismarck, North Dakota 58505-0510
Tel (651)539-1600 Tel (701)328-2910

NEBRASKA OREGON
Gene Schenkelberg, Securities Analyst Director, Department of Consumer &
Department of Banking & Finance Business Services
1200 N Street, Suite 311 Division of Finance & Corporate Securities
P O Box 95006 Labor and Industries Building
Lincoln, Nebraska 68509 Salem, Oregon 97310
Tel (402)417-3445 Tel (503)378-4140
Fax (503)947-7862
NEW YORK Email debs dfcsmail@>state or us
(for service of process)
Attention New York Secretary of State RHODE ISLAND
New York Department of State Director
One Commerce Plaza, Securities Division
99 Washington Avenue, 6"* Floor Department of Business Regulation,
Albany, NY 12231-0001 Building 69, First Floor
(518) 473-2492 John O Pastore Center
1511 Pontiac Avenue,
Cranston, Rhode Island 02920
Tel (401)462 9582

©2015 Club Pilates Franchise LLC

UTAH WASHINGTON
Director, Division of Consumer Protection (state agency)
Utah Dept of Commerce Administrator
160 East Three Hundred South Department of Financial Institutions
SM Box 146704 Securities Division
Salt Lake City, Utah 84114-6704 PO Box 9033
Tel (801)530-6601 Olympia, Washington 98507-9033
Fax (801)530-6001 Tel (360)902-8760
Fax (360)902-0524
VIRGINIA
(for service of process) WISCONSIN
Clerk of the State Corporation Commission Commissioner of Securities
1300 East Mam Street, 1st Floor Department of Financial Institutions
Richmond, Virginia 23219 PO Box 1768
Madison, Wisconsin 53701-1768
(state agency) Tel (608)266-2801
Director
State Corporation Commission
Division of Securities and Retail Franchising
1300 East Mam Street, 9th Floor
Richmond, Virginia 23219
Tel (804)371-9051

WASHINGTON
(for service of process)
Administrator
Department of Financial Institutions
Securities Division
150 Israel Road SW
Tumwater, Washington 98501

©2015 Club Pilates Franchise LLC

FINANCIAL STATEMENTS

©2015 Club Pilates Franchise LLC

2015 Franchise Orsclosure Document (Amended) - Exhibits
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accuracy of this information. Any action you take upon the information you find on this website (FranChimp.com), is strictly at your own risk. We will not be liable for any losses and/or damages in connection with the use of our website.
Club Pilates Franchise LLC
Balance Sheet
As of August 31, 2015

Aug 31,15
ASSETS
Current Assets
Checking/Savings
Cal United 1593 725 469 95
CP Checking 7780 19 109 61
CP Savings 8309 500 08
Global Checking 6320 9 608 10
Global Marketing 9080 8,077 85
Global Savings 8033 550 10
OM Checking9496 741 81
OM Savings 1956 1,400 07
VP Checking 1645 435 77
VP Savings 3287 1100 11

Total Checking/Savings 766,993 45

Accounts Receivable
Accounts Receivable 22 681 78

Total Accounts Receivable 22,681 78

Other Current Assets

Accounts Rec Franchise Fee 20 000 00
Accounts Receivable MFC 40,684 90
Inventory Asset 72 747 09
Prepaid Expenses 65 091 34
Prepaid Insurance 23,135 90
Prepaid Other 7 006 22
Undeposited Funds 8,564 16

Total Other Current Assets 237 229 61

Total Current Assets 1 026 904 84

Fixed Assets
Accumulated Depreciation 27,915 00
Computer Equip and Programming 81,989 94
Furniture and Equipment 293 388 92

Total Fixed Assets 347,463 86

Other Assets
Deposits 13,000 00
Intangible Assets
Goodwill 5,792 584 02
Trademark 25,000 00

Total Intangible Assets 5 817 584 02

Total Other Assets 5 830,584 02

TOTAL ASSETS 7,204,952 72

UNAUDITED - PREPARED FOR INTERNAL USE Page 1

Aug 31 15
LIABILITIES & EQUITY
Liabilities
Current Liabilities
Accounts Payable
Accounts Payable 392,799 70

Total Accounts Payable 392,799 70

Other Current Liabilities

Accrued Expenses 149,097 96
Deferred Product Sales 4 500 00
Marketing Reserve 8,077 85
Note Payable - LAG Fit 125,400 00
Sales Tax Payable 10 661 18

Total Other Current Liabilities 297,736 99

Total Current Liabilities 690 536 69

Long Term Liabilities

Deferred Revenues
Deferred area development fee 150 801 27
Deferred Franchise Fee Revenue 315 416 67
Deferred Prepaid Classes 340,658 59

Total Deferred Revenues 806,876 53

Note Pay Club Pilates Global 2 250,000 00

Note Payable Club Pilates LLC 250,000 00

Total Long Term Liabilities 3,306,876 53

Total Liabilities 3 997,413 22

Equity
Common Units 666,667 00
Member Capital Contribution 445 000 00
Peferred Units 2 000 000 00
Net Income 95 872 50

Total Equity 3 207,539 50

TOTAL LIABILITIES & EQUITY 7,204 952 72

UNAUDITED - PREPARED FOR INTERNAL USE Page 2

Ordinary Income/Expense
income
Franchise Revenues
Area Development Revenues 47,413
Franchise Territory Fees 270,000
Royalties 14,573
Total Franchise Revenues 331,986
Other Income 22,739
Sales
Equipment Sales 432,880
Freight Income 49,689
Product Sales 40,984
Studio Revenues 573,012
Teacher Training - net revenues 16,000
Total Sales 1,112,565
Total Income 1,467,290
Cost of Goods Sold
Cost of Goods Sold
Equipment Costs 395,566
Products 31,412
Total Cost of Goods Sold 426,978
Freight 815
Merchant Account Fees 23,641
Total COGS 451,434
Gross Profit 1,015,856
Expense
Administrative Expense
Del Mar Office 3,704
Total Administrative Expense 3,704
Advertising and Promotion
Convention 78,867
Franchise Marketing 25,688
Advertising and Promotion - Other 758
Total Advertising and Promotion 105,313
Automobile Expense 62
Bank Service Charges 262
Business Licenses and Permits 3,850
Comp/Phone/lnternet Expenses 6,948
Dues and Subscriptions 3,751
Insurance Expense 22,614
Janitorial Expense 4,443
Meals and Entertainment 753
MindBody Online Fee 6,907

UNAUDITED - PREPARED FOR INTERNAL USE Page 1of 2

Office Supplies 1,151

Payroll Expenses
Franchise Salaries and Wages 223,500
Payroll Admin Fees 921
Studio Salaries and Wages 223,604
Total Payroll Expenses 448,025
Postage and Delivery 281
Printing and Reproduction 1,434
Professional Fees
Accounting and Auditing 18,664
Legal Fees 15,923
Professional Fees - Other 6,591
Total Professional Fees 41,178
Purified Water for Client Use 1,317
Rent Expense 121,838
Repairs and Maintenance 9,295
Security Alarm 946
Shipping 2,334
Taxes - Property 392
Teacher Training Materials 813
Towel Service 6,364
Travel Expense 12,706
Utilities 3,462
Total Expense 810,143
Net Ordinary Income 205,713
Other Income/Expense
Other Income
Interest Income 0
Total Other Income 0
Other Expense
Depreciation Expense 18,828
Interest Expense 93,692
Startup Expenses 2,795
Total Other Expense 115,315
Net Other Income -115,315
Net Income 90,398

UNAUDITED - PREPARED FOR INTERNAL USE Page 2 of 2

Financial Statements

The Period
March 12, 2015 (Date of Inception)
To April 15, 2015

Independent Auditors' Report 1-2

Financial Statements

Balance sheet 3

Statement of income 4

Statement of changes in members' equity 5

Statement of cash flows 6-7

Notes to financial statements 8-14

Certified Public Accountants

INDEPENDENT AUDITORS' REPORT

To the Members of
Club Pilates Franchise, LLC
Newport Beach, California

We have audited the accompanymg financial statements of Club Pilates Franchise, LLC (a Limited
Liability Company), which compnse the balance sheet as of Apnl 15, 2015, and the related
statements of income, changes in members' equity and cash flows for the period of inception (March
12,2015) to Apnl 15, 2015, and the related notes to the financial statements
Management's Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these fmancial statements in
accordance with pnnciples generally accepted m the United States of Amenca this includes the
design, implementation, and mamtenance of intemal control relevant to the preparation and fair
presentation of fmancial statements that are free of material misstatements, whether due to fraud or
error
Auditors' Responsibility
Our responsibility is to express an opinion on these fmancial statements based on our audit We
conducted our audit m accordance with auditing standards generally accepted m the United States of
Amenca Those standards require that we plan and perform the audit to obtain reasonable assurance
about whether the financial statements are free of matenal misstatement
An audit involves performmg procedures to obtain audit evidence about the amounts and disclosures
m the fmancial statements The procedures selected depend on the auditor's judgment, including the
assessment of the nsks of matenal misstatement of the fmancial statements, whether due to fraud or
error In makmg those nsk assessments, the auditor considers internal control relevant to the entity's
preparation and fair presentation of the fmancial statements m order to design audit procedures that
are appropnate m the circumstances, but not for the purpose of expressing an opmion on the
effectiveness of the entity's mtemal control Accordmgly, we express no such opmion An audit
also includes evaluating the appropnateness of accounting policies used and the reasonableness of
significant accountmg estimates made by management, as well as evaluating the overall presentation
of the fmancial statements

This document was downloaded from franchimp.com. All the information on this website is published in good faith and for general information purpose only. FranChimp.com does not make any warranties about the completeness, reliability, and
accuracy of this information. Any action you take upon the information you find on this website (FranChimp.com), is strictly at your own risk. We will not be liable for any losses and/or damages in connection with the use of our website.
We believe that the audit evidence we have obtained is sufficient and appropnate to provide a basis
for our audit opinion
Opinion
In our opmion the financial statements referred to above present fairly, m all material respects, the
financial positions of Club Pilates Franchise, LLC, as of Apnl 15, 2015, and the results of
operations and cash flows for the period of inception (March 12, 2015) to April 15, 2015 m
accordance with accountmg pnnciples generally accepted in the Umted States of Amenca

t /i' LL'P

April 19,2015

Assets
Current Assets
Cash $ 2,070,825
Accounts receivable 33,902
Total current assets 2,104,727
Property and Equipment 241,904
Other Assets
Intangible assets 5,807,162
Total other assets 5,807,162
Total assets $ 8,153,793

Liabilities and Members' Equity

Current Liabilities
Accrued expenses 53,090
Revolving credit accounts 200
Marketing fiind 10,674
Deferred revenue 498,992
Due to related parties 38,404
Total current liabilities 601,360
Long-Term Debt 2,500,000
Other Long-Term Liabihties
Deferred revenue 388,631
Total other long-term liabilities 388,631
Total liabilities 3,489,991
Members' Equity 4,663,802
Total liabilities and members' equity S 8,153,793

The accompanying notes are an integral part of this statement

Revenue
Franchise initiation fees 16,667
Franchise royalty fees 10,636
Development franchise agreement 4,670
Pilates class & traimng revenues 170,448
Total revenues 202,421

Operating Expenses
Personnel expense 85,284
Legal and professional 49,563
Occupancy 23,282
Depreciation 9,087
Bank and merchant fees 7,435
Class supplies & services 1,794
Computer 1,613
Online services 1,377
Advertising and promotion 1,271
Miscellaneous 887
Dues & subscriptions 375
Total operating expenses 181,968
Income from Operations 20,453
Other Income (Expenses)
Interest expense (23,318)
Net Loss $ (2,865)

The accompanying notes are an integral part of this statement

Additional
Conunon Preferred Paid-in Accumulated
Units Units Capital (Deficit) Total

Opening Balance, March 12,2015 $-$ - $ - $ - $

Issuance of666,667 Common Lftuts 666,667 ... 666,667
Issuance of2,000,000 Preferred Umts - 2,000,000 - - 2,000,000
Capital contribution - - 2,000,000 - 2,000,000
Net Loss : : : (2,865) (2,865)
Balance, April 15,2015 $666 667 $2,000 000 $2 000 000 $ (2 865) $4 663 802

The accompanying notes are an integral part of this statement

Cash Flows From Operating Activities

Net Loss S (2,865)
Adjustments to reconcile net loss
to net cash provided by operating activities
Depreciation 9,087
(Increase) decrease in.
Accounts receivables (13,902)
Increase (decrease) la
Accrued ejqjenses 53,090
Revolving credit accounts 200
Marketing fiind 1,159
Deferred revenue (22,576)
Net cash provided by operating activities 24,193
Cash flows from financing activities
Proceeds from related party 38,404
Marketing frmds contributed as part of member unit issuance 8,228
Member capital contribution 2,000,000
Net cash provided by financing activities 2,046,632
Net increase in cash and cash equivalents 2,070,825
Cash and cash equivalents at beginning of year _

Cash and cash equivalents at end of year $ 2,070,825

The accompanying notes are an integral part of this statement

Supplemental Disclosure of Noncash Flnancmg and Investing Activities

Club Pilates Franchise, LLC Capitalization
Marketing fund cash $ 8,228
Accounts receivable 20,000
Property & equipment 250,991
Intangible assets 5,807,161
Markebng fund liability assumed (9,514)
Deferred revenues assumed (910,199)
Net assets acquired $ 5,166,667
Noncash Sources Used to Acquired Net Assets
Long-term debt issued $ (2,500,000)
Common member units issued (666,667)
Preferred member umts issued (2,000,000)
Total noncash source used to acquire net assets $ (5,166,667)
Supplemental Disclosure of Cash Flow Information
Cash paid during the year for
Interest expense $ 12329
Income taxes $ -

The accompanying notes are an integral part of this statement

Note 1 Summary of Significant Accounting Policies

This summary of significant accounting policies of Club Pilates Franchise, LLC,
(the Company) is presented to assist in understanding the Company's financial
statements The financial statements and notes are representations of the
Company's management who is responsible for theu" integrity and objectivity
These accounting policies have been consistently applied in the preparation of the
financial statements
Nature of organization
The Company is a Delaware Limited Liability Company The Company owns a
Pilates studio and training system ("Club Pilates") that is proprietary to the
Company The Company licenses its propnetary system to franchisees who in turn
provide facilities to promote Pilates training and instruction programs The
Company also owns and operates five Club Pilates studio franchises
On March 12, 2015, the Company acquired the assets, certain liabilities and the
operations of Club Pilates Global, Inc ("Global") and Club Pilates, LLC ("Pilates
LLC ) Global owned and operated the studio training system "Club Pilates" and
licensed the proprietary system to franchisees Pilates LLC owned and operated
five Club Pilates studio franchises Global and Pilates LLC were owned and
operated by the same shareholders/members
Nature of Services and Revenue Recognition
Franchise Agreements
The Company offers two types of fi-anchise agreements A single-unit franchise (for
half-size or full-size) agreement and a multi-unit development agreement which
gives the fi-anchisee the right to open (over time) 3 or more units in a particular
geographic area
Depending on the type of agreement, an initiation franchise fee ranging from
$5,000 to $65,000 IS paid to the Company when a franchisee signs the franchise
agreement In return for the initial franchise fee, the Company provides site
location assistance, traming and the other services The initial franchise fee is non
refundable and IS earned once the fi-anchise location is open Uneamed franchise
fees and related direct costs are deferred until earned

8
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accuracy of this information. Any action you take upon the information you find on this website (FranChimp.com), is strictly at your own risk. We will not be liable for any losses and/or damages in connection with the use of our website.
Club Pilates Franchise, LLC
Notes to Financial Statements
April 15, 2015

Note 1 Summary of Significant Accounting Policies (Continued)

Development Agent Agreement
The Company assumed a five year Development Agent Agreement from Global
which was entered mto with Solid Care, Inc (Solid Care) in 2014 In return for a
fee of $250,000, the Global granted Solid Care, the exclusive right to development
Club Pilates franchises m the state of Colorado Durmg the term of the agreement,
plus any extensions. Solid Care is to receive 100% of all franchise fees for the first
thirty (30) locations it develops, 50% of franchise fees thereafter plus 50% of net
royalties collected Provided Solid Care complies with all terms of the agreement,
including developing a minimum of twenty (20) locations dunng the first five
years, the agreement can be renewed for an additional two five year terms The fee
for each term renewal is $50,000 The development fee of $250,000 is being
amortized and recognized as revenue over the five year term of the agreement
Unearned development fees is being deferred until earned
Pilates Classes and Teacher Training
Individuals interested in participating in Pilates classes can purchase class packages
ranging from one class to twenty or purchase monthly passes which allow the
participant unlimited classes dunng a month With the exception some promotional
packages that expire in ten years, class packages expire one year from date of
purchase Class packages are nonrefundable and revenue is deferred until the
classes have been used Monthly passes are nonrefundable and are recognized as
revenue when received
The Company offers a Club Pilates Teacher Training Program The program fee is
$4,400, excluding discounts, and mcludes training and materials The program fee
includes a $2,000 nonrefundable deposit for purchase of materials and is recognized
as revenue upon receipt and delivery of matenals The remaining balance of the fee
is deferred and recognized as revenue as the trainmg program progresses
Deferred Revenue
Total deferred revenues at April 15, 2015 as follows
Deferred initiation franchise fees $ 348,750
Deferred development agent agreement 198,214
Deferred Pilates classes & training 340,659
Deferred Revenue $ 887,623

Short-term $ 498,992
Long-term 388,631
$ 887,623

Note 1 Summary of Significant Accounting Policies (Continued)

Nature of Services and Revenue Recognition (Continued)
Franchisees are charged a royalty ranging from two (2%) to four (4%) percent of
the franchisees' monthly gross revenues The royalty revenue is accrued and
recognized monthly
Under the agreement the franchisees are charged one percent (1%) of monthly gross
revenues for national advertising and marketing services The agreement
establishes an agency relationship between the Company and the franchisees, and
the fees are recorded as a liability and qualified advertising and promotional costs
are charged against it The liability is presented as marketing fund liability on the
balance sheet
Cash and cash equivalents
For purposes of the statement of cash flows, demand deposits, currency and
certificates of deposit with an original maturity of three months or less are
considered cash equivalents
Accounts receivable
Accounts receivable is recorded net of allowance for expected losses The
Company provides for estimated losses on accounts receivable based on prior bad
debt experience and a review of existing receivables As of April 15, 2015, there
are no allowances and all accounts receivable are considered to be collectible
Advertising Costs
Advertising costs are expensed as mcurred For the period of March 12, 2015 to
April 15, 2015, advertising expense was $1,271
Use of estimates
The preparation of financial statements m conformity with accounting principles
generally accepted m the United States of America requires management to make
estimates and assumptions that affect the reported amounts of assets and liabilities
and disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the reporting
period Actual results could differ from those estunates

10
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accuracy of this information. Any action you take upon the information you find on this website (FranChimp.com), is strictly at your own risk. We will not be liable for any losses and/or damages in connection with the use of our website.
Club Pilates Franchise, LLC
Notes to Financial Statements
April 15, 2015

Note 1 Summary of Significant Accounting Policies (Continued)

Intangibles
Goodwill represents the excess of purchase pnce over the fair market value of net
assets acquired in the purchase of the Company's operations from Global and
Pilates LLC Goodwill has an indefinite life and is not amortized Alternatively,
goodwill IS tested annually for impairment
Trademarks represent the costs associated with the Company's acquisition of the
registered trade name of Club Pilates The Company is amortizing these costs over
a period of fifteen years
Property & Equipment
Property and equipment are carried at cost Depreciation is provided using the
straight-line method for financial reporting purposes at rates based on the following
estimated useful lives
Furniture & equipment 5 to 7 years
Computer equipment 5 years
Franchise Stores

Stores at beginning of penod 29

New stores opened 1
Stores closed
Stores at end of year 30

Concentration of Cash and Cash Equivalents

The company maintains its cash in bank deposit accounts that, at times may exceed
federally insured limits Accounts are guaranteed by the Federal Deposit Insurance
Corporation (FDIC) up to $250,000 per bank At April 15, 2015, the amount in
excess of insured limits was approximately $1,750,000 The Company has not
experienced any losses in such accounts The Company believes it is not exposed
to any significant credit nsk on cash and cash equivalents
Subsequent Events
Management has evaluated subsequent events through April 19, 2015, the date of
which the financial statements were available to be issued

11
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accuracy of this information. Any action you take upon the information you find on this website (FranChimp.com), is strictly at your own risk. We will not be liable for any losses and/or damages in connection with the use of our website.
Club Pilates Franchise, LLC
Notes to Financial Statements
April 15,2015

Note 2 Property and Equipment

Property and equipment at April 15, 2015 consisted of the following
Furniture & equipment 232,799
Computers 18.192
250,991
Less accumulated depreciation 9.087

Depreciation expense for the period of March 12, 2015 to Apnl 15, 2015 was
$9,087
Note 3 Intangible Assets
Intangible assets at Apnl 15, 2015 consisted of the following
Goodwill $5.782.162
Intangible assets with indefinite life 5.782.162
Trademarks 25,000
Less accumulated amortization ^
Intangible assets with define life 25.000
Total intangible assets $ 5.807.162
There is no Amortization expense for period of March 12, 2015 to April 15, 2015
Note 4 Long-Term Debt
Long-term debt consisted of the following

Note payable to Club Pilates Global, Inc , interest $2,250,000

accrues at 10% per annum, requires quarterly
interest payments starting March 31, 2015 until
March 12, 2017 when the note matures Subject
to subordmation of Senior Debt, as defined in the
agreement, the note is secured by all assets of the
company Note is related to the Company's
acquisition of its operations on March 12, 2015

12
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accuracy of this information. Any action you take upon the information you find on this website (FranChimp.com), is strictly at your own risk. We will not be liable for any losses and/or damages in connection with the use of our website.
Club Pilates Franchise, LLC
Notes to Financial Statements
April 15, 2015

Note 4 Long-Term Debt (Continued)

Note payable to Club Pilates, LLC, mterest 250,000

accrues at 10% per annum, requires quarterly
interest payments starting March 31, 2015 until
March 12, 2017 when the note matures Subject
to subordination of Senior Debt, as defined in the
agreement, the note is secured by all assets of the
company Note is related to the Company's

2,500,000
Less current maturities
Total long term debt $2,500,000

Aggregate maturities of long-term debt are as follows

Year ended December 31,
2016 $
2017 2,500,000
Thereafter
$2.500.000
Note 5 Commitments and Contingencies
Lease Commitments
The Company assumed vanous building leases that are classified as operatmg
leases
Total rent expense was $20,489 for the period of March 12, 2015 to April 15, 2015
Future mmimum lease payments under the non-cancelable operating leases with
initial or remaining terms of one year or more are as follows

2016 $208,105
2017 135,180
2018 118,147
2019 76,920
Thereafter

13
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accuracy of this information. Any action you take upon the information you find on this website (FranChimp.com), is strictly at your own risk. We will not be liable for any losses and/or damages in connection with the use of our website.
Club Pilates Franchise, LLC
Notes to Financial Statements
April 15, 2015

Note 6 Related Party Transactions

Club Pilates, LLC and Club Pilates Global, Inc, both owned by the same
shareholders, collectively own a 25% membership interest in the Company As of
April 15 2015, the Company has two notes payable to Club Pilates, LLC and Club
Pilates Global, Inc for a total of $2,500,000 (See Note 4) For period of March
12, 2015 to April 15, 2015 the Company paid $12,329 in interest on these notes
and had accrued an additional $10,989 as of April 15, 2015
As of April 15, 2015, Club Pilates, LLC and Club Pilates Global, Inc had
collectively advanced the Company $38,404 in cash The amount is reflected on
the balance sheet as "Due to related parties"
Note 7 Members' Equity
The limited liability company operating agreement, as amended March 1, 2015,
authonzes the Company to issue interest in the Company in the form of two
classes of ownership interest. Common Units and Preferred Units
There are 666,667 authorized and issued Common Units Common Units are
entitled to their allocable interest of profits and losses as well as all distributions
from the Company Common Units have voting rights
There are 2,000,000 issued Preferred Units The Preferred Units are non-voting
with a 10% preferred return When the Company declares distributions or
liquidates. Preferred Units have preferred distribution and liquidation preference
equal to the amount of unpaid return plus the original Capital ($2,000,000) and is
not entitled to any further distribution As of April 15, 2015, there was $18,682 in
cumulative preferred returns in arrears on the Preferred Units, and no distributions
have been declared by the Company

14
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accuracy of this information. Any action you take upon the information you find on this website (FranChimp.com), is strictly at your own risk. We will not be liable for any losses and/or damages in connection with the use of our website.
Exhibit D
To Franchise Disclosure Document

STATEMENT OF PROSPECTIVE FRANCHISEE

©2015 Club Pilates Franchise LLC

rNote Dates and Answers Must Be Completed

in the Prospective Franchisee's Own Handwriting ]

Since the Prospective Franchisee (also called "me," "our," "us," "we" and/or "I" in this document) and
Club Pilates (also called the "Franchisor" or "CLUB PILATES") both have an interest in making sure that no
misunderstandings exist between them, and to verify that no violations of law might have occurred, and
understanding that the Franchisor is relying on the statements I/we make in this document, I/we assure the
Franchisor as follows

A The following dates and information are true and correct

_, 20 The date on which I/we received a Uniform Franchise Disclosure

Document about a Franchise
initials

2 ,20 The date when I/we received a fully completed copy (other than
signatures) of the Franchise Agreement, Development
Initials Agreement (if appropriate) and all other documents I/we later
signed

3 , 20 The earliest date on which I/we signed the Franchise Agreement,

Development Agreement or any other binding document (not
Initials including any Letter or other Acknowledgment of Receipt)

4 , 20 The earliest date on which I/we delivered cash, check or other

consideration to the Franchisor, or any other person or company
Initials

B Representations and Other Matters

1 No oral, written, visual or other promises, agreements, commitments, representations, understandings,

"side deals," options, rights-of-first-refusal or otherwise of any type (collectively, the "representations"),
including, but not limited to. any which expanded upon or were inconsistent with the Disclosure Document; the
Franchise Agreement, or any other written documents, have been made to or with me/us with respect to ^
matter (including, but not limited to. advertising, marketing, site location and/or development, operational,
marketing or administrative assistance, exclusive rights or exclusive or protected territory or otherwise) nor have
I/we relied in any way on any such representations, except as expressly set forth in the Franchise Agreement, or
a written Addendum thereto signed by the Prospective Franchisee and the Franchisor, except as follows

(If none, the Prospective Franchisee should write NONE in his/her/their own handwriting )

Prospective Franchisee's Initials

2 No oral, written, visual or other claim, guarantee or representation (including, but not limited to. charts,

©2015 Club Pilates Franchise LLC

2015 Franchise Disclosure Document (Amended) - Exhibits
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accuracy of this information. Any action you take upon the information you find on this website (FranChimp.com), is strictly at your own risk. We will not be liable for any losses and/or damages in connection with the use of our website.
tables, spreadsheets or mathematical calculations to demonstrate actual or possible results based on a
combination of variables, such as multiples of price and quantity to reflect gross sales, or otherwise), which
stated or suggested any specific level or range of actual or potential sales, costs, income, expenses, profits, cash
flow, tax effects or otherwise (or from which such items might be ascertained), from franchised or non-
franchised units, was made to me/us by Franchisor, its affiliates or agents/representatives, nor have I/we relied
in any way on any such, except for information (if any) expressly set forth in Item 19 of the Franchisor's Disclosure
Document (or an exhibit referred to therein), except as follows

Prospective Franchisee's Initials

3 No contingency, prerequisite, reservation or otherwise exists with respect to any matter (including, but
not limited to. the Prospective Franchisee obtaining any financing, the Prospective Franchisee's selection,
purchase, lease or otherwise of a location, any operational matters or otherwise) or the Prospective Franchisee
fully performing any of the Prospective Franchisee's obligations, nor is the Prospective Franchisee relying on the
Franchisor or any other entity to provide or arrange financing of any type, nor have I/we relied in any way on
such, except as expressly set forth in the Franchise Agreement, Development Agreement (if and as appropriate)
or a written Addendum thereto signed by the Prospective Franchisee and the Franchisor, except as follows

(If none, the Prospective Franchisee should write NONE in his/her/their own handwriting )

Prospective Franchisee's Initials

4 The individuals signing for the "Prospective Franchisee" constitute all of the executive officers, partners,
shareholders, investors and/or principals of the Prospective Franchisee and each of such individuals has received
the Uniform Franchise Disclosure Document and all exhibits and carefully read, discussed, understands and
agrees to the Franchise Agreement, Development Agreement (if and as appropriate), each written Addendum
and any Personal Guarantees

Prospective Franchisee's Initials

5 I/we have had an opportunity to consult with an independent professional advisor, such as an attorney
or accountant, prior to signing any binding documents or paying any sums, and the Franchisor has stronglv
recommended that I/we obtain such independent professional advice I/we have also been stronglv advised by
the Franchisor to discuss my/our proposed purchase of, or investment in, a CLUB PILATES Studio Franchise with
existing Franchisees prior to signing any binding documents or paying any sums and I/we have been supplied
with a list of existing CLUB PILATES Studio Franchisees

Prospective Franchisee's Initials

6 I confirm that, as advised, I've spoken with past and/or existing CLUB PILATES Studio Franchisees, and
that I made the decision as to which, and how many, CLUB PILATES Studio Franchisees to speak with

Prospective Franchisee's Initials

7 I/we understand that entry into any business venture necessarily involves some unavoidable risk of loss
or failure, the purchase of a CLUB PILATES Franchise (or anv other) is a speculative investment, an investment
bevond that outlined in the Disclosure Document mav be required to succeed, there exists no guarantv against
possible loss or failure in this or anv other business and the most important factors in the success of anv CLUB

©2015 Club Pilates Franchise LLC

Prospective Franchisee's Initials

If there are any matters inconsistent with the statements in this document, or if anyone has suggested
that I sign this document without all of its statements being true, correct and complete. I/we will (a) immediately
inform the President of Club Pilates Franchise. LLC. (949/346-9794). and (b) make a written statement regarding
such next to my signature below so that the Franchisor may address and resolve any such issue(s) at this time
and before either partv goes forward

I/we understand and agree that the Franchisor does not furnish or endorse, or authorize its salespersons
or others to furnish or endorse, any oral, written or other information concerning actual or potential sales, costs,
income, expenses, profits, cash flow, tax effects or otherwise (or from which such items might be ascertained),
from franchised or non-franchised units, that such information (if any) not expressly set forth in Item 19 of the
Franchisor's Disclosure Document (or an exhibit referred to therein) is not reliable and that I/we have not relied
on It. that no such results can be assured or estimated and that actual results will vary from unit to unit. Franchise
to Franchise, and mav vary significantly

Prospective Franchisee's Initials

I/we understand and agree to all of the foregoing and represent and warrant that all of the above
statements are true, correct and complete

Date

PROSPECTIVE FRANCHISEE (Individual) PROSPECTIVE FRANCHISEE (Corp , LLC or Partnership)

[Must be accompanied by appropriate personal
guarantee(s)]
Signature

Legal Name of Entity

Printed Name

State of incorporation, formation, etc

Signature
By
Name
Printed Name

Signature

Title

©2015 Club Pilates Franchise LLC

TABLE OF CONTENTS OF THE OPERATIONS MANUAL

©2015 Club Pilates Franchise LLC

2015 Franchise Disclosure Document (Amended) - Exhibits
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accuracy of this information. Any action you take upon the information you find on this website (FranChimp.com), is strictly at your own risk. We will not be liable for any losses and/or damages in connection with the use of our website.
CLUB PILATES
OPERATIONS MANUAL
TABLE OF CONTENTS
Page No Pages in Section
Introduction 1 7
The Start 8
Our Goal 8
Who Will Pilates Benefit' 8
The Club Pilates Studio Culture and Vibe 9
Club Pilates Studio 10 Commandments 9 16
Contribute to the greater good Be Open and flexible to Change
Develop New Material and SHARE it with Club Pilates 13
Legal Services 19
An inclusive online store, scheduling, and merchant services 21
Site Selection 25 60
Overview of Site Criteria 25
This section provides guidelines for selecting the optimal space for
your studio The need for ample parking in an area of conservative
rent and with minor tenant improvements is best suited for our
studios The following information will provide general guidelines
for a franchisee to follow 25
Examples of Club Pilates Criteria 25
Demographics 25
Exterior 26
Interior 26
Rent Parameters 26
What the Real Estate Broker Needs to Know 27
Lease Negotiations 27
Letter of Intent 27
Freight Program 49
Shipping Acknowledgement 50
General Contractor Qualification Agreement 52
Sample Construction Contract 55
Construction Punchlist 62
Studio Construction Ledger 67
Overview 85 1
Franchisee Training Program 85 0

©2015 Club Pilates Franchise LLC

2015 Franchise Disclosure Document (Amended) - Exhibits
This document was downloaded from franchimp.com. All the information on this website is published in good faith and for general information purpose only. FranChimp.com does not make any warranties about the completeness, reliability, and
accuracy of this information. Any action you take upon the information you find on this website (FranChimp.com), is strictly at your own risk. We will not be liable for any losses and/or damages in connection with the use of our website.
Paee No Pages in S
Teacher Training Program 85 1
Ongoing In-Studio Training 86 0
Regional Meetings 86 0
National Conventions 86 4
Defining Characteristics of a Quality Hire 90 1
Common Hiring Mistakes 90 0
Topics to Avoid During an Interview 91 10
Sample Hiring Questions 92
Work Pattern 93
Ambitions 94
Stress 94
Attendance/Punctuality 94
Problem Solving/Analytical Skills 94
Ability to Learn 94
Organization/Attention to Detail 95
Interpersonal Communication Skills 95
Cooperation 95
Values Based Questions 95
Basic Characteristics Interview Questions 96
Interpersonal Behaviors Interview Questions 96
Motivation and Style Interview Questions 98
Managerial Interview Questions 99
Customer Service Interview Questions 100
Pre-Hire Assessment 101 1
Sample Pre-lnterview Screen 102 1
Advertising for Employees 103 14
Sample Employee Handbook Receipt 117 4
Sample Emergency Form 121 4
Maintaining Personnel Files 125 1
Medical Records & Legal Records 126 1
Records Retention & Destruction Procedure 127 1
Performance Improvement Hints 128 43
Change in Relationship Document 132

©2015 Club Pilates Franchise LLC

Total Pages 211

©2015 Club Pilates Franchise LLC

GENERAL RELEASE OF ALL CLAIMS

©2015 Club Pilates Franchise LLC

(FRANCHISEE") and , an individual ("GUARANTOR") enter

into this General Release on , with reference to the following facts

1 On , Club Pilates Franchise, LLC, a Delaware limited liability company

("FRANCHISOR"), and FRANCHISEE entered into a Franchise Agreement (the "Franchise Agreement") to operate a
CLUB PILATES Franchised Business located at (the "Premises') GUARANTOR
guaranteed FRANCHISEE'S performance under the Franchise Agreement pursuant to a Guarantee and Assumption of
Obligations (the "Guarantee') In consideration of FRANCHISOR'S processing and approval of
, the Franchise Agreement provides that
FRANCHISEE must sign this General Release as a condition to such All capitalized terms not otherwise
defined in this General Release shall have the same meaning as in the Franchise Agreement and/or the Guarantee

2 For valuable consideration, the receipt and sufficiency of which is hereby acknowledged,
FRANCHISEE and GUARANTOR hereby release and forever discharge FRANCHISOR, its parents and subsidiaries and
the directors, officers, employees, attorneys and agents of said corporations, and each of them, from any and all
claims, obligations, liabilities, demands, costs, expenses, damages, actions and causes of action, of whatever nature,
character or description, known or unknown (collectively "Damages"), which arose on or before the date of this
General Release, including any Damages with respect to the Franchise Agreement, the Franchised Business, the
Premises and the Guarantee FRANCHISEE waives any right or benefit which FRANCHISEE or GUARANTOR may have
under Section 1542 of the California Civil Code or any equivalent law or statute of any other state Section 1542 of the
California Civil Code reads as follows

"Section 1542 Certain claims not affected by general release A general release does not extend to
claims which the creditor does not know or suspect to exist in his favor at the time of executing this
release, which if know by him must have materially affected his settlement with the debtor"

3 This General Release sets forth the entire agreement and understanding of the parties regarding the
subject matter of this General Release and any agreement, representation or understanding express or implied,
heretofore made by any party or exchanged between the parties are hereby waived and canceled

4 This Agreement shall be binding upon each of the parties to this General Release and their respective
heirs, executors, administrators, personal representatives, successors and assigns

IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the day and year set forth
above

FRANCHISEE

Print Name

Title

GUARANTOR
, an individual

©2015 Club Pilates Franchise LLC

STATE SPECIFIC ADDENDA

©2015 Club Pilates Franchise LLC

If the franchise is located in orif franchisee is a resident of any of the following states, then the designated
provisions in the Uniform Franchise Disclosure Document ("Disclosure Document") and Franchise Agreement will
be amended as follows
CALIFORNIA

ADDENDUM TO DISCLOSURE DOCUMENT

California Corporations Code, Section 31125 requires the franchisor to give the franchisee a disclosure
document, approved by the Department of Business Oversight, prior to a solicitation of a proposed material
modification of an existing franchise

Our website has not been reviewed or approved by the California Department of Business Oversight
Any complaints concerning the content of this website may be directed to the California Department of Business
Oversight at www dbo ca gov

THE CALIFORNIA FRANCHISE INVESTMENT LAW REQUIRES THAT A COPY OF ALL PROPOSED AGREEMENTS
RELATING TO THE SALE OF THE FRANCHISE BE DELIVERED TOGETHER WITH THE DISCLOSURE DOCUMENT

1 The following language is added to the end of Item 3 of the Disclosure Document

Neither Club Pilates Franchise, LLC, nor any person identified in Item 2, or an affiliate or
franchise broker offering franchises under our principal trademark is subject to any currently
effective order of any national securities association or national securities exchange, as defined in
the Securities and Exchange Act of 1934, 15 U S C A 78a et seq . suspending or expelling such
person from membership in such association or exchange

2 The following paragraphs are added at the end of Item 17 of the Disclosure Document

The Franchise Agreement requires franchisee to execute a general release of claims upon
renewal or transfer of the Franchise Agreement California Corporations Code Section 31512
provides that any condition, stipulation or provision purporting to bind any person acquiring any
franchise to waive compliance with any provision of that law or any rule or order thereunder is
void

California Business and Professions Code Sections 20000 through 20043 provide rights to
franchisees concerning termination or non-renewal of a franchise If the Franchise Agreement
contains a provision that is inconsistent with the law, the law will control

The Franchise Agreement provides for termination upon bankruptcy This provision may
not be enforceableunder federal bankruptcy law(llUSCA Sec 101 et seq )

The Franchise Agreement contains a covenant not to compete which extends beyond the
termination of the franchise This provision may not be enforceable under California law but we
will enforce it to the extent enforceable

©2015 Club Pilates Franchise LLC

The Franchise Agreement requires binding arbitration The arbitration will occur in
Orange County, California, with the costs being borne by the non-prevailing party The prevailing
party shall be entitled to recover reasonable compensation for expenses, costs and fees in
connection with arbitration, including reasonable attorney's fees Prospective franchisees are
encouraged to consult private legal counsel to determine the applicability of California and federal
laws (such as Business and Professions Code Section 20040 5 Code of Civil Procedure Section 1281,
and the Federal Arbitration Act) to any provisions of a franchise agreement restricting venue to a
forum outside the State of California

©2015 Club Pilates Franchise LLC

ADDENDUM TO DISCLOSURE DOCUMENT

These franchises will be/ have been filed under the Franchise Investment Law of the State of Hawaii Filing
does not constitute approval, recommendation or endorsement by the Director of Commerce and Consumer
Affairs or a finding by the Director of Commerce and Consumer Affairs that the information provided herein is true,
complete, and not misleading

The Franchise Investment Law makes it unlawful to offer or sell any franchise in this state without first
providing to the prospective franchisee, or subfranchisor, at least seven days prior to the execution by the
prospective franchisee of any binding franchise or other agreement, or at least seven days prior to the payment of
any consideration by the franchisee, or subfranchisor, whichever occurs first, a copy of the Disclosure Document,
together with an copy of all proposed agreements relating to the sale of the franchise

This Disclosure Document contains a summary only of certain material provisions of the franchise
agreement The contract or agreement should be referred to for a statement of all rights, conditions, restrictions
and obligations of both the franchisor and the franchisee

©2015 Club Pilates Franchise LLC

ADDENDUM TO DISCLOSURE DOCUMENT

1 The "Summary" section of Item 17(v), entitled Choice of forum, is deleted in its entirety

2 The "Summary" section of Item 17(w), entitled Choice of law, is deleted and replaced with the following

Illinois law applies

3 Illinois law governs the agreement(s) between the parties to this franchise

4 Any provision in a franchise agreement that designates jurisdiction or venue in a forum outside of Illinois
IS void, provided that arbitration may take place outside of Illinois 815 ILCS 705/4 (West 2010)

5 Any condition, stipulation, or provision purporting to bind any person acquiring any franchise to waive
compliance with any provision of the Illinois Franchise Disclosure Act or any other law of Illinois is void 815 ILCS
705/41 (West 2010)

©2015 Club Pilates Franchise LLC

AMENDMENT TO FRANCHISE AGREEMENT AND DEVELOPMENT AGREEMENT

The Franchise Agreement and Development Agreement are speafically amended as follows

In recognition of the requirements of the Illinois Franchise Disclosure Act of 1987 (as amended), the parties
to the attached Franchise Agreement ("Agreement") agree as follows

1 Governing Law

a Section 16 7 of the Franchise Agreement, "CHOICE OF LAWS," is deleted in its entirety and replaced
with the following

EXCEPT TO THE EXTENT GOVERNED BY THE UNITED STATES TRADEMARK ACT OF 1946 (LANHAM ACT,
15 U S C SECTIONS 1051 ET SEQ), THE FEDERAL ARBITRATION ACT, OR OTHER FEDERAL LAW, THIS
AGREEMENTAND THE RIGHTS OF THE PARTIES HEREUNDER SHALL BE INTERPRETED AND CONSTRUED
UNDER THE LAWS OF THE STATE OF ILLINOIS

b Section 21(A) of the Development Agreement is hereby amended to provide that Illinois law governs
the agreements between the parties to this franchise

3 Section 4 of the Illinois Franchise Disclosure Act provides that any provision in a franchise
agreement/development agreement that designates jurisdiction or venue outside of the State of Illinois
IS void However, a franchise agreement/development agreement may provide for arbitration in a venue
outside of Illinois

4 Section 41 of the Illinois Franchise Disclosure Act provide that any condition, stipulation or provision
purporting to bind any person acquiring any franchise to waive compliance with the Illinois Franchise
Disclosure Act or any other law of Illinois is void Accordingly, insofar as the Franchise Agreement
requires you to waive your rights under the Illinois franchise law, these requirements are deleted from
the Franchise Agreement This provision will not prevent the franchisor from requiring you to sign a
general release of claims as part of a negotiated settlement of a dispute or actual lawsuit filed under any
of the provisions of the Act, nor shall it prevent the arbitration of any claim pursuant to the provisions
of Title 9 of the United States Code

IN WITNESS WHEREOF, each of the undersigned hereby acknowledges having read this Amendment,
understands and consents to be bound by all of its terms

Club Pilates Franchise, LLC Franchisee

By By

Title Title

©2015 Club Pilates Franchise LLC

ADDENDUM TO DISCLOSURE DOCUMENT

1 The "Summary" section of Item 17(c) entitled Requirements for you to renew or extend, and the
"Summary" section of Item 17(m) entitled Conditions for our approval of transfer, is amended by adding the
following

Any general release you sign shall not apply to the extent prohibited by the Maryland Franchise
Registration and Disclosure Law

2 The "Summary" section of Item 17(h) entitled "Cause" defined (defaults which cannot be cured), is
amended by adding the following

The Franchise Agreement provides for termination upon your bankruptcy This provision might
not be enforceable under federal bankruptcy law (11 U S C Sections 101 et seq ). but we will
enforce it to the extent enforceable

3 The following are added to the end of the chart in Item 17

Despite any contradicting provision in the Franchise Agreement, you have 3 years from the date
on which we grant you the franchise to bring a claim under the Maryland Franchise Registration
and Disclosure Law

A franchisee may bring a lawsuit in Maryland for claims arising under the Maryland Franchise
Registration and Disclosure Law

©2015 Club Pilates Franchise LLC

AMENDMENT TO FRANCHISE AGREEMENT

The Franchise Agreement is specifically amended as follows

Any provision requiring Franchisee to execute a general release of any and all claims against Franchisor shall not
apply to claims arising under the Maryland Franchise Registration and Disclosure Law

Termination upon bankruptcy of the Franchisee might not be enforceable under federal bankruptcy law (11U 5 C
Sections 101 seg), but Franchisor intends to enforce it to the extent enforceable

Sections 17 3 and 17 4 shall be supplemented by the following additional language

PROVIDED, HOWEVER, THAT THIS LIMITATION OF CLAIMS SHALL NOT ACT TO REDUCE
THE THREE (3) YEAR STATUTE OF LIMITATIONS AFFORDED FRANCHISEE FOR BRINGING
A CLAIM UNDER THE MARYLAND FRANCHISE REGISTRATION AND DISCLOSURE LAW

Section 14-226 of the Maryland Franchise Registration and Disclosure Law prohibits a franchisor from requiring a
prospective franchisee to assent to any release, estoppel, or waiver of liability as a condition of purchasing a
franchise Any provision of this Franchise Agreement which requires a prospective franchisee to disclaim the
occurrence and/or non-occurrence of acts that would constitute a violation of the Maryland Franchise Registration
and Disclosure Law in order to purchase a franchise are not intended to, nor shall they act as a release, estoppel
or waiver of any liability incurred under the Maryland Franchise Registration and Disclosure Law

IN WITNESS WHEREOF, each of the undersigned hereby acknowledges having read this Amendment, understands
and consents to be bound by all of its terms

Club Pilates Franchise, LLC Franchisee.

By By

Title Title

©2015 Club Pilates Franchise LLC

AMENDMENT TO DISCLOSURE QUESTIONNAIRE

The Franchisee Disclosure Questionnaire is specifically amended as follows

In recognition of the requirements of the Maryland Franchise Registration and Disclosure Law (as
amended), Md Code Bus Reg Sections 14-201through 14-233, the following paragraph is added to the Franchisee
Disclosure Questionnaire

Maryland Franchise Registration and Disclosure Law prohibits a franchisor from requiring a
prospective franchisee to assent to any release, estoppel, or waiver of liability as a condition of
purchasing a franchise Representations in this questionnaire are not intended to nor shall they
act as a release, estoppel, or waiver of any liability incurred under the Maryland Franchise
Registration and Disclosure Law

Name of Franchisee/Applicant

Date

Signature

Name and Title of Person Signing

©2015 Club Pilates Franchise LLC

ADDENDUM TO DISCLOSURE DOCUMENT

The following disclosures are required by the State of Michigan

1 THE STATE OF MICHIGAN PROHIBITS CERTAIN UNFAIR PROVISIONS THAT ARE SOMETIMES IN FRANCHISE
DOCUMENTS IF ANY OF THE FOLLOWING PROVISIONS ARE IN THESE FRANCHISE DOCUMENTS, THE PROVISIONS
ARE VOID AND CANNOT BE ENFORCED AGAINST YOU

Each of the following provisions is void and unenforceable if contained in any documents related to a
franchise

A A prohibition on the right of a franchisee to join an association of franchisees

B A requirement that a franchisee assent to a release, assignment, novation, waiver or estoppel

which deprives a franchisee of rights and protections provided in the Michigan Franchise investment Act This shall
not preclude a franchisee, after entering into a franchise agreement, from settling any and all claims

C A provision that permits a franchisor to terminate a franchise prior to the expiration of this term
except for good cause Good cause shall include the failure of the franchisee to comply with any lawful provision
of the franchise agreement and to cure such failure after being given written notice thereof and a reasonable
opportunity, which in no event need be more than 30 days, to cure such failure

D A provision that permits a franchisor to refuse to renew a franchise without fairly compensating
the franchisee by repurchase or other means for the fair market value at the time of expiration of the franchisee's
inventory, supplies, equipment, fixtures and furnishings Personalized materials which have no value to the
franchisor and inventory, supplies, equipment, fixtures and furnishings not reasonably required in the conduct of
the franchise business are not subject to compensation This subsection applies only if (i) the term of the franchise
IS less than 5 years, and (ii) the franchisee is prohibited by the franchise or other agreement from continuing to
conduct substantially the same business under another trademark, service mark, trade name, logotype, advertising
or other commercial symbol in the same area subsequent to the expiration of the franchise or the franchisee does
not receive at least 6 months advance notice of franchisor's intent not to renew the franchise

E A provision that permits the franchisor to refuse to renew a franchise on terms generally available
to other franchisees of the same class or type under similar circumstances This section does not require a renewal
provision

F A provision requiring that arbitration or litigation be conducted outside this state This shall not
preclude the franchisee from entering into an agreement, at the time of arbitration, to conduct arbitration at a
location outside this state

G A provision which permits a franchisor to refuse to permit a transfer of ownership of a franchise,

except for good cause The subdivision does not prevent a franchisor from exercising a right of first refusal to
purchase the franchise Good cause shall include, but is not limited to

©2015 Club Pilates Franchise LLC

2015 Franchise Disclosure Document (Amended) - Exhibits

2) The fact that the proposed transferee is a competitor of the franchisor or subfranchisor

3) The unwillingness of the proposed transferee to agree in writing to comply with all lawful
obligations

4) The failure of the franchisee or proposed transferee to pay any sums owing to the
franchisor or to cure any default in the franchise agreement existing at the time of the proposed transfer

H A provision that requires the franchisee to resell to the franchisor items that are not uniquely
identified with the franchisor This subdivision does not prohibit a provision that grants to a franchisor a right of
first refusal to purchasetheassetsof a franchise on the same terms and conditions as a bona fide third party willing
and able to purchase those assets, nor does this subdivision prohibit a provision that grants the franchisor the right
to acquire the assets of a franchise for the market or appraised value of such assets if the franchisee has breached
the lawful provisions of the franchise agreement and has failed to cure the breach in the manner provided in
subdivision (C)

I A provision which permits the franchisor to directly or indirectly convey, assign or otherwise
transfer its obligations to fulfill contractual obligations to the franchisee unless a provision has been made for
providing the required contractual services

2 If the franchisor's most recent financial statements are unaudited and show a net worth of less than
$100,000 00 the franchisor shall, at the request of a franchisee, arrange for the escrow of initial investment and
other funds paid by the franchisee until the obligations to provide real estate, improvements, equipment,
inventory, training or other items included in the franchise offering are fulfilled At the option of the franchisor, a
surety bond may be provided in place of escrow

3 THE FACT THAT THERE IS A NOTICE OF THIS OFFERING ON FILE WITH THE ATTORNEY GENERAL DOES NOT
CONSTITUTE APPROVAL, RECOMMENDATION OR ENFORCEMENT BY THE ATTORNEY GENERAL

Any questions regarding this notice should be direct to

State of Michigan
Consumer Protection Division
Attention Franchise
670 G Mennen Williams Building
525 West Ottawa
Lansing, Ml 48933
(517) 373-1160

Note Despite paragraph F above, we intend to enforce fully the provisions of the arbitration section
contained in the Franchise Agreement We believe that paragraph F is unconstitutional and cannot preclude us
from enforcing our arbitration section You acknowledge that we will seek to enforce this section as well

©2015 Club Pilates Franchise LLC

2015 Franchise Disclosure Document (Amended) - Exhibits

ADDENDUM TO DISCLOSURE DOCUMENT

In accordance with the requirements of the state of Minnesota the following disclosure should be read in
conjunction with the Disclosure Document Any inconsistency with the information contained m the Disclosure
Document will be resolved in favor of this Minnesota Addendum

1 Item 13 Trademarks is amended by adding the following

As required by the Minnesota Franchise Act, Minn Stat Sec 80C 12(g), we will reimburse you for
any of your costs incurred in the defense of your right to use the Marks, so long as you were using
the Marks in the manner authorized by us, and so long as we are timely notified of the claim and
are given the right to manage the defense of the claim including the right to compromise, settle
or otherwise resolve the claim, and to determine whether to appeal a final determination of the
claim

2 Item 17 Renewal. Termination, Transfer and Dispute Resolution is amended by adding the following

A Renewal and Termination

With respect to franchises governed by Minnesota law, we will comply with Minn Stat
Sec 80C 14, Subds 3,4 and 5 which require, except in certain specified cases, that you be
given 90 days' notice of termination (with 60 days to cure) and 180 days' notice for non
renewal of the Agreement

B Choice of Forum
Nothing in the Disclosure Document or Agreement can abrogate or reduce any of your
rights as provided for in Minnesota Statutes 1984, Chapter 80C, or your rights to any
procedure, forum, or remedies provided for by the laws of the jurisdiction

C Releases
A general release shall not relieve any person from liability imposed by the Minnesota
Franchise Law, Minn Stat, Chapter 80C, Sections 80C 22

These franchises have been registered under the Minnesota Franchise Act, registration does not
constitute approval, recommendation, or endorsement by the Commissioner of Commerce of Minnesota or a
finding by the Commissioner that the information provided herein is true, complete, and not misleading

The Minnesota Franchise Act makes it unlawful to offer or sell any franchise in this state which is subject
to registration without first providing to the franchisee, at least 7 days prior to the execution by the prospective
franchisee of any binding franchise or other agreement, or at least 7 days prior to the payment of any
consideration, by the franchisee, whichever occurs first, a copy of this Disclosure Document, together with a
copy of all proposed agreements relating to the franchise This Disclosure Document contains a summary only
of certain material provisions of the Franchise Agreement The contract or agreement should be referred to for
an understanding of all rights and obligabons of both the franchisor and the franchisee

©2015 Club Pilates Franchise LLC

AMENDMENTTO FRANCHISE AGREEMENT

The Franchise Agreement is specifically amended as follows

In recognition of the Minnesota Franchise Law, Minn Stat, Chapter 80C, Sections 80C 01through 80C 22, and the
Rules and Regulations promulgated pursuant thereto by the Minnesota Commission of Securities, Minnesota Rule
2860 4400, et seq , the parties to the attached Franchise Agreement ("Agreement") agree as follows

With respect to franchises governed by Minnesota law. Franchisor will comply with Minn Stat Sec
80C 14, Subds 3,4 and 5 which require, except in certain specified cases, that Franchisee be given
90 days' notice of termination (with 60 days to cure) and 180 days' notice of non-renewal of the
Agreement

As required by Minnesota Franchise Act, Minn Stat Sec 80C 12(g), Franchisor will reimburse
Franchisee for any costs incurred by Franchisee in the defense of Franchisee's right to use the Marks,
so long as Franchisee was using the Marks in the manner authorized by Franchisor, and so long as
Franchisor is timely notified of the claim and is given the right to manage the defense of the claim
including the right to compromise, settle or otherwise resolve the claim, and to determine whether
to appeal a final determination of the claim

A general release shall not relieve any person from liability imposed by the Minnesota Franchise
Law, Minn Stat, Chapter 80C, Section 80C 22

Nothing in the Disclosure Document or Agreement can abrogate or reduce any of your rights as
provided for in Minnesota Statutes 1984, Chapter 80C, or your rights to any procedure, forum, or
remedies provided for by the laws of the jurisdiction

Any claims brought pursuant to the Minnesota Franchises Act, § 80 C 01et seq must be brought
within 3 years after the cause of action accrues To the extent that any provision of the Franchise
Agreement imposes a different limitations period, the provision of the Act shall control

IN WITNESS WHEREOF, each of the undersigned hereby acknowledges having read this Amendment, understands
and consents to be bound by all of its terms

Club Pilates Franchise, LLC Franchisee

By By

Title Title

©2015 Club Pilates Franchise LLC

ADDENDUM TO DISCLOSURE DOCUMENT

The Disclosure Document is amended as follows

1 All references made herein to a Disclosure Document shall be amended to Offering Prospectus

2 The following paragraphs are added to the Disclosure Document Cover Page

INFORMATION COMPARING FRANCHISORS IS AVAILABLE CALL THE STATE ADMINISTRATORS USTED IN

EXHIBIT B OR YOUR PUBLIC UBRARY FOR SOURCES OF INFORMATION IF YOU LEARN THAT ANYTHING IN THIS
DISCLOSURE DOCUMENT IS UNTRUE, CONTAa THE FEDERAL TRADE COMMISSION AND THE NEW YORK STATE
DEPARTMENT OF LAW, BUREAU OF INVESTOR PROTECTION AND SECURITIES, 120 BROADWAY, 23"° FLOOR,
NEW YORK, NEW YORK, 10271-0332

WE MAY, IF WE CHOOSE, NEGOTIATE WITH YOU ABOUT ITEMS COVERED IN THE PROSPECTUS
HOWEVER, WE CANNOT USE THE NEGOTIATING PROCESS TO PREVAIL UPON A PROSPECTIVE FRANCHISEE TO
ACCEPT TERMS WHICH ARE LESS FAVORABLE THAN THOSE SET FORTH IN THIS PROSPECTUS

3 Item 3 Litigation is amended by the addition of the following language Neither the franchisor, its
predecessor, a person identified in item 2, or an affiliate offering franchises under the franchisor's principal
trademark

A Has an administrative, criminal or civil action pending against that person alleging a felony, a
violation of a franchise, antitrust or securities law, fraud, embezzlement, fraudulent conversion,
misappropriation of property, unfair or deceptive practices or comparable civil or misdemeanor
allegations, or has pending actions, other than routine litigation incidental to the business, which are
significant in the context of the number of franchisees and the size, nature or financial condition of the
franchise system or its business operations

B Has been convicted of a felony or pleaded nolo contendere to a felony charge or, within the ten-
year period immediately preceding the application for registration, has been convicted of a or pleaded
nolo contendere to a misdemeanor charge or has been the subject of a civil action alleging violation of a
franchise, antifraud or securities law, fraud, embezzlement, fraudulent conversion or misappropriation of
property, or unfair or deceptive practices or comparable allegations

C Is subject to a currently effective injunctive or restrictive order or decree relating to the franchise,
or under a Federal, State or Canadian franchise, securities, antitrust, trade regulation or trade practice law,
resulting from a concluded or pending action or proceeding brought by a public agency,, or is subject to
any currently effective order of any national securities association or national securities exchange, as
defined in the Securities and Exchange Act of 1934, suspending or expelling such person from membership
in such association or exchange, or is subject to a currently effective injunctive or restrictive order relating
to any other business activity as a result of an action brought by a public agency or department, including,
without limitation, actions affecting a license as a real estate broker or sales agent

(a) filed as debtor (or had filed against it) a petition to start an action under the U S Bankruptcy Code,
(b) obtained a discharge of its debts under the bankruptcy code, or
(c) was a principal officer of a company or a general partner in a partnership that either filed as a
debtor (or had filed against it) a petition to start an action under the U S Bankruptcy Code or that obtained
a discharge of its debts under the U S Bankruptcy Code during or within 1year after the officer or general
partner of the franchisor held this position in the company or partnership

5 The following language is added to the end of Item 5 Initial Franchise Fee

The initial franchise fee shall be used to compensate us for our costs in providing training
materials, evaluating the site, and other services we provide to you prior to and as you begin
operating your business

6 Item 7 Initial Investment is amended by the addition of the following language

There are no other direct or indirect payments to us in conjunction with the purchase of the
franchise

7 The "Summary" section of Item 17(s) entitled Modification of the Franchise Agreement will be amended
by adding the following language

We have the right to modify or revise lists of specifications, the Confidential Operations Manual, or any
part of the System, provided that any revisions or modifications will not unreasonably increase your
obligation or place an excessive and unreasonable economic burden on your operations

8 The "Summary" section of Items 17(c) entitled Requirements for vou to renew or extent and 17(m)
entitled Conditions for our approval of transfer will be amended by adding the following language

All rights enjoyed by the Franchisee and any causes of action arising in its favor from the provisions
of Article 33 of the GBL of the State of New York and the regulations issued thereunder shall
remain in force, it being the intent of this provision that the non-waiver provisions of GBL Section
687 4 and 687 5 be satisfied

9 Item 17. Renewal. Termination The "Summary" section of Items 17(d), entitled Termination, will
be amended by adding the following language

The franchisee may terminate the franchise agreement or multi-unit development agreement on
any grounds available by law

10 Item 17, Renewal, Termination, etc The "Summary" section of Items 170), entitled Assignment
of contract bv franchisor, will be amended by adding the following language

However, no assignment will be made by the franchisor except to an assignee who, in the good faith and
judgment of the franchisor, is willing and financially able to assume the franchisor's obligations under the
franchise or multi-unit development agreement

The forgoing choice of law should not be considered a waiver of any right conferred upon the
franchisor or upon the franchisee or upon the multi-unit developer by Article 33 of the General
Business law of the State of New York

WE REPRESENT THAT THIS PROSPECTUS DOES NOT KNOWINGLY OMIT ANY MATERIAL FACT OR
CONTAIN ANY UNTRUE STATEMENT OF A MATERIAL FACT

ADDENDUM TO DISCLOSURE DOCUMENT

1 The following language is added to the "Summary" section of Item 17(c) entitled Requirements for vou to
renew or extend and Item 17(m) entitled Conditions for our approval of a transfer

The execution of a general release upon renewal, assignment or termination will be inapplicable
to franchises operating under the North Dakota Franchise Investment Law

2 The applicable portion of the "Summary" section of Item 17(i) entitled Your obligations on
termination/non-renewal is amended to read as follows

If we prevail in anv enforcement action you will pay all damages and costs we incur in
enforcing the termination provisions of the Franchise Agreement

3 The following is added to the "Summary" section of Item 17(u) entitled Dispute resolution by
arbitration or mediation

To the extent required by the North Dakota Franchise Investment Law (unless such
requirement is preempted by the Federal Arbitration Act), arbitration will be at a site to
which we and you mutually agree

4 The following is added to the "Summary" section of Item 17(r) entitled Non-competition
covenants after the franchise is terminated or expires

Covenants not to compete upon termination or expiration of the Franchise Agreement

are generally unenforceable in the State of North Dakota except m limited instances as
provided by law

5 The following is added to the "Summary" section of Item 17(v) entitled Choice of forum

However, to the extent allowed by the North Dakota Franchise Investment Law, you may
commence any cause of action against us in any court of competent jurisdiction, including
the state or federal courts of North Dakota

2015 Franchise Disclosure Document (Amended) - Exhibits

AMENDMENT TO FRANCHISE AGREEMENT

1 The following is added to Section 3 2, "RENEWAL" and Section 14 'TRANSFER OF INTEREST"

The execution of a general release upon renewal, assignment or termination will be

inapplicable to franchises operating under the North Dakota Franchise Investment Law

2 The following is added to Section 17 4, "CHOICE OF FORUM"

However, to the extent allows by the North Dakota Franchise investment Law, Franchisee may
commence any cause of action against Franchisor in any court of competent jurisdiction, including
the state or federal courts of North Dakota

3 The following is added to Section 16 1, "MANDATORY BINDING ARBITRATION"

To the extent required by the North Dakota Franchise Investment Law (unless such
requirement is preempted by the Federal Arbitration Act), arbitration will be at a site to
which Franchisor and Franchisee mutually agree

4 Section 18, "ACKNOWLEDGMENTS" is amended by the addition of the following language to the original
language that appears therein to read as follows

Franchisee acknowledges that Franchisee received a copy of this Agreement, the

attachments hereto, if any, and agreements relating thereto, if any, at least seven (7) days
prior to the date on which this Agreement was executed

5 Section 13 1(regarding post-term restrictions) is amended by the addition of the following language to the
original language that appears therein

Covenants not to compete upon termination or expiration of the Franchise Agreement

are generally unenforceable in the State of North Dakota except in limited instances as
provided by law

IN WITNESS WHEREOF, each of the undersigned hereby acknowledges having read this Amendment,
understands and consents to be bound by all of its terms

Club'Pilates Franchise, LLC Franchisee

By By

Title Title

ADDENDUM TO DISCLOSURE DOCUMENT

The following language is added to Item 17(v) entitled Choice of forum

, except as otherwise required by the Rhode Island Franchise Investment Act

AMENDMENT TO FRANCHISE AGREEMENT

In recognition of the requirements of the Rhode Island Franchise Investment Act (Section 19-28 1-14), the
parties to the attached Franchise Agreement agree as follows

Section 17 4, "CHOICE OF FORUM" is amended by adding the following

§19-24 1-14 of the Rhode Island Franchise Investment Act provides that "A provision in a
franchise agreement restricting jurisdiction or venue to a forum outside this state or
requiring the application of the laws of another state is void with respect to a claim
otherwise enforceable under this Act"

IN WITNESS WHEREOF, each of the undersigned hereby acknowledges having read this Amendment,
understands and consents to be bound by all of its terms

Club Pilates Franchise, LLC Franchisee

By By

Title Title

ADDENDUM TO DISCLOSURE DOCUMENT

In recognition of the restrictions contained in Section 13 1-564 of the Virginia Retail Franchising Act, the
Franchise Disclosure Document for Club Pilates Franchise, LLC for use in the Commonwealth of Virginia shall be
amended as follows

The following statement is added to Item 17 h

"Pursuant to Section 13 1-564 of the Virginia Retail Franchising Act, it is unlawful for a franchisor
to cancel a franchise without reasonable cause If any ground for default or termination stated in the
franchise agreement does not constitute "reasonable cause", as that term may be defined in the Virginia
Retail Franchising Act or the laws of Virginia, that provision may not be enforceable "

ADDENDUM TO DISCLOSURE DOCUMENT

In recognition of the requirements of the Washington Franchise Investment Protection Act (RCW
19 100 180), the Franchise Disclosure Document is revised as follows

1 The following paragraphs are added at the end of Item 17

The state of Washington has a statute, RCW 19 100 180, which may supersede the Franchise
Agreement in your relationship with the franchisor including the areas of termination and renewal
of your franchise There may also be court decisions which may supersede the franchise
agreement in your relationship with the franchisor including the areas of termination and renewal
of your franchise

In any arbitration involving a franchise purchased in Washington, the arbitration site shall be either
in the state of Washington, or in a place mutually agreed upon at the time of the arbitration, or as
determined by the arbitrator

In the event of a conflict of laws, the provisions of the Washington Franchise Investment
Protection Act, Chapter 19 100 RCW shall prevail

A release or waiver of rights executed by a franchisee shall not include rights under the
Washington Franchise Investment Protection Act except when executed pursuant to a negotiated
settlement after the agreement is in effect and where the parties are represented by independent
counsel Provisions such as those which unreasonably restrict or limit the statute of limitations
period for claims under the Act, rights or remedies under the Act such as a right to a jury trial may
not be enforceable

Transfer fees are collectable to the extent that they reflect the franchisor's reasonable estimated
or actual costs in effecting a transfer

AMENDMENT TO FRANCHISE AGREEMENT

In recognition of the requirements of the Washington Franchise Investment Protection Act (RCW
19 100 180), the parties to the attached Franchise Agreement agree as follows

In the event of a conflict of laws, the provisions of the Washington Franchise Investment
Protection Act, Chapter 19 100 RCW shall prevail

Transfer fees are collectable to the extent that they reflect the franchisor's reasonable estimated
or actual costs in effecting a transfer

IN WITNESS WHEREOF, each of the undersigned hereby acknowledges having read this Amendment,
understands and consents to be bound by all of its terms

Club Pilates Franchise, LLC Franchisee

By By

Title Title

UST OF FRANCHISEES AND THEIR OUTLETS

AS OF THE ORIGINAL ISSUE DATE OF THE DISCLOSURE DOCUMENT

Owner
Club Pilates Studio First Owner Last
Location Street City State Zip Phone Studio Email Name Name
520 241 tucson(3clubDilate
Tucson 1702 E Prince #120 Tucson AZ 8S719 4743 sstudio com Mary Beardsley
1820 Marron Road 760 201- Carlsbad(Scluboilat Dumaw
Carlsbad Suite 100 Carlsbad CA 92008 3374 esstudio com Arielle Whitman
469 Magnolia 951 268 coronaiSduboilate Katie/Cin
Corona Avenue Suite 106 Corona CA 92879 9656 sstudio com dy Picazo/Reyes
1525 Mesa Verde Costa 949-791 costamesa(®clubDil
Costa Mesa Dr E Mesa CA 92626 7184 atesstudio com Brittany Borga
861 Harold Place Chula 619 392- eastlake(®clubDilat Carolyn/
Eastlake Suite 305 Vista CA 91914 2572 esstudio com Dave Davies/Hays
760 529- encinitasOcluboila Dumaw
Encinitas 555 2nd St Suite 2 Encinitas CA 92024 6706 tesstudio com Arielle Whitman
Los 323-774- hollvwoodOcluboil
Hollywood 730 N La Brea Ave Angeles CA 90038 2701 atesstudio com Derek Jones
Laguna 30100 Town Center Laguna 949 257 lasunanigueltadub
Niguel Drive Suite B 1 Niguel CA 92677 2292 Dilatesstudio com Keely/ Liz Watson/Wright
Manhatt manhattanbeach(S
Manhattan 903 N Sepulveda an 310-921 duboilatesstudio c
Beach Blvd Beach CA 90266 8004 om Chris Suder
Midtown 1330 21st Street Sacrame 916 347 sacramento(a)clubD Linda/
Sacramento Ste 101 nto CA 95811 0304 ilatesstudio com Rebecca Kendall/Holden
9460 Mira Mesa San 858 254 miramesa(a>clubDil Carolyn/
Mira Mesa Blvd, Unit P Diego CA 92126 3326 atesstudio com Dave Davies/Hays
Mission 6690 Mission Gorge San 619 786- missioneoree(5)du
Gorge Road Diego CA 92120 2300 boilatesstudio com Katie Mann
Mission 25800 Jeronimo Mission 949 446 missionvieioOclub
Viejo Road Ste 404 Viejo CA 92691 8243 Dilatesstudio com Keely/Liz Watson/Wright
3959 30th Street San 619 677 north Da rk(fflclubDil
North Park Suite 101 Diego CA 92104 1500 atesstudio com Katie Mann

Pacific 5010 Cass Street San 858 220- Dacificbeach(S)club Jennifer/

Beach Suite H Diego CA 92109 2462 Dilatesstudio com Brigette Gold/Guido
50 El Camino Real, San 650 722 sancarlosiSclubDila Renata
San Carlos #50 Carlos CA 94070 4710 tesstudio com and Sean Lance
San
San 302 N El Camino Clement 949 482 sanclemente(5)club Constanc
Clemente Real Suite 106 e CA 92672 4396 Dilatesstudio com e Moisan
San Juan
San Juan 27184 Ortega Hwy Capistra 949 257- sic(5)clubDilatesstu
Capistrano Suite 206 no CA 92675 2292 dio com Keely/Liz Watson/Wright
904 \N San Marcos San 760 201 sanmarcosOduboi Dumaw
San Marcos Blvd Suite 5 Marcos CA 92078 3070 latesstudio com Arielle Whitman
225 Town Center 619-485 santee(®clubDilate
Santee Parkway, Suite C Santee CA 92071 1800 sstudio com Katie Mann
1111W El Camino Sunnyval 408 844 sunnvvale@clubDil Michael/ Fedyna/ Del
Sunnyvale Real #213 e CA 94087 4403 atesstudio com Gina Vecchio

2015 Franchise Disclosure Document (Amended) - Exhibits
This document was downloaded from franchimp.com. All the information on this website is published in good faith and for general information purpose only. FranChimp.com does not make any warranties about the completeness, reliability, and
accuracy of this information. Any action you take upon the information you find on this website (FranChimp.com), is strictly at your own risk. We will not be liable for any losses and/or damages in connection with the use of our website.
41789 Nicole Lane Temecul 951-297 temecula(5)clubDila Olivia/Ka
Temecula Suite B4 a CA 92591 7828 tesstudio com tie Scira/Picazo
Woodland 19720 Ventura Blvd Woodia 818 207 woodlandhills(5)clu
Hills Suite 101/102 nd Hills CA 91364 2857 boiiatesstudio com Nikkita Weerasinghe
100 South
Chaparral Court, 760-262 vorbalinda(5)clubDil Susann/ Clifford/
Yorba Linda Suite 140 Anaheim CA 92808 7337 atesstudio com Claudia Stieding
437 S Wadsworth Lakewoo 720 789 belmar(®clubDilate
Bel Mar Blvd, Suite F d CO 80226 1011 sstudio com Kevin Easterly
Cherry 3000 E 3rd Ave 720 361 denverOduboilate Mary &
Creek Suite 20'& 21 Denver CO 80206 9995 sstudio com Brian Busse
39799 Grand River 248 410 novi(a)clubDilatesst
Novi Avenue NOVI Ml 48375 7700 udio com Kristen Cronin
8665 W Flamingo Las 702 608 lasveeas^clubDilat Victoria/
Las Vegas Rd Suite 118 Vegas NV 89147 1396 esstudio com Emil Rechester
6077 W Mequon 414-939 meauontScluboilat
Mequon Rd Mequon Wl 53092 3644 esstudio com Megan Sinnen

UST OF FRANCHISE AGREEMENTS SIGNED, BUT OUTLETS NOT OPENED

Phoenix AZ j_marrinan@yahoo com Jennifer Marrinan 619 200 2992

Long Beach CA camillelombardo@gmail com Camille Lombardo 949 306-7498

Pasadena CA pasadena@clubpilatesstudio com Rebecca Bailey 323-898 8244

Lerro
Torrance CA liubalerro@gmail com Liuba Parraway 619 518 3338
Santa
Clarita CA andrea@clubpilatesstudio com Andrea Schade 775 771 9605
West Palm
Beach FL amandamullins02@hotmail com Amanda Gomez 954 650 6151

Chicago CA nathanmichaelhuffman@gmail com Vanessa/Nathan Huffman 310-428-0009

scpontone@aol com
njhunt@msn com, Scott &
Houston TX elisavl5(5)gmail com Elisa/Nate Pontone/Hunt 858-212-6787

LIST OF FRANCHISEES WHO CEASED TO DO BUSINESS

UNDER THE FRANCHISE AGREEMENT AT SOME POINT DURING OUR PAST FISCAL YEAR (2014)

NONE

DEVELOPMENT AGREEMENT

AREA DEVELOPMENT AGREEMENT

DEVELOPER

DATE OF AGREEMENT

1 REFERENCES AND DEFINITIONS 2

2 USE OF SYSTEM 2
3 GRANT OF DEVELOPMENT RIGHTS 3
4 DEVELOPMENT RIGHTS AND OBLIGATIONS 4
5 STUDIO CLOSINGS 6
6 PROCEDURE FOR EXERCISING DEVELOPMENT RIGHTS 6
7 DUTIES OF DEVELOPER 6
8 SITE SELECTION, LEASES, FRANCHISE AGREEMENT 8
9 DEVELOPMENT FEE 9
10 SUPERIORITY OF INDIVIDUAL FRANCHISE AGREEMENT 9
11 COVENANTS 9
12 RELATIONSHIP OF THE PARTIES 11
13 PROPRIETARY MARKS 13
14 TERMINATION 14
15 EFFECT OF'TERMINATION AND EXPIRATION 15
16 TRANSFER OF INTEREST 16
17 APPROVALS 20
18 NONWAIVER 20
19 DEVELOPER'S RECORDS AND REPORTS 21
20 NOTICES AND PAYMENTS 21
21 GOVERNING LAW 24
22 ARBITRATION AND OTHER DISPUTE RESOLUTION PROVISIONS 24
23 ENFORCEMENT 24
24 CAVEAT 27
25 MISCELLANEOUS 27

EXHIBITS

ATTACHMENT GUARANTY AND ASSUMPTION OF OBLIGATIONS

EXHIBIT A - DEVELOPMENT AREA
EXHIBIT B - DEVELOPMENT SCHEDULE
EXHIBIT C - FRANCHISE AGREEMENT
EXHIBIT D - STATEMENT OF OWNERSHIP INTERESTS AND PRINCIPALS
EXHIBIT E - CONFIDENTIALITY AGREEMENT AND ANCILLARY COVENANTS NOT TO
COMPETE

THIS AREA DEVELOPMENT AGREEMENT (the ' Agreement"), is made and entered into
this day of , 20 , by and between (i) Club Pilates Franchise, LLC, a limited
liability company formed and operatmg under the laws of the State of Delaware whose pnncipal business
address is 3185 Pullman Street, Costa Mesa, California 92626 (the "Franchisor"), and (ii) , a/n
with a business address at (the "Developer")

WITNESSETH

WHEREAS, as the result of the expenditure of time, effort and expense. Franchisor has created a
unique and distinctive proprietary system (hereinafter the "System") for the establishment, development
and operation of a CLUB PILATES Studio (each, a "Studio") that provides Studio services, including
professional therapeutic massage and skin care services, to the general public and through a membership-
based program, as well as related services and products we authonze m a relaxing, clean and fnendly
environment under the mark CLUB PILATES

WHEREAS, Franchisor owns the System and the nght to use the Propnetaiy Marks (as defined
below), and grants the nght and license to others to use the System and the Propnetary Marks,

WHEREAS, the distinguishing charactenstics of the System include, without limitation,

propnetary methodology and procedures for the establishment and operating procedures, site selection
guidance and cntena, specifications for the design, layout and construction of the interior of the Studio,
standards and specifications for the furniture, fixtures and equipment located within a Studio, established
relationships with approved or designated suppliers for certain products and services, and standards and
specifications for advertising, bookkeeping, sales and other aspects of operating a Studio

WHEREAS, Franchisor identifies the System and licenses the use of certain trade names, service
marks, trademarks, emblems and indicia of ongin, including the mark CLUB PILATES and other trade
names, service marks and trademarks as are now designated and may hereafter be designated by
Franchisor in writing for use with the System (the "Proprietary Marks"),

WHEREAS, Developer desires the right to develop, own and operate multiple CLUB PILATES
Studios under the System m a defined geographic area under a Development Schedule (the "Development
Schedule") set forth m this Agreement, and

WHEREAS, Developer acknowledges that Developer has conducted an independent investigation

of the business contemplated by this Agreement and recognizes that, like any other business, the nature of
the business conducted as a CLUB PILATES Studio may evolve and change over time, that an
investment m a CLUB PILATES Studio involves a business risk and the success of the venture is largely
dependent upon Developer's business abilities and efforts

NOW, THEREFORE, the parties, in consideration of the mutual undertakings and commitments
set forth in this Agreement, the receipt and sufficiency of which are hereby acknowledged, agree as
follows

A DEVELOPMENT AREA

' Development Area" means the geographic area descnbed in Exhibit A

B DEVELOPMENT SCHEDULE/DEVELOPMENT PERIOD

'Development Schedule" means the schedule for Developer to open and operate a specific
cumulative number of CLUB PILATES Studios as set forth in Exhibit B to this Agreement Each
"Development Penod" is a period of tune set forth in the Development Schedule wherein Developer must
meet each specific development obligations

C FRANCHISE AGREEMENT

Except for the royalty fee and the advertising contributions, which shall remain the same m each
franchise agreement executed pursuant to this Agreement and any extensions of this Agreement, the term
"Franchise Agreement" means the then-current form of agreements (including the franchise agreement
and any exhibits, nders, collateral assignments of leases or subleases, shareholder guarantees and
preliminary agreements) that Franchisor customarily uses in the granting of a franchise for the ownership
and operation of a CLUB PILATES Studio

Concurrent with the execution of this Agreement, Developer shall execute the Franchise
Agreement for the first Studio that Developer is granted the nght to open within the Development Area
hereunder Franchisor, in its sole discretion, but subject to the express provisions contained herein, may
modify or amend in any respect the standard form of Franchise Agreement it customarily uses in granting
a franchise for a CLUB PILATES Studio

The parties agree and acknowledge that (i) Developer must timely execute Franchisor's then-
current form of Franchise Agreement for each CLUB PILATES Studio that Developer is required to open
and commence operating pursuant to the Development Schedule, and (ii) Franchisor may, in its
discretion, modify or amend the form of Franchise Agreement that Franchisor is using as of the date this
Agreement is executed as it deems appropriate for (a) use in the CLUB PILATES System generally, and
(b) execution by the parties in connection with the Studios that Developer must subsequently open and
commence operatmg under this Agreement

D PRINCIPALS

The term "Principals" includes, collectively and individually. Developer's owners, if Developer
IS an entity, any officers and directors of Developer (including the officers and directors of any general
partner of Developer) and any person and of any entity du-ectly owning and/or controlling ten percent
(10%) or more of Developer, or a managing member or manager of a limited liability company The
initial Pnncipals shall be listed in Exhibit D The Pnncipals must execute an agreement in substantially
the form of the attached Guaranty and Assumption of Obligations (immediately following this
Agreement) undertaking to be bound jointly and severally to all provisions of this Agreement

2 USE OF SYSTEM

Developer acknowledges, and does not contest. Franchisor's exclusive ownership and rights to
each and every aspect of the System Developer's nght to use the System is specifically limited to the

3 GRANT OF DEVELOPMENT RIGHTS

A GRANT AND TERM

In reliance on the representations and warranties of Developer and its Pnncipals, Franchisor
grants to Developer, and Developer hereby accepts the right and obligation to develop, a designated
number of CLUB PILATES Studios withm the Development Area in full compliance with the terms of
this Agreement, mcludmg the timely development obligations to open a specific cumulative number of
CLUB PILATES Studios over prescnbed periods of time as established in the Development Schedule,
and m full compliance with all obligations and provisions under the form(s) of Franchise Agreement
entered into for the right to own and operate each individual CLUB PILATES Studio

The term of this Agreement shall commence upon full execution of this Agreement and, unless
earlier terminated by Franchisor pursuant to the terms hereof, this Agreement shall expire upon the earlier
of (i) the date Developer timely opens the last CLUB PILATES Studio it is reqmred to open and
commence operations within the Development Area pursuant to this Agreement, or (ii) the last day of the
last Development Period on the Development Schedule Developer acquires no rights under this
Agreement to develop CLUB PILATES Studios outside the Development Area. Upon expiration or
termination of this Agreement for any reason. Developer will have no rights whatsoever within the
Development Area (other than any temtonal rights that Franchisor has granted to Developer in
connection with any CLUB PILATES Studio(s) that Developer has timely opened pursuant to a Franchise
Agreement as required by the Development Schedule prior to the date this Agreement is terminated or
expires)

B COMMITMENT OF DEVELOPER

Franchisor has granted these nghts in reliance on the business skill, financial capability, personal
character and expectations of performance by the Developer and its Principals This Agreement is for the
purpose of developing and operating the CLUB PILATES Studios, and is not for the purpose of reselling
the nghts granted by this Agreement

C DEVELOPMENT PLAN

The following conditions and approvals are conditions precedent before the nght of Developer to
develop each CLUB PILATES Studio becomes effective At the time Developer selects a site for each
CLUB PILATES Studio, Developer must satisfy the operational, financial and traimng requirements, set
forth below

(1) Operational Developer must be in substantial compliance with the matenal terms
and conditions of this Agreement and all Franchise Agreements granted Developer For each CLUB
PILATES Studio operated by Developer, Developer must be m substantial compliance with the standards,
specifications, and procedures set forth and described in the Manuals (defined in the Franchise
Agreement)

(2) Financial Developer and the Principals must satisfy Franchisor's financial
critena for Developers and Pnncipals with respect to Developer's operation of its existing CLUB
PILATES Studios, if any, and the proposed CLUB PILATES Studio Developer must be in compliance
and not been in default dunng tlie twelve (12) months preceding Developer's request for approval, of any

D EXECUTION OF FRANCHISE AGREEMENT

This Agreement is not a Franchise Agreement and does not grant Developer any right or license
to operate a CLUB PILATES Studio, or to provide services, or to distnbute goods, or any nght or license
in the Proprietary Marks Developer must timely execute Franchisor's then-current form of Franchise
Agreement for each CLUB PILATES Studio that Developer is required to open under the Development
Schedule

4 DEVELOPMENT RIGHTS AND OBLIGATIONS

A RESERVATION OF RIGHTS

Franchisor (on behalf of itself and its affiliate and its subsidiaries) retains the nghts, in its sole
discretion and without granting any nghts to Developer (1) to itself operate, or to grant other persons the
right to operate, CLUB PILATES Studios at locations and on terms Franchisor deems appropriate outside
the Development Area granted Developer, and (2) to sell the products and services authonzed for CLUB
PILATES Studios under the Proprietary Marks or under other trademarks, service marks and commercial
symbols through dissimilar channels of distnbution and under terms Franchisor deems appropnate within
and outside the Development Area, mcluding, but not limited to, by electronic means, such as the
Internet, and by web sites established by Franchisor, as we determine, in our sole discretion

In addition. Franchisor, any other developer and any other authonzed person or entity shall have
the nght, at any time, to advertise and promote the System, m the Development Area. Developer
acknowledges and agrees that Developer is only granted the nght to develop and operate CLUB
PILATES Studios within the Development Area Accordingly, withm and outside the Development
Area, Franchisor and its affiliate and its subsidiaries may also offer and sell, and may authonze others to
offer and sell products and services identified by the Propnetary Marks (including memberships and gift
cards) at or from any location

Franchisor or any other developer or any other authonzed person or entity shall have the nght, at
any time, to establish and operate businesses offenng dissimilar products or dissimilar services within and
outside the Development Area granted by the Area Development Agreement and within and outside the
Designated Territory granted by a Franchise A^eement, under the Propnetary Marks and on any terms
and conditions as determined by Franchisor, to acquire the assets or ownership interests of one or more
businesses providing products and services similar to those provided at a CLUB PILATES Studio and to
franchise, license or create similar arrangements with respect to these businesses once acquired, wherever
these businesses (or the franchisees or the licensees of these businesses) are located or operating, which
may include within the Development Area granted by this Area Development Agreement and withm the
Designated Temtory granted by any franchise agreement

Franchisor may be acquired (whether through acquisition of assets, ownership mterests or

otherwise, regardless of the form of transaction, by a business providing products and similar services to
those provided at a CLUB PILATES Studio, or by another business, even if such business operates,
franchises and/or licenses competitive businesses within the Development Area granted by the Area
Development Agreement and withm the Designated Temtoiy granted by a Franchise Agreement

Franchisor has no obligation and will not pay Developer if it exercises any of the nghts specified
above within the Development Area granted by the Area Development Agreement or within the
Designated Territory granted by a Franchise Agreement

B RIGHTS DURING DEVELOPMENT PERIODS

Except as provided below, if Developer (i) is m compliance with the matenal terms and
conditions contained in this Agreement, including the timely development obligations to open a specific
cumulative number of CLUB PILATES Studios over prescnbed penods of time as established m Exhibit
B (the "Development Schedule") and (ii) is in substantial compliance with all matenal obligations under
Franchise Agreements executed by Developer for individual CLUB PILATES Studios under this
Agreement, then dunng the Development Schedule, Franchisor (i) will grant Developer the right to own
and operate CLUB PILATES Studios located within the Development Area pursuant to the terms of this
Agreement, and (ii) will not operate (du'ectly or through its affiliate), nor grant a franchise for the location
of, any CLUB PILATES Studio within the Development Area, except for franchises granted to Developer
under this Agreement, or other than through the uses and exceptions as described in Section 4(A) of this
Agreement

If Developer, for any reason within his control, fails to comply with the Development Schedule,
this failure constitutes a matenal default of this Agreement, and Franchisor has the nght to terminate this
Agreement pursuant to Section 14 of this Agreement In the event Developer fails to cure the noticed
default within the time allowed under Section 14, Franchisor may terminate this Agreement and grant
individual or area development franchises withm the Development Area to third parties or own and
operate Studios owned by Franchisor or by the affiliate of Franchisor Franchisor and Developer agree
that the timely development of Studios by Developer m compliance with the Development Schedule will
control the rights granted Developer by this Agreement, regardless of the time penod granted Developer
to open a Studio pursuant to a Franchise Agreement for such Studio Upon termination of this
Agreement, all rights granted Developer revert to Franchisor, who is free to fi-anchise any other person to
use the System within the Development Area or to itself own and operate CLUB PILATES Studios
within the Development Area

Notwithstanding anything contained in this Section, Franchisor will provide Developer with a
one-time reasonable extension of time not to exceed 90 days to comply with its development obligations
in any one of the Development Period as set forth in the Development Schedule (see Exhibit B), provided
(i) Developer has already executed a lease for, or otherwise obtained, a Premises that Franchisor approves
for any CLUB PILATES Studio(s) it is required to open and operate dunng that Development Penod, and
(ii) Developer notifies Franchisor of its need for such an extension no less than 30 days pnor to expiration
of that Development Penod The parties agree and acknowledge that Franchisor's grant of this one-time
extension imder this Section will not extend, modify or otherwise affect the expiration of any of
Developer's subsequent Development Penods or subsequent development obligations

C DEVELOPMENT OBLIGATIONS

Developer will at all times faithfully, honestly, and diligently perform his obligations under this
Agreement and will continuously exert his best efforts to timely promote and enhance the development of
CLUB PILATES Studios within the Development Area Developer agrees to open and operate the
cumulative number of CLUB PILATES Studios at the end of each Development Penod set forth m the

2015 Development Agreement 5
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accuracy of this information. Any action you take upon the information you find on this website (FranChimp.com), is strictly at your own risk. We will not be liable for any losses and/or damages in connection with the use of our website.
Development Schedule (see Exhibit B) Developer agrees that compliance with the Development
Schedule is the essence of this Agreement

D EXPIRATION OR TERMINATION

After this Agreement expires or terminates for any reason. Franchisor shall have the absolute
nght to own and operate, or license other parties the nght to own and operate CLUB PILATES
STUDIOS, in the Development Area, except in those Designated Territones granted under each Franchise
Agreement that Developer enters into pursuant to this Agreement

5 STUDIO CLOSINGS

If during the term of this Agreement, Developer ceases to operate any CLUB PILATES Studio
developed under this Agreement for any reason. Developer must develop a replacement CLUB PILATES
Studio to fulfill Developer's obligation to have open and in operation the required number of CLUB
PILATES Studios upon the expiration of each Development Period The replacement CLUB PILATES
Studio must be open and in operation within mne (9) months after Developer ceases to operate the CLUB
PILATES Studio to be replaced or Developer will be in material breach of this Agreement If, during the
term of this Agreement, Developer, in accordance with the terms of any Franchise Agreement for a
CLUB PILATES Studio developed under this Agreement, transfers its interests in that CLUB PILATES
Studio, a transferred CLUB PILATES Studio shall continue to be counted in determinmg whether the
Developer has complied with the Development Schedule so long as it continues to be operated as a CLUB
PILATES Studio If the transferred CLUB PILATES Studio ceases to be operated as a CLUB PILATES
Studio, it will not count toward Developer's compliance with the Development Schedule

6 PROCEDURE FOR EXERCISING DEVELOPMENT RIGHTS

Developer shall enter into a separate Franchise Agreement with Franchisor for each CLUB
PILATES Studio developed pursuant to this Agreement The Franchise Agreement to be executed for the
first CLUB PILATES Studio to be developed by Developer under this Agreement must be executed and
delivered to Franchisor concurrently with the execution and delivery of this Agreement All subsequent
CLUB PILATES Studios developed under this Agreement must be established and operated under the
then-current form of Franchise Agreement then being used by Franchisor for CLUB PILATES Studios
under the System The then-current form of Franchise Agreement may differ from the form attached as
Exhibit C, however, the provisions regarding royalty fees and advertising contributions shall remain as
established in Exhibit C Developer must execute the then-current form of Franchise Agreement for each
CLUB PILATES Studio to be developed under this Agreement

Developer acknowledges that the projected opemng dates for each CLUB PILATES Studio set
forth in the Development Schedule are reasonable requirements Developer must execute a Franchise
Agreement for each Studio by the earlier of (i) fifteen (15) days fi-om the date a lease is signed for a
location that Franchisor approves for the CLUB PILATES Studio at issue, and (ii) the date necessary for
Developer to otherwise comply with its development obligations under this Agreement

7 DUTIES OF DEVELOPER
A ORGANIZATION OF DEVELOPER
Developer makes the following representations, warranties and covenants and accepts the
following continuing obligations

2015 Development Agreement
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accuracy of this information. Any action you take upon the information you find on this website (FranChimp.com), is strictly at your own risk. We will not be liable for any losses and/or damages in connection with the use of our website.
(1) If Developer is a corporation, hmited liability company or a partnership,
Developer represents, warrants and covenants that (i) Developer is duly organized and validly existmg
under the state law of its formation, (ii) Developer is duly qualified and is authonzed to do business in
each jurisdiction which requires such qualification, (iii) the execution and performance of this Agreement
are within Developer's corporate power, if Developer is a corporation or if Developer is a partnership
permitted under Developer's written partnership agreement, or if Developer is a limited liability
company, permitted under the management agreement,

(2) If Developer is a corporation, copies of its articles of incorporation, bylaws, other

governing documents, any amendments, resolutions of the Board of Directors authorizing entry into and
performance of this Agreement, shall be promptly furmshed to Franchisor If Developer is a partnership,
copies of Developer's wntten partnership agreement and other governing documents shall be promptly
furnished to Franchisor before the execution of this Agreement If Developer is a lunited liability
company, copies of Developer's organizational documents and management agreement shall be promptly
furmshed to Franchisor,

(3) If Developer is a corporation, partnership, hmited liability company, or other

form of legal entity other than an individual. Developer shall maintain at all times a current list of all
owners of record and all beneficial owners of any class of voting secunties in Developer or, if Developer
IS a partnership. Developer shall maintain at all times a current list of all owners of an interest in the
peirtnership, or, if Developer is a lunited liability company, it shall maintain at all times a current list of
managers and members of the limited liability company,

(4) If, after the execution of this Agreement, any person ceases to qualify as one of
the Developer's Principal's (as defined in Section 1), or if Developer believes in the event any individual
later qualifies as one of Principals, Developer shall promptly notify Franchisor and that person shall
execute any documents (including, as applicable, this Agreement) as Franchisor may reasonably require,

(5) If Developer is a corporation. Developer must maintain stop-transfer instructions

against the transfer of its records of any equity secunty and each stock certificate of the corporation shall
have conspicuously endorsed upon it a statement in a form satisfactory to Franchisor that it is held subject
to all restrictions imposed upon assignments by this Agreement, provided, however, that the requirements
of this Section 7 shall not apply to a publicly held corporation If Developer is a partnership, its wntten
partnership agreement shall provide that ownership of an mterest in the partnership is held subject to and
that further assignment or transfer is subject to restnctions imposed on assignments by this Agreement If
Developer is a limited liability company, its articles of organization and operating agreement must
provide that ownership interests are subject to restnctions on transfers imposed on assignments by this
Agreement,

(6) Developer agrees to maintain at all tunes throughout the term of this Agreement,
sufficient working capital to fulfill its obligations under this Agreement, and

(7) Each Prmcipal who has nght, title, or mterest of ten percent (10%) or more m the
ownership of Developer, must each execute and bind themselves to the confidentiality and
noncompetition covenants set forth in the Confidentiality Agreement and Ancillary Covenants Not to
Compete (Exhibit E) The Pnncipals agree to jointly and severally guarantee the performance of all of
Developer's obligations, under the terms of this Agreement, except the obligation to open Studios

Upon the execution of this Agreement, Developer must designate and retain an individual
throughout the term of this Agreement to act on behalf of Developer m all transactions with Developer
concermng Developer's obligations under this Agreement (the "Representative") If Developer is an
individual. Developer must perform all obligations of the Representative The Representative must use
reasonable efforts to do the following, durmg the entire penod he serves in that capacity (1) maintain a
direct or indmect ownership interest in the Developer, (2) devote substantial time and reasonable efforts to
the supervision and conduct of the business contemplated by this Agreement and execute this Agreement
as one of the Principals, and (3) meet Franchisor's standards and criteria for a Representative as set forth
in the Manuals or otherwise in wnting by Franchisor If the Representative or any designee is not able to
continue to serve in the capacity of Representative or no longer qualifies, Developer must promptly notify
Franchisor emd designate a replacement

C BEST EFFORTS

Developer must use his best efforts to substantially comply with all requirements of federal, state
and local rules, regulations and orders

8 SITE SELECTION. LEASES. FRANCHISE AGREEMENT

A SELECTION OF SITE BY DEVELOPER

Developer assumes all costs, liabilities, expenses and responsibilities for locating, obtaining,
financing and developing sites for CLUB PILATES Studios, and for constructing and equippmg CLUB
PILATES Studios at those sites The selection of a site and the development of a Studio at any site is the
responsibility of Developer The selection of a site by Developer is subject to our approval and must be
in compliance with Franchisor's site selection procedures and its standards for demographic
characteristics, parking, traffic patterns and the predommsmt character of the neighborhood, and other
commercial charactenstics of the site and any other factors Franchisor may consider relevant in reviewing
a site selected by Developer Developer must not enter into a binding commitment with a prospective
seller or lessor of real estate with respect to the site for a Studio until Franchisor has approved the
proposed site Developer specifically acknowledges that the selection of a site by Developer in
compliance with Franchisor's site selection procedures and the approval of a site by Franchisor does not
constitute a representation, promise or guarantee by Franchisor that the site and the Studio to be operated
at that site will be profitable or successful Developer acknowledges that factors governing the success of
a CLUB PILATES Studio are unpredictable and beyond Franchisor's control Franchisor is not
responsible to Developer or to any other person or entity if a site approved by Franchisor fails to meet
Developer's expectations for revenue or operational criteria

B DEMOGRAPHIC INFORMATION

Before acquiring a site for any Studio by lease or purchase. Developer must locate a site for the
Studio that satisfies the site selection guidelines Franchisor provides to Developer and must submit to
Franchisor, in the form Franchisor specifies, a descnption of the site, a demographic study and other
information and matenals Franchisor may reasonably requue and shall represent in writing that
Developer has the option or other firm commitment to obtain the site Franchisor will review information
provided by Developer for the site which may include the population of the work force or residents,
character of the neighborhood, household income, ingress and egress, and trade area If on-site
evaluations by Franchisor are requested by Developer or determmed to be necessary by Franchisor, then
Franchisor or its designee will, at Franchisor's expense, provide a single on-site inspection in connection

2015 Development Agreement 8
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accuracy of this information. Any action you take upon the information you find on this website (FranChimp.com), is strictly at your own risk. We will not be liable for any losses and/or damages in connection with the use of our website.
with each Studio that Developer is required to open hereunder at Franchisor's expense Developer must
reimburse Franchisor for the reasonable expenses Franchisor mcurs for any additional on-site evaluations,
mcludmg, but not lunited to, the cost of travel, lodgmg, meals and wages of Franchisor's representatives
and employees

C LEASE OR PURCHASE OF SITE

Developer shall not make any binding commitment to purchase or lease real estate for a proposed
site for a CLUB PILATES Studio until the proposed site has been approved by Franchisor and a
Franchise Agreement has been executed by Franchisor and Developer (or its affiliate) for a Studio at such
site Developer shall provide Franchisor with a copy of either the proposed contract of sale or lease
relating to the site before the Franchise Agreement is executed Developer must comply with the
conditions set forth in the Franchise Agreement at issue m connection with the sigmng of such a lease,
mcludmg ensuring that both Developer and the landlord for the proposed site execute Franchisor's
prescribed from of Collateral Assignment of Lease

D FRANCHISE AGREEMENT

Franchisor will deliver a Franchise Agreement, m the then-current form, to Developer for
execution by Developer (or its affiliate) With the execution of this Agreement, Developer must
concurrently execute the Franchise Agreement establishing Developer's first CLUB PILATES Studio and
return both this Agreement and the Franchise Agreement to Franchisor If Developer fails to execute the
Franchise Agreement, Franchisor may, at its sole discretion, revoke its approval of the site and its offer to
grant Developer a franchise to operate a CLUB PILATES Studio at the site

9 DEVELOPMENT FEE

Concurrently with the execution of this Agreement, Developer must pay to Franchisor a
nonrefundable area development fee equal to $ (the "Development Fee") The
Development Fee is deemed fully earned by Franchisor upon execution of this Agreement m
consideration of lost development opportunities and is noru-efundable under any circumstances
Developer will not be required to pay any additional initial franchise fee for each Studio opened pursuant
to this Agreement upon executing a Franchise Agreement for that Studio

10 SUPERIORITY OF INDIVIDUAL FRANCHISE AGREEMENT

Developer understands and agrees that any and all individual Franchise Agreements executed by
Developer and Franchisor for CLUB PILATES Studios within the Development Area are independent of
this Agreement The continued effectiveness of any Franchise Agreement does not depend on the
continued effectiveness of this Area Development Agreement If any conflict arises with this Agreement
and any Franchise Agreement, the Franchise Agreement controls, has precedence and supenonty (except
with respect to the opening deadlme for each CLUB PILATES Studio Developer is granted the right to
open under this Agreement)

11 COVENANTS

A Developer and the Representative covenant that during the term of this Agreement,
except as otherwise approved in writing by Franchisor, Developer and the Representative must devote
substantial time, energy and best efforts to the management and operation of the development activities
required under this Agreement

2015 Development Agreement
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accuracy of this information. Any action you take upon the information you find on this website (FranChimp.com), is strictly at your own risk. We will not be liable for any losses and/or damages in connection with the use of our website.
B Developer acknowledges that, as a participant m Franchisor's System, Developer will
receive propnetaiy and confidential information and materials, trade secrets, and the umque methods,
procedures and techniques that Franchisor has developed As such. Developer agrees to the covenants m
this Section to protect Franchisor, the System, Propnetary Marks and Franchisor's other franchisees and
developers

(1) Dunng the term of this Agreement, neither Developer, its Principals, owners,
officers or guarantors, nor any immediate family of Developer, its Pnncipals, owners, officers or
guarantors, may, directly or indirectly, for themselves or through, on behalf of, or in conjunction with any
other person, partnership or corporation

(a) Own, maintam, engage in, be employed or serve as an officer, director,

or pnncipal of, lend money or extend credit to or have any interest in or involvement with, any fitness or
exercise business, any fitness or exercise marketmg or consulting business, any business offermg products
of a similar nature to those of the Studio, or m any business or entity which franchises, licenses or
otherwise grants to others the right to operate such aforementioned businesses (each, a "Competing
Business"), or (b) offers or grants licenses or franchises, or establishes joint ventures, for the ownership or
operation of a Competing Business For purposes of this Agreement, a Competing Busmess does not
mclude (i) any busmess operated by Developer under a Franchise Agreement with Franchisor, or (ii) any
busmess operated by a publicly-traded entity in which Developer owns less than two percent (2%) legal
or beneficial interest

(b) Employ or seek to employ any person who is at that time employed by
Franchisor, Franchisor's affiliates or any other System franchisee or developer, or otherwise directly or
indirectly induce or seek to induce such person to leave his or her employment thereat, or

(c) Divert, or attempt to divert, any prospective customer to a Competing

Business in any manner

(2) For a period of two (2) years after the expiration and nonrenewal, transfer or
termination of this Agreement, regardless of the cause, neither Developer, its Pnncipals, owners, officers
and guarantors, nor any member of the immediate family of Developer, its Pnncipals, owners, officers or
guarantors, may, directly or indirectly, for themselves or through, on behalf of, or in conjunction with any
other person, partnership or corporation, be involved with any business that competes in whole or in part
with Franchisor by offenng or granting licenses or franchises, or establishing joint ventures, for the
ownership or operation of a Competing Business The geographic scope of the covenant contained in this
Section IS any location where Franchisor can demonstrate it has offered or sold franchises as of the date
this Agreement is terminated or expires

(3) For a penod of two (2) years after the expiration and nonrenewal, transfer or
termination of this Agreement, regardless of the cause, neither Developer, its Pnncipals, owners, officers
and guarantors, nor any member of the immediate family of Developer, its Principals, owners, officers or
guarantors, may, directly or indirectly, for themselves or through, on behalf of, or in conjunction with any
other person, partnership or corporation

(a) Own, maintain, engage in, be employed as an officer, du-ector, or

pnncipal of, lend money to, extend credit to or have any mterest in or involvement with any other
Competing Business (i) within the Development Area, or (ii) within a forty (40) mile radius of the
perimeter of the Development Area being granted hereunder or any other designated temtory or
development area licensed by Franchisor to a CLUB PILATES Studio (whether fi-anchised or company-

2015 Development Agreement 10
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owned) at any time from the date of expiration or termination of this Agreement through the date
Franchisee attempts to undertake the competitive activity at issue

(b) Solicit business from customers of Developer's former Studios or contact

any of Franchisor's suppliers or vendors for any competitive busmess purpose, nor solicit any of
Franchisor's other employees, or the employees of Franchisor's affiliates or any other System franchisee
or developer to discontinue employment

C It is the parties' intent that the provisions of this Section 11 be judicially enforced to the
fullest extent permissible under applicable law Accordingly, the parties agree that any reduction in scope
or modification of any part of the noncompetition provisions contained herein shall not render any other
part unenforceable In the event of the actual or threatened breach of this Section 11 by Developer, any of
Developer's Principals, or any member of the immediate family of Developer or Developer's Pnncipals,
Franchisor shall be entitled to an injunction restraimng such person from any such actual or threatened
breach Developer acknowledges that the covenants contained herein are necessary to protect the
goodwill of other System franchisees and developers, and the System Developer further acknowledges
that covenants contained m this Section 11 are necessary to protect Franchisor's procedures and know-
how transmitted dunng the term of this Agreement Developer agrees that m the event of the actual or
threatened breach of this Section 11, Franchisor's harm will be irreparable and that Franchisor has no
adequate remedy at law to prevent such harm Developer and the Pnncipals agree to pay all costs and
expenses (including reasonable attorneys' fees) mcurred by Franchisor in connection with the
enforcement of this Section 11 Developer acknowledges and agrees on Developer's own behalf and on
behalf of the persons who are liable under this Section 11 that each has previously worked or been
gainfully employed in other careers and that the provisions of this Section 11 in no way prevent any such
person from earning a living Developer further acknowledges and agrees that the time limitation of this
Section 11 shall be tolled durmg any default under this Section 11

D Developer must ensure that all management personnel of Developer's Studios opened
under this Agreement, as well as any officers or directors of Developer, execute Franchisor's then-current
form of Confidentiality and Non-Competition Agreement Developer must furmsh Franchisor a copy of
each executed agreement

E Developer hereby agrees that the existence of any claim Developer may have against
Franchisor, whether or not arising from this Agreement, shall not constitute a defense to Franchisor's
enforcement of the covenants contained in this Section 11 Developer agrees to pay all costs and expenses
(including reasonable attorneys' fees) that Franchisor incurs m connection with the enforcement of this
Section 11

F Notwithstanding the foregoing. Franchisor reserves the nght, in its sole discretion, to
reduce the period of time or geographic scope of the non-competition covenants set forth in this Section
11 and m Exhibit E, by written notice to Developer

12 RELATIONSHIP OF THE PARTIES

A The parties agree that this Agreement does not create a fiduciary relationship between
them, that Developer is an independent contractor and must at all times represent itself as an independent
contractor This Agreement does not create either party as an agent, legal representative, subsidiary, joint
venturer, partner, employee or jomt employer Developer shall hold itself out to the public as an
mdependent contractor operating pursuant to this Agreement Developer agrees to take any action
necessary to that end, includmg without limitation, exhibitmg a notice on signage and member contracts,
as required by Franchisor as to content and manner of disclosure

2015 Development Agreement 11
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B Developer understands and agrees that nothmg in this Agreement authonzes Developer to
make any contract, agreement, warranty or representation on Franchisor's behalf, or to incur any debt or
other obligation m Franchisor's name and that Franchisor shall in no event assume liability for, or be
deemed liable under this Agreement as a result of any such action, or for any act or omission of
Developer in the conduct of its busmess pursuant to this Agreement or any claim or judgment arising
therefrom

C Developer and each of the Pnncipals shall, at all times, indemmfy and hold harmless
Franchisor and its affiliate, successors and assigns £md the officers, directors, shareholders, agents,
representatives and employees of each of them ("Indemnitees") from all losses and expenses mcurred in
connection with any formal or informal action, suit, proceeding, claim, demand, investigation or inquiry
or any settlement thereof, which arises out of or is based upon the action or negligence of Developer or
any Pnncipal in any of the following

(1) The infringement, alleged infringement, or any other violation or alleged

violation of any Proprietary Mark or other propnetary nght owned by Franchisor,

(2) Claims of sexual harassment or discrimination by Developer's employees or by a

guest at the Studio,

(3) The violation of any federal, state or local law, regulation, rule, standard or
directive, or any industry standard, including without limitation, health, samtation and safety laws and
regulations,

(4) Libel, slander or any other form of defamation of Franchisor or the System, by
Developer or the Pnncipals,

(5) The violation or breach by Developer or any of the Pnncipals of any warranty,
representation, agreement or obligation of this Agreement or any Franchise Agreement, and

(6) Acts, errors or omissions of Developer or any of its agents, servants, employees,
contractors, partners, affiliates or representatives

Notwithstanding anything contained m this Section 12(C), Developer will not be required to
indemnify, defend or hold Franchisor harmless for any claims or causes of action that arise solely out of
Franchisor's gross negligence or willful misconduct

D Developer and each of the Pnncipals agree to give Franchisor immediate notice of any
such action, suit, proceedmg, claim, demand, inquiry or investigation

E Franchisor may, at any time and without notice, as it, m its reasonable discretion,
consent, or agree to settlement, or take such other remedial or corrective action as it deems expedient with
respect to the action, suit, proceeding, claim, demand, inquiry or investigation

F All losses and expenses incurred under this Section 12 shall be chargeable to and shall be
paid by Developer or any of the Principals pursuant to this Section 12, regardless of any actions, activity
or defense undertaken by Franchisor or the subsequent success or failure of such actions, activity or
defense However, Franchisor will indemnify Developer from losses or expenses resulting from the direct
result of Franchisor's negligence or intentional acts

2015 Development Agreement 12
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G The phrase "losses and expenses" shall include, without limitation, all monetary losses,
compensatory, exemplary or punitive damages, fines, actual costs, expenses, lost profits, reasonable
attorneys' fees, court costs, settlement amounts, judgments, damages to Franchisor's reputation and
goodwill, costs of fmancing or advertising matenal and media costs and all expenses of recall, refunds,
compensation, public notices and such other amounts incurred in connection with the matters described

H Developer must give Franchisor notice of any such action immediately upon Developer
having received notice of any such action, claim or proceeding

I Under no circumstances shall Indemnitees be required or obligated to seek recovery from

third parties or otherwise mitigate their losses m order to maintain a claim against Developer Developer
and the Principals agree that the failure of Franchisor to pursue recovery or mitigate loss fi-om third
parties will in no way reduce the amounts recoverable from Developer or the Pnncipals

J Developer and the Pnncipals expressly agree that the terms of this Section 12 shall
continue in full force and effect after the termination, expiration or transfer of this Agreement or any
interest herein

13 PROPRIETARY MARKS

A Developer acknowledges that Developer has no interest in or to the Propnetary Marks

and Developer's nght to use the Propnetary Marks is denved solely from the individual Franchise
Agreements entered into between Developer and Franchisor for the purpose of operating CLUB
PILATES Studios Developer agrees that all usage of the Propnetary Marks by Developer and any
goodwill established exclusively benefits Franchisor Developer agrees that after termination or
expiration of this Agreement, Developer will not, except with respect to CLUB PILATES Studios
operated by Developer under individual Franchise Agreements, directly or indirectly, at any time or in
any manner identify itself or any business as a Developer or former Developer of, or otherwise associated
with. Franchisor or use in any manner or for any purpose any Propnetaiy Mark or other indicia of a
CLUB PILATES Studio or any colorable imitation

B Developer must not use any Proprietary Mark as part of any corporate or trade names or
with any prefix, suffix, or other modifying words, terms, designs, or symbols, or in any modified form,
nor may Developer use any Proprietary Mark in connection with any business or activity, other than the
business conducted by Developer under Franchise Agreements entered into between Developer and
Franchisor, or m any other manner not explicitly authonzed in wntmg by Franchisor

C Developer must immediately notify Franchisor in wnting of any apparent mfrmgement of

or challenge to Developer's use of any Propnetary Mark, or claun by any person of any rights in any
Propnetary Mark or similar trade name, trademark, or service mark of which Developer becomes aware
Developer must not communicate with any person other than Franchisor and its counsel regardmg any
infringement, challenge or claim Franchisor has sole discretion to take action it deems appropnate and
the nght to exclusively control any litigation, U S Patent and Trademark Office proceedmg or other
admimstrative proceeding ansing out of any infringement, challenge, or claim or otherwise relating to any
Propnetary Mark

D Franchisor has registered the domain name vww clubpilatesstudio com Developer
acknowledges that Franchisor is the lawful and sole owner of this domain name, which incorporates the
trademark CLUB PILATES Developer agrees not to register the trademark CLUB PILATES or any of
the Propnetary Marks now or hereafter owned by Franchisor or any abbreviation, acronym or variation of
the Propnetaiy Marks, or any other name that could be deemed confusingly similar, as Internet domain

2015 Development Agreement 13
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accuracy of this information. Any action you take upon the information you find on this website (FranChimp.com), is strictly at your own risk. We will not be liable for any losses and/or damages in connection with the use of our website.
names, including, but not limited to, genenc and country code top level domain names available at the
present time or m the future

E Developer agrees and acknowledges that this Agreement does not grant Developer any
nghts whatsoever to use any Proprietary Mark, and that such rights are only granted through Developer's
timely execution of a Franchise Agreement that will govern the operation of a CLUB PILATES Studio
that Developer is required to open pursuant to the Development Schedule

14 TERMINATION

A Franchisor may terminate this Agreement for a matenal default of this Agreement by
Developer and all rights granted herein shall automatically terminate upon written notice to Developer,
upon the occurrence of any of the following

(1) If Developer becomes insolvent, makes a general assignment for the benefit of
creditors, files a voluntary petition in bankruptcy, or an involuntary petition is filed against Developer in
bankruptcy, or Developer is adjudicated bankrupt, or if a bill in equity or other proceeding for the
appointment of a receiver of Developer or other custodian for Developer or assets is filed and consented
to by Developer, or if a receiver or other custodian (permanent or temporary) of Developer's assets or
property, or any part thereof, is appointed by a court of competent jurisdiction, or if a proceeding for a
composition of creditors under any state or federal law should be imtiated against Developer, or if a final
judgment remains unsatisfied or of record for thuly (30) days or longer, (unless supersedeas bond is
filed), or if Developer is'dissolved, or if execution is levied against Developer, or if a suit to foreclose any
lien or mortgage against the premises or Studio is levied, or if the real or personal property of Studio is
sold after levy thereon by any sheriff, marshal or law officer,

(2) If Developer or any of its Pnncipals fail to comply with Section 11 of this
Agreement,

(3) If Developer or a Pnncipal discloses the contents of the Manuals or other

confidential information contrary to this Agreement,

(4) If an immediate threat or danger to public health or safety results from the
operation of a Studio operated by Developer under a Franchise Agreement,

(5) If Developer or a Principal has made matenal misrepresentations in connection

with its application for the franchise,

(6) If Developer fails on three (3) or more occasions within any one (1) year penod
to comply with one (1) or more provisions of this Agreement, whether or not such failures to comply are
cured after notice thereof is delivered to Developer, or

(7) Failure to comply with the conditions of transfer of any interest in Developer as
required of this Agreement

B Franchisor may terminate this Agreement and all rights granted herein, upon thirty (30)
days wntten notice to Developer, or a less time as specified below, for a material default of this
Agreement, which shall constitute good cause for termmation and the failure of Developer to cure the
good cause for termination within the notice penod Good cause for termination shall be the occurrence
of any one of the following events of default

2015 Development Agreement 14
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(1) If Developer fails to meet the development requirements set forth in the
Development Schedule,

(2) If Developer fails to develop, open and operate each Studio and execute each
Franchise Agreement in compliance with this Agreement,

(3) If Developer fails to designate a qualified replacement Representative,

(4) If Developer misappropriates, misuses or makes any unauthonzed use of the

Propnetary Marks or materially impairs the goodwill associated with the Propnetary Marks or with the
System and does not cure such default followmg wntten notice from Franchisor,

(5) If Developer, fails, refuses or is unable to promptly pay when due any monetary
obligation to Franchisor or its affiliate required by this Agreement, or by any Franchise Agreement or any
other agreement between the parties and does not cure the monetary default within fourteen (14) days
following written notice from Franchisor,

(6) If Developer fails to correct a deficiency of a health, sanitation, or safety issue

after notice of such deficiency is issued by a local, state, or federal agency or regulatory authority, or

(7) If Developer fails to comply with any other matenal term or material condition
imposed by this Agreement or any Franchise Agreement executed pursuant thereto

C Failure of Developer to cure the default within the specified time, or a longer period of
time as applicable law may require, will result in Developer's rights under this Agreement to be
terminated effective on the expiration of the notice penod, and without further notice to Developer

D Upon termination of this Agreement, Developer has no nght to establish or operate any
Studio for which an individual Franchise Agreement has not already been executed by both Franchisor
and Developer, as well as delivered to Developer, as of the date of termination Franchisor, effective upon
termination of this Agreement, shall have the absolute nght and is entitled to establish, and to license
others to establish, CLUB PILATES Studios in the Development Area, except as may be otherwise
provided under any Franchise Agreement which is then m effect between Franchisor and Developer

E No default under this Agreement shall constitute a default under any Franchise
Agreement between the parties, unless Developer's acts or omissions also violate the terms and
conditions of the applicable Franchise Agreement

F No right or remedy herein conferred upon or reserved to the Franchisor is exclusive of

any other nght or remedy provided or permitted by law or in equity

15 EFFECT OF TERMINATION AND EXPIRATION

All obligations of Franchisor and Developer under this Agreement, which expressly or by their
nature survive the expiration or termination of this Agreement, continue m full force and effect after the
expiration or termination of this Agreement and until they are satisfied m full or by their nature expire

2015 Development Agreement 15
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16 TRANSFER OF INTEREST

A BY FRANCHISOR

Franchisor has the absolute right to transfer or assign this Agreement and all or any part of its
nghts, duties or obligations to any person or legal entity without the consent of or notice to Developer
This Agreement shall mure to the benefit of, and be binding on the successors and assigns of Franchisor

B DEVELOPER MAY NOT ASSIGN WITHOUT APPROVAL OF THE

FRANCHISOR

Developer understands and acknowledges that the rights and duties created by this Agreement are
personal to Developer and its owners and that Franchisor has granted these nghts to Developer in reliance
upon the individual or collective character, skill, aptitude, attitude, business ability and financial capacity
of Developer and/or its owners Unless otherwise provided with respect to an assignment to an entity
controlled by Developer as provided in Section 16(D), none of these nghts nor any ownership interest m
Developer may be voluntarily, involuntarily, directly or indirectly, assigned, sold, conveyed, pledged,
sub-franchised or otherwise transferred by Developer or its owners (including by merger or consolidation,
by issuance of additional secunties representing an ownership interest in Developer, by conversion of a
general partnership to a limited partnership, by transfer or creation of an interest as a general partner of a
partnership, by transfer of an mterest m Developer or in this Agreement in a divorce proceeding, or if
Developer or an owner of Developer dies, by will, declaration of or transfer in trust or the laws of the
intestate succession) without the approval of Franchisor Any attempted assignment or transfer without
such approval will constitute a breach of this Agreement and will not transfer any rights or interests to
such assignee or transferee

C CONDITIONS FOR APPROVAL OF ASSIGNMENT

If Developer is in substantial compliance with this Agreement, Franchisor shall not unreasonably
withhold Its approval of an assignment or transfer contemplated by Section 16(B) so long as the proposed
assignee or transferer has good and moral character, sufficient business expenence and aptitude to
develop and own and operate Studios, and otherwise meets Franchisor's then-current standards for
developers and System franchisees Franchisor may require that any one or more of the following
conditions be met before, or concurrently with, the effective date of any such assignment or transfer

(1) All the accrued monetary obligations of Developer or any of its affiliates and all
other outstanding obligations to Franchisor or its affiliate ansing under this Agreement or any Franchise
Agreement or other agreement between them and all trade accounts and any other debts to Franchisor, of
whatsoever nature, pnor to the transfer becoming effective shall be satisfied,

(2) Developer and its affiliates are not in matenal default of any substantive
provision of this Agreement, any amendment hereof or successor hereto, or any Franchise Agreement
granted pursuant to its terms, or other agreement between Developer or any of its affiliates and Franchisor
or Its affiliate,

(3) Developer and its Prmcipals, as applicable, shall have executed a general release,
in a form satisfactory to Franchisor, releasing Franchisor of any and all claims against Franchisor and its
affiliate and their respective past and present partners, the past and present officers, directors,
shareholders, partners, agents, representatives, independent contractors, servants and employees of each
of them, in their corporate and individual capacities, mcluding, without limitation, claims arising under or

2015 Development Agreement 16
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accuracy of this information. Any action you take upon the information you find on this website (FranChimp.com), is strictly at your own risk. We will not be liable for any losses and/or damages in connection with the use of our website.
related to this Agreement and any other agreements between Developer and Franchisor, or under federal,
state or local laws, rules, and regulations or orders,

(4) The transferee shall demonstrate to Franchisor's satisfaction that the transferee
meets the critena considered by Franchisor when reviewing a prospective developer's application for
development nghts, including, but not limited to. Franchisor's managerial and business experience
standards, that the transferee possesses good moral character, business reputation and credit rating, that
the transferee has the aptitude, financial resources and capital committed for the operation of the business,
and the geographic proximity of other temtones with respect to which transferee has been granted
development n^ts or of other CLUB PILATES Studios operated by transferee, if any,

(5) The transferee shall sign a wntten assumption agreement, m a form prescnbed by
Franchisor, assuming full, unconditional, jomt and several liability from the date of the transfer of all
obligations, covenants and agreements of Developer m this Agreement, and, if transferee is a corporation,
limited liability company or a partnership, transferee's shareholders, partners, members or other investors,
as applicable, shall also execute such agreement,

(6) Developer shall pay a transfer fee equal to 50% of the Development Fee to
Franchisor at the time of transfer, unless the transfer is being made (i) to an immediate family member of
Developer that Franchisor approves pursuant to Section 16(F), or (ii) in the form of an encumbrance of
the assets of any Franchised Business (or a subordinating Franchisor's security interest in such assets) as
a necessary condition to obtain SBA or traditional bank financing,

(7) Developer acknowledges and agrees that each condition, which must be met by
the transferee, is reasonable and necessary, and

(8) Developer must pay any referral fees or commissions that may be due to any
franchise broker, sales agent or other third party upon the occurrence of such assignment

Franchisor's consent to a transfer of any interest in Developer described herein shall not
constitute a waiver of any claims it may have against the transfemng party, nor shall it be deemed a
waiver of Franchisor's right to demand exact compliance with any of the terms of this Agreement by the
transferee Upon an approved transfer under this Section, Developer will only be bound by, and liable m
connection with, its post-term obligations under this Agreement

D ASSIGNMENT TO A CORPORATION OR LIMITED LIABILITY COMPANY

(1) Notwithstanding the provisions of this Section 16 of this Agreement, upon thirty
(30) days' prior wntten notice to Franchisor, and without payment of a transfer fee. Developer may assign
this Agreement to a corporation or limited liability company that conducts no business other than the
development and/or operation of CLUB PILATES Studios Developer shall be the owner of all the
voting stock or interest of the corporation or lunited liability company, or if Developer is more than one
mdividual, each individual shall have the same proportionate ownership interest m the corporation as he
had in Developer before the transfer Developer and each of its Principals, as applicable, may transfer,
sell or assign their respective interests in Developer, by and amongst themselves with Franchisor's pnor
written consent, which consent shall not be unreasonably withheld, but may be conditioned on
compliance with Section 11, except that such transfer, sale or assignment shall not effect a change in the
controlling interest in Developer

(2) Any person who is or becomes a shareholder or member of Developer or has or

acquires beneficial ownership of any shares of stock equal to or greater than ten percent (10%) ownership

2015 Development Agreement 17
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interest in Developer must execute an agreement in substantially the form of the attached Guaranty and
Assumption of Obligations undertakmg to be bound jointly and severally to all provisions of this
Agreement Developer must fiirmsh Franchisor at any time upon request a certified copy of the articles of
incorporation or articles of orgamzation and a list, in a form Franchisor reqmres, of dl shareholders or
members of record and all persons havmg beneficial ownership of shares of stock, reflectmg theu
respective interests in Developer

E RIGHT OF FIRST REFUSAL

If Developer receives and desires to accept any bona fide offer to transfer an ownership mterest in
this Agreement from a thu-d party, then the Developer shall promptly notify Franchisor m writing and
send Franchisor an executed copy of the contract of transfer Franchisor shall have the nght and option,
exercisable within thirty (30) days after actual receipt of such notification or of the executed contract of
transfer which shall describe the terms of the offer, to send written notice to Developer that Franchisor
intends to purchase the Developer's interest on the same terms and conditions offered by the third party
Closing on the purchase must occur within sixty (60) days from the date of notice by Franchisor to the
Developer of Franchisor's election to purchase If Franchisor elects not to accept the offer within the
thirty (30) day penod. Developer shall have a penod not to exceed sixty (60) days to complete the transfer
subject to the conditions for approval set forth in Section 16(C) of this Agreement Any material change
m the terms of any offer before closing shall constitute a new offer subject to the same nghts of first
refusal by Franchisor as in the case of an mitial offer Failure of Franchisor to exercise the option
afforded by this Section 16 shall not constitute a waiver of any other provision of this Agreement If the
offer from a third party provides for payment of consideration other than cash or involves certain
intangible benefits. Franchisor may elect to purchase the mterest proposed to be sold for the reasonable
cash equivalent, or any publicly-traded securities, including its own, or intangible benefits similar to those
being offered If the parties cannot agree within a reasonable time on the reasonable cash equivalent of
the non-cash part of the offer, then such amount shall be determined by an independent appraiser
designated by Franchisor, and his determination shall be binding

F DEATH OR DISABILITY

Upon the death or permanent disability of Developer (or the managing shareholder, managing
member or partner), the executor, administrator, conservator or other personal representative of that
person, or the remaining shareholders, partners or members, must appoint a competent manager that is
approved by Franchisor within mnety (90) days from the date of death or permanent disability (the "90
Day Period") Before the end of the 90 Day Penod, the appointed manager must attend and successfully
complete Franchisor's trammg program and must either execute Franchisor's then-current form of area
development agreement for the unexpired term of this Agreement, or furnish a personal guaranty of any
partnership, corporate or lunited liability company Developer's obligations to Franchisor and Franchisor's
affiliates If the Studio is not being managed by a Franchisor approved manager during the 90 Day
Penod, Franchisor is authorized, but is not required, to immediately appomt a manager to maintain the
operations of Developer's Studios for and on behalf of Developer until an approved assignee is able to
assume the management and operation of the Studio Franchisor's appointment of a manager of the
Studio does not relieve Developer of his obligations, and Franchisor is not liable for any debts, losses,
costs or expenses incurred in the operations of the Studio or to any creditor of Developer for any
products, materials, supplies or services purchased by the Studio dunng any period in which it is managed
by Franchisor's appointed manager Franchisor has the nght to charge a reasonable fee for management
services and to cease to provide management services at any time Franchisor's right of first refusal set
forth in Section 16(E) will not apply to a transfer under this Section if the transferee is an immediate
family member of Developer that Franchisor approves

2015 Development Agreement 18
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G PUBLIC OR PRIVATE OFFERINGS

(1) Developer acknowledges that the written information used to raise or secure
funds can reflect upon Franchisor Developer agrees to submit any wntten information intended to be
used for that purpose to Franchisor before its inclusion in any registration statement, prospectus or similar
offenng circular or memorandum This reqmrement applies under the following conditions (i) if
Developer attempts to raise or secure funds by the sale of secunties m Developer or any affiliate of
Developer (mcluding common or preferred stock, bonds, debentures or general or lunited partnership
interest) and (ii) if any of its owners attempt to raise or secure funds by the sale of secunties in Developer
or any affiliate of Developer (including common or preferred stock, bonds, debentures or general or
limited partnership interests) Developer (or any of its owners) agrees not to use the written materials
submitted to Franchisor or any other wntten matenals to raise or secure funds unless and until Franchisor
approves of the language No information respecting Franchisor or its affiliate shall be included in any
secunties disclosure document, unless that information has been furnished to Franchisor, in wnting,
pursuant to the wntten request of the Developer The written request shall state the specific purpose for
which the information is to be used Should Franchisor, in its sole discretion, object to any reference to
Franchisor or its affiliate or any of their businesses in the offering literature or prospectus, the literature or
prospectus shall not be used unless and until the objections of Franchisor are withdrawn Franchisor
assumes no responsibility for the offenng whatsoever Developer must pay Franchisor a public offenng
fee of Three Thousand Five Hundred Dollars ($3,500) for the costs to Franchisor to review the
information The written consent of Franchisor pursuant to this Paragraph G does not imply or constitute
the approval of Franchisor with respect to the method of financmg, the offenng literature submitted to
Franchisor or any other aspect of the offenng

(2) The prospectus or other literature utilized in any offering must contain the
following language in bold-face type on the fu-st textual page

"NEITHER CLUB PILATES FRANCHISE, LLC NOR ITS AFFILIATE NOR

ANY OF ITS AFFILIATE'S SUBSIDIARIES IS DIRECTLY OR INDIRECTLY
THE ISSUER OF THE SECURITIES OFFERED NEITHER CLUB PILATES
FRANCHISE, LLC NOR ITS AFFILIATE NOR ANY OF ITS AFFILIATE'S
SUBSIDIARIES ASSUMES ANY RESPONSIBILITY WITH RESPECT TO THIS
OFFERING AND/OR THE ADEQUACY OR ACCURACY OF THE
INFORMATION SET FORTH, INCLUDING ANY STATEMENTS MADE WITH
RESPECT TO ANY OF THEM NEITHER CLUB PILATES FRANCHISE, LLC
NOR ITS AFFILIATE NOR ANY OF ITS AFFILIATE'S SUBSIDIARIES
ENDORSES OR MAKES ANY RECOMMENDATION WITH RESPECT TO THE
INVESTMENT CONTEMPLATED BY THIS OFFERING "

(3) Developer and each of its owners agrees to indemnify, defend and hold harmless
Franchisor and its affiliate, and their respective officers, directors, employees and agents, fi-om any and all
claims, demands, liabilities, and all costs and expenses (including reasonable attorneys' fees) incurred by
Franchisor as the result of the offer or sale of securities This Agreement applies to any and all claims,
demands, liabilities, and all costs and expenses (including reasonable attorneys' fees) asserted by a
purchaser of any secunty or by a governmental agency Franchisor has the right (but not the obligation)
to defend any claims, demands or liabilities and/or to participate in the defense of any action to which
Franchisor or its affiliate or any of their respective officers, directors, employees or agents is named as a
party

2015 Development Agreement 19
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H NOTICE TO FRANCHISOR

Provided Developer is not then a public company, if any person holding an interest in Developer
(other than Developer or a Principal, which parties shall be subject to the provisions set forth above)
transfers such interest, then Developer shall promptly notify Franchisor of such proposed transfer in
writing and provide mformation as Franchisor may reasonably request before the transfer The transferee
may not be one of Franchisor's competitors The transferee must execute a Confidentiality Agreement
and Ancillary Covenants Not to Compete in the form then required by Franchisor, which form shall be m
substantially the same form attached hereto as Exhibit E Franchisor also reserves the right to designate
the transferee as one of the Pnncipals If Developer is a public company, this provision applies only to
transfers m interest by Pnncipals or to any person or entity controlling more than ten percent (10%) of
Developer's votmg stock

17 APPROVALS

A Wherever this Agreement requires the pnor approval or consent of Franchisor, Developer
shall make a timely written request to Franchisor for such approval or consent

B Franchisor makes no warranties or guarantees upon which Developer may rely and
assumes no liability or obligation to Developer or to any third party to which it would not o^erwise be
subject, by providing any waiver, approval, advise, consent, or services to Developer in connection with
this Agreement, or by any reason of neglect, delay or denial of any request therefor

18 NONWAIVER

A No failure of Franchisor to exercise any power reserved to it by this Agreement, or to

insist upon stnct compliance by Developer or Pnncipals with any obligation or condition hereunder, and
no custom or practice of the parties at variance with the terms hereof, shall constitute a waiver or estoppel
of Franchisor's nght to demand exact compliance with any of the terms herein and Developer and the
Principals warrant and undertake that it shall not rely on such failure, custom or practice Waiver by
Franchisor of any particular default by Developer or any of the Principals shall not affect or impair
Franchisor's nghts with respect to any subsequent default of the same, similar or different nature, nor
shall delay, forbearance, or omission of Franchisor to exercise any power or nght ansing out of any
breach or default by its other developers or by Developer of any of the terms, provisions, or covenants
hereof, affect or impair Franchisor's right to exercise the same, nor shall such constitute a waiver by
Franchisor of any nght hereunder, or the nght to declare any subsequent breach or default and to
terminate this Agreement pnor to the expiration of its term Subsequent acceptance by Franchisor of any
payments due to it hereunder shall not be deemed to be a waiver by Franchisor of any preceding breach
by Developer of any terms, covenants or conditions of this Agreement

B All nghts and remedies of the parties hereto shall be cumulative and not alternative, in
addition to and not exclusive of any other rights or remedies which are provided for herein or which may
be available at law or in equity in case of any breach, failure or default or threatened breach, failure or
default of any term, provision or condition of this Agreement, the nghts and remedies of the parties hereto
shall be continuing and shall not be exhausted by any one or more uses thereof, and may be exercised at
any time or from time to time as often as may be expedient, and any option or election to enforce any
such nght or remedy may be exercised or taken at any time and from time to time The expiration or
early termination of this Agreement shall not discharge or release Developer fi-om any liability or
obligation then accrued, or any liability or obligation continuing beyond, or ansing out of, the expiration
or early termination of this Agreement

2015 Development Agreement 20
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19 DEVELOPER'S RECORDS AND REPORTS

A Developer must keep accurate records concemmg all transactions and written
communications between Franchisor and Developer relating to the development and operation of Studios
m the Development Area. Franchisor's duly authonzed representative has the right, following reasonable
notice, at all reasonable hours of the day to examine all Developer's records with respect to the subject
matter of this Agreement, and has full and free access to records for that purpose and for the purpose of
making extracts All records must be kept available for at least three (3) years after preparation

B Developer must furnish to Franchisor monthly written reports regarding Developer's

progress on the development of CLUB PILATES Studios under this Agreement

20 NOTICES AND PAYMENTS

All wntten notices and reports permitted or required to be delivered by the provisions of this
Agreement or of the Manuals shall be deemed so delivered at the time delivered by hand or by e-mail
with receipt confirmed by the receiving party or one (1) busmess day after sendmg by overnight couner
with delivery confirmed and addressed to the party to be notified at its most current address of which the
notifying party has been notified The following addresses for the parties shall be used unless and until a
different address has been designated by wntten notice to the other party

Notices to Franchisor

Club Pilates Franchise, LLC

Attn Shaun Grove
3185 Pullman Street
Costa Mesa, Califorma 92626

With an additional copy to

Fisher Zucker, LLC

Attn Lane Fisher
21 South 2 P'Street
Philadelphia, PA 19103

Notice to Developer

ATTN

21 GOVERNING LAW

A This Agreement shall be governed by and construed m accordance with the laws of the
State of California, without reference to the state's conflict of laws pnnciples, except that any disputes or
actions involving any non-competition covenants set forth m any Franchise Agreement, includmg the
interpretation and enforcement thereof, must be governed by the law of the state where the Studio is
located

2015 Development Agreement 21
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22 ARBITRATION AND OTHER DISPUTE RESOLUTION PROVISIONS

A Developer must first bnng any claim or dispute between Developer and Franchisor to
Franchisor's management and make every effort to resolve the dispute mtemally Developer must exhaust
this internal dispute resolution procedure before Developer may bung Developer's dispute before a third
party This agreement to fu-st attempt resolution of disputes mtemally shall survive termination or
expiration of this Agreement

B At Franchisor's option, all claims or disputes between Developer and Franchisor (or its
affiliates) arising out of, or in any way relating to, this Agreement or any other agreement by and between
Developer and Franchisor (or its affiliates), or any of the parties' respective rights and obligations ansmg
from such agreement, which are not first resolved through the internal dispute resolution procedure sent
forth m Section 22(A) above, will be submitted first to mediation to take place at Franchisor's then-
current headquarters under the auspices of the American Arbitration Association ('AAA"), m accordance
with AAA's Commercial Mediation Rules tlien in effect Before commencing any legal action against
Franchisor or its affiliates with respect to any such claim or dispute. Developer must submit a notice to
Franchisor, which specifies, m detail, the precise nature and grounds of such claun or dispute Franchisor
will have a period of thirty (30) days following receipt of such notice withm which to notify Developer as
to whether Franchisor or its affiliates elects to exercise its option to submit such claim or dispute to
mediation Developer may not commence any action against Franchisor or its affiliates with respect to
any such claim or dispute in any court unless Franchisor fails to exercise its option to submit such claim
or dispute to mediation, or such mediation proceedings have been terminated either (i) as the result of a
written declaration of the mediator(s) that further mediation efforts are not worthwhile, or (ii) as a result
of a written declaration by Franchisor Franchisor's rights to mediation, as set forth herein, may be
specifically enforced by Franchisor Each party will bear its own cost of mediation and Franchisor and
Developer will sheire mediator fees equally This agreement to mediate will survive any termination or
expiration of this Agreement The parties will not be required to first attempt to mediate a controversy,
dispute, or claim through mediation as set forth in this Section 22(B) if such controversy, dispute, or
claim concerns an allegation that a party has violated (or threatens to violate, or poses an imminent risk of
violating) (i) any federally protected intellectual property rights in the Propnetaiy Marks, the System, or
in any confidential information, (ii) any of the restnctive covenants contained in this Agreement, and (in)
any of Developer's payment obligations under this Agreement

C Developer and Franchisor believe that it is important to resolve any disputes amicably,
quickly, cost effectively and professionally, and to return to business as soon as possible Subject to
Sections 22(D)-(E) of this Agreement, Developer and Franchisor have agreed that the provisions of this
Article 22 support these mutual objectives and, therefore, agree that any litigation, claim, dispute, suit,
action, controversy, or proceeding of any type whatsoever including any claim for equitable relief and/or
where either party is actmg as a "private attorney general," smng pursuant to a statutoiy claim or
otherwise, between or mvolvmg Developer and Franchisor on whatever theory and/or facts based, and
whether or not arising out of this Agreement, ("Claim") will be processed in the following manner

a Developer and Franchisor each expressly waives all rights to any court proceeding,
except as expressly provided in Sections 22(B) and 22(C), below

b All Claims shall be submitted to and resolved by binding arbitration m Orange County,
California, before and m accordance with the arbitration rules of the American
Arbitration Association Judgment upon the award rendered by the arbitrator shall be
entered m any Court having junsdiction thereof

2015 Development Agreement 22
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c Franchisor and Developer agree that any arbitration between Franchisor and Developer
shall be of Developer's individual claim and that the claim subject to arbitration shall not
be arbitrated on a class-wide basis

d This arbitration provision shall be deemed to be self-executmg, and m the event either
party fails to appear at any properly noticed arbitration proceeding, an award may be
entered against such party notwithstanding said failure to appear

e In no event shall Franchisor be liable to Developer for pumtive damages in any action
ansing out of or relating to this Agreement, or any breach, termination or cancellation
hereof

f Any arbitration proceedmg conducted under this Section, includmg all demands, filings
and evidence submitted m connection therewith, must be kept strictly confidential, unless
Franchisor agrees otherwise in wnting

D Developer acknowledges and agrees that irreparable harm could be caused to Franchisor
by Developer's violation of certain provisions of this Agreement and, as such, m addition to any other
relief available at law or equity, Franchisor shall be entitled to obtain in any court of competent
jurisdiction, without bond, restraimng orders or temporary or permanent mj unctions in order to enforce,
among other items, the provisions of this Agreement relating to (i) Developer's use of the Proprietary
Marks and confidential information, (ii) the in-term covenant not to compete, as well as any other
violations of the restrictive covenants set forth in this Agreement, (iii) Developer's obligations on
termination or expiration of this Agreement, (iv) disputes and controversies based on or ansing under the
Lanham Act, as now or hereafter amended, (v) disputes and controversies involving enforcement of the
Franchisor's rights with respect to confidentiality under this Agreement, and (vi) to prohibit any act or
omission by Developer or its employees that constitutes a violation of applicable law, threatens
Franchisor's franchise system or threatens other franchisees of Franchisor Developer's only remedy if
such an injunction is entered will be the dissolution of the injunction, if appropriate, and Developer
waives all damage claims if the injunction is wrongfully issued

E Franchisor's officers, directors, shareholders, agents and/or employees are express third
party beneficiaries of the provisions of this Agreement, including the dispute resolution provisions set
forth in Section 22 of this Agreement, each having authonty to specifically enforce the right to mediate
claims asserted against such person(s) by Developer

F As a condition precedent to commencing an action for damages or for violation or breach

of this Agreement, Developer must notify Franchisor withm thirty (30) days after the occurrence of the
violation or breach, and failure to timely give such notice shall preclude any claim for damages

G Developer shall not withhold all or any part of any payment to Franchisor or any of its
affiliates on the grounds of Franchisor's alleged nonperformance or as an offset against any amount
Franchisor or any of Franchisor's affiliates allegedly may owe Developer under this Agreement or any
related agreements

H Developer further agrees that no cause of action ansing out of or under this Agreement
may be maintained by Developer agamst Franchisor unless brought before the expiration of one (1) year
after the act, transaction or occurrence upon which such action is based or the expiration of one year after
the Developer becomes aware of facts or circumstances reasonably indicating that Developer may have a
claim agamst Franchisor hereunder, whichever occurs sooner, and that any action not brought within this
period shall be barred as a claim, counterclaim, defense, or set-off Developer hereby waives the right to

2015 Development Agreement 23
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accuracy of this information. Any action you take upon the information you find on this website (FranChimp.com), is strictly at your own risk. We will not be liable for any losses and/or damages in connection with the use of our website.
obtain any remedy based on alleged fraud, misrepresentation, or deceit by Franchisor, mcluding, without
limitation, rescission of this Agreement, m any mediation, judicial, or other adjudicatory proceeding
arising hereunder, except upon a ground expressly provided m this Agreement, or pursuant to any nght
expressly granted by any applicable statute expressly regulating the sale of franchises, or any regulation
or rules promulgated thereunder

I Developer hereby waives to the fullest extent permitted by law, any nght to or claim for
any pimitive, exemplary, incidental, mdirect, special or consequential damages (mcluding, without
limitation, lost profits) gainst Franchisor ansmg out of any cause whatsoever (whether such cause be
based in contract, negligence, stnct liability, other tort or otherwise) and agrees that m the event of a
dispute, that Developer's recovery is limited to actual damages If any other term of this Agreement is
found or determined to be unconscionable or unenforceable for any reason, the foregoing provisions shall
continue m full force and effect, mcluding, without limitation, the waiver of any right to claim any
consequential damages Nothing in this Section or any other provision of this Agreement shall be
construed to prevent Franchisor from claiming and obtammg expectation or consequential damages,
including lost future royalties for the balance of the term of this Agreement if it is terminated due to
Developer's default, which the parties agree and acknowledge Franchisor may claim under this
Agreement

J THE PARTIES HEREBY AGREE TO WAIVE TRIAL BY JURY IN ANY ACTION,

PROCEEDING OR COUNTERCLAIM, WHETHER AT LAW OR EQUITY, REGARDLESS OF
WHICH PARTY BRINGS SUIT THIS WAIVER SHALL APPLY TO ANY MATTER
WHATSOEVER BETWEEN THE PARTIES HERETO WHICH ARISES OUT OF OR IS RELATED
IN ANY WAY TO THIS AGREEMENT OR THE PERFORMANCE OF EITHER PARTY

K THE PARTIES AGREE THAT ALL PROCEEDINGS ARISING OUT OF OR

RELATED TO THIS AGREEMENT WILL BE CONDUCTED ON AN INDIVIDUAL, NOT A CLASS-
WIDE BASIS, AND THAT ANY PROCEEDING BETWEEN DEVELOPER, DEVELOPER'S
GUARANTORS AND FRANCHISOR OR ITS AFFILIATES/OFFICERS/EMPLOYEES MAY NOT
BE CONSOLIDATED WITH ANY OTHER PROCEEDING BETWEEN FRANCHISOR AND ANY
OTHER THIRD PARTY

23 ENFORCEMENT

A SEVERABILITY AND SUBSTITUTION OF VALID PROVISIONS

(1) Except as expressly provided to the contrary m this Agreement, each section,
paragraph, term and provision of this Agreement, is considered severable and if, for any reason, any
portion of this Agreement is held to be invalid, contrary to, or in conflict with any applicable present or
fiiture law or regulation in a final, unappealable ruling issued by any court, agency or tribunal with
competent jurisdiction in a proceeding to which Franchisor is a party, that ruhng shall not impair the
operation of, or have any other effect upon, other portions of this Agreement as may remain otherwise
intelligible, which shall continue to be given full force and effect and bmd the parties to this Agreement,
although any portion held to be invalid shall be deemed not to be a part of this Agreement from the date
the time for appeal expires, if Developer is a party, otherwise upon Developer's receipt of a notice of non-
enforcement from Franchisor

(2) If any applicable and binding law or rule of any jurisdiction requires a greater
prior notice of the termination of this Agreement than is required in this Agreement, or the taking of some
other action not required, or if under any applicable and binding law or rule of any junsdiction, any
provision of this Agreement or any specification, standard or operating procedure Franchisor prescribes is

2015 Development Agreement 24
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accuracy of this information. Any action you take upon the information you find on this website (FranChimp.com), is strictly at your own risk. We will not be liable for any losses and/or damages in connection with the use of our website.
invalid or unenforceable, the pnor notice and/or other action required by law or rule shall be substituted
for the comparable provisions, and Franchisor has the nght, in its sole discretion, to modify the invalid or
unenforceable provision, specification, standard or operating procedure to the extent required to be valid
and enforceable Developer agrees to be bound by any promise or covenant imposing the maxunum duty
permitted by law which is prescribed withm the terms of any provision of this Agreement, as though it
were separately articulated m and made a part of this Agreement, that may result from stnking from any
of the provisions, or any specification, standard or operatmg procedure Franchisor prescnbes, any portion
or portions which a court may hold to be unenforceable m a final decision to which Franchisor is a party,
or from reducing the scope of any promise or covenant to the extent required to comply with a court
order Modifications to this Agreement shall be effective only in that junsdiction, unless Franchisor
elects to give them greater applicability, and this Agreement shall be enforced as originally made and
entered into m all other jurisdictions

B EXCEPTIONS

Neither Franchisor nor Developer are liable for loss or damage or deemed to be in breach of this
Agreement if its failure to perform its obligations results from (1) transportation shortages, inadequate
supply of labor, matenal or energy, or the voluntary foregoing of the n^t to acquue or use any of the
foregoing m order to accommodate or comply with the orders, requests, regulations, recommendations or
instructions of any federal, state or municipal government or any department or agency, (2) compliance
with any law, ruling, order, regulation, requirement or instruction of any federal, state, or mumcipal
government or any department or agency, (3) acts of God, (4) acts or omissions of the other party, (5)
fires, strikes, embargoes, war or not, or (6) any other similar event or cause Any delay resulting from
any of these causes shall extend performance accordingly or excuse performance, m whole or in part, as
may be reasonable

C RIGHTS OF PARTIES ARE CUMULATIVE

The rights of Franchisor and Developer under this Agreement are cumulative and no exercise or
enforcement by Franchisor or Developer of any nght or remedy precludes the exercise or enforcement by
Franchisor or Developer of any other nght or remedy which Franchisor or Developer is entitled by law to
enforce

D COSTS AND ATTORNEYS' FEES

If Developer is in breach or default of any monetary or non-monetary obligation under this

Agreement or any related agreement between Developer and Franchisor and/or Franchisor's affiliates,
and Franchisor engages an attorney to enforce Franchisor's rights (whether or not formal judicial
proceedmgs are initiated). Developer must reimburse Franchisor for all costs/expenses incurred in
connection with enforcing its nghts under this Agreement includmg all reasonable attorneys' fees, court
costs and arbitration expenses If Developer institutes any legal action to interpret or enforce the terms of
this Agreement, and Developer's claim in such action is denied or the action is dismissed. Franchisor is
entitled to recover Franchisor's reasonable attorneys' fees, and all other reasonable costs and expenses
incurred m defending agamst same, and to have such an amount awarded as part of the judgment in the
proceedmg

E VARIANCES

Developer acknowledges that Franchisor has and may at different times approve exceptions or
changes from the uniform standards of the System in Franchisor's absolute sole discretion, which
Franchisor deems desirable or necessary under particular circumstances Developer understands that he

2015 Development Agreement 25
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accuracy of this information. Any action you take upon the information you find on this website (FranChimp.com), is strictly at your own risk. We will not be liable for any losses and/or damages in connection with the use of our website.
has no nght to object to or automatically obtain such variances, and any exception or change must be
approved in advance from Franchisor m writing Developer understands existing Developers may operate
under different forms of agreements and that the rights and obligations of existing Developers may differ
materially from this Agreement

F BINDING EFFECT

This Agreement is binding upon the parties of this Agreement and their respective executors,
administrators, heirs, assigns and successors in interest, and shall not be modified except by written
agreement signed by both Developer and Franchisor

G CONSTRUCTION/INTEGRATION CLAUSE

This Agreement, all exhibits to this Agreement and all ancillary agreements executed
contemporaneously with this Agreement constitute the entire agreement between the parties with
reference to the subject matter of this Agreement and supersede any and all pnor negotiations,
undertakings, representations, and agreements Nothmg in this Agreement or in any related agreement,
however, is intended to disclaim the representations Franchisor made in the FDD that Franchisor
furmshed to Developer Developer acknowledges that Developer is entenng into this Agreement, and all
ancillary agreements executed contemporaneously with this Agreement, as a result of Developer's own
independent investigation of the franchised business and not as a result of any representations about
Franchisor made by Franchisor's shareholders, officers, directors, employees, agents, representatives,
independent contractors, attorneys, or Developers, which are contrary to the terms set forth in this
Agreement or of any franchise disclosure document, offering circular, prospectus, or other similar
document required or permitted to be given to Developer pursuant to applicable law

Developer hereby acknowledges and further represents and warrants to Franchisor that

1 Developer has placed no reliance on any oral or wntten statements, whether

referred to as representations, warranties, inducements, or otherwise, which are not contained in this
Agreement or in the Franchise Disclosure Document,

2 Developer has entered into this Agreement after making an independent

investigation of Franchisor's operations and the System,

3 Franchisor has not made any guarantee or provided any assurance that the
business location will be successful or profitable regardless of whether Franchisor may have approved of
the franchise or site location,

4 Developer has (a) read this Agreement in its entirety and understands its
contents, (b) been gven the opportumty to clanfy any provisions that Developer did not understand and
(c) had the opportunity to consult with professional advisors regarding the operation and effect of the
Agreement and the operation of the System,

5 Developer has, together with its advisors, sufficient knowledge and experience in
financial and business matters to make an informed decision with respect to the fi^chise offered by
Franchisor, and

6 Developer has received a copy of the Franchise Disclosure Document not later
than the first personal meeting held to discuss the sale of a franchise, or fourteen (14) calendar days

2015 Development Agreement 26
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accuracy of this information. Any action you take upon the information you find on this website (FranChimp.com), is strictly at your own risk. We will not be liable for any losses and/or damages in connection with the use of our website.
before execution of this Agreement or fourteen (14) calendar days before any payment of any
consideration

Except as may have been disclosed at Item 19 of Franchisor's Franchise Disclosure Document,
Developer represents and warrants to Franchisor that no claims, representations, or warranties regarding
the eammgs, sales, profits, success or failure of the franchised busmess have been made to Developer and
no such claims, representations or warranties have mduced Developer to enter mto this Agreement

Except for those changes permitted to be made unilaterally by Franchisor, no amendment, change
or variance from this Agreement is bmding on either party unless mutually agreed to by the parties and
executed by their authonzed officers or agents m wntmg

24 CAVEAT

A The success of the business venture contemplated to be undertaken by this Agreement is

speculative and depends, to a large extent, upon the ability of the Developer as an independent busmess
person, and the active participation of Developer m the daily affairs of the business as well as other
factors Franchisor does not make any representation or warranty, express or implied, as to the potential
success of the business venture contemplated hereby

B Developer acknowledges that it has entered into this Agreement after making an
independent investigation of Franchisor's operations and not upon any representation as to gross sales,
volume, potential earnings or profits which Developer in particular might be expected to realize, nor has
anyone made any other representation which is not expressly set forth in this Agreement, to induce the
Developer to accept this franchise and execute this Agreement

C Developer represents and acknowledges that he has received a copy of this Agreement,
with all blanks filled in, from Franchisor at least seven (7) calendar days before the date of execution of
this Agreement Developer further represents that he understands the terms, conditions and obligations of
this Agreement and agrees to be bound

25 MISCELLANEOUS

A Except as otherwise expressly provided, nothing in this Agreement is intended, nor shall
be deemed, to confer any rights or remedies upon any person or legal entity who is not a party to this
Agreement

B The headings of the several sections and paragraphs are for convenience only and do not
define, limit or construe the contents of sections or paragraphs

C The "Developer" as used m this Agreement is applicable to one (1) or more persons, a
corporation or a partnership or limited partnership or limited liability company as the case may be, and
the singular usage includes the plural and the masculine and neuter usages include the other and the
feminine If two (2) or more persons are at any time Developer under this Agreement, their obligations
and liabilities to Franchisor shall be joint and several References to "Developer" and "Assignee" which
are applicable to an mdividual or individuals shall mean the owner or owners of the equity or operating
control of Developer or the Assignee, if Developer or the Assignee is a corporation, partnership, limited
partnership or limited liability company

This Agreement shall be executed in multiple copies, each of which shall be deemed an onginal

2015 Development Agreement 27
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accuracy of this information. Any action you take upon the information you find on this website (FranChimp.com), is strictly at your own risk. We will not be liable for any losses and/or damages in connection with the use of our website.
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement under sea! on the
date first written above

FRANCHISOR DEVELOPER
CLUB PILATES FRANCHISE, LLC

By IF AN INDIVIDUAL

Pnnt Name By

Title Print Name

Date Date

Spouse Signature

Spouse Name

Date

IF A PARTNERSHIP, CORPORATION, OR
OTHER ENTITY

Pnnt Name

Title

Date

2015 Development Agreement 28
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accuracy of this information. Any action you take upon the information you find on this website (FranChimp.com), is strictly at your own risk. We will not be liable for any losses and/or damages in connection with the use of our website.
ATTACHMENT TO DEVELOPMENT AGREEMENT

GUARANTY AND ASSUMPTION OF OBLIGATIONS

TfflS GUARANTY AND ASSUMPTION OF OBLIGATIONS is given this day of _

, 20 , by , (each a "Guarantor")

In consideration of, and as an inducement to, the execution of that certain Area Development
Agreement (the "Area Development Agreement") by and between Club Filates Franchise, LLC (the
"Franchisor"), and ("Developer"), each of the undersigned (each, a "Guarantor")
hereby personally and unconditionally (a) guarantees to Franchisor, and its successor and assigns, for the
term of the Area Development Agreement and as provided in the Area Development Agreement, that
Developer shall punctually pay and perform each and every undertaking, agreement and covenant set
forth m the Area Development Agreement, and (b) agrees to be personally bound by, and personally
liable for the breach of, each and every obligation of Developer under the the Area Development
Agreement, both monetary obligations and non-monetary in nature, including without limitation, those
obligations related to confidentiality and non-disclosure, indemnification, the Proprietary Marks, the m-
term and post-term covenants against competition, as well as all other restnctive covenants, and the
governing law, venue, attorneys' fees and other dispute resolution provisions set forth m the Area
Development Agreement (that shall also apply to this Guaranty and Assumption of Obligations)

Each Guarantor hereby waives (1) acceptance and notice of acceptance by Franchisor of the
foregoing undertakings, (2) notice of demand for payment of any indebtedness or nonperformance of any
obligations guaranteed, (3) protest and notice of default to any party with respect to the indebtedness or
nonperformance of any obligations guaranteed, (4) any nght Guarantor may have to requme that an action
be brought against Developer or any other person as a condition of liability, and (5) the defense of the
statute of limitations m any action hereunder or for the collection of any indebtedness or the performance
of any obligation hereby guaranteed

Each Guarantor hereby consents and agrees that (1) such Guarantor's undertaking shall be direct,
immediate and independent of the liability of, and shall be joint and several with. Developer and any
other Guarantors, (2) Guarantor shall render any payment or performance required under the Area
Development Agreement upon demand if Developer fails or refuses punctually to do so, (3) Guarantor's
liability shall not be contingent or conditioned upon pursuit by Franchisor of any remedies against
Developer or any other person, (4) Guarantor's liability shall not be diminished, relieved or otherwise
affected by any extension of time, credit or other indulgence which Fremchisor may grant to Developer or
to any other person, including the acceptance of any partial payment or performance, or the compromise
or release of any claims, none of which shall m any way modify or amend this guaranty, which shall be
continuing and irrevocable during the term of the Area Development Agreement, (5) this undertaking will
continue unchanged by the occurrence of any bankruptcy with respect to Developer or any assignee or
successor of Developer or by any abandonment of the Area Development Agreement by a trustee of
Developer, (6) neither the Guarantor's obligations to make payment or render performance in accordance
with the terms of this undertaking nor any remedy for enforcement shall be impaired, modified, changed,
released or limited in any manner whatsoever by any impairment, modification, change, release or
limitation of the liability of Developer or its estate in bankruptcy or of any remedy for enforcement,
resulting from the operation of any present or future provision of the U S Bankruptcy Act or other statute,
or from the decision of any court or agency, (7) Franchisor may proceed against Guarantor and Developer
jointly and severally, or Franchisor may, at its option, proceed against Guarantor, without having
commenced any action, or having obtained any judgment against Developer, and (8) Guarantor shall pay
all reasonable attorneys' fees and all costs and other expenses incurred in any collection or attempt to

IN WITNESS WHEREOF, the parties hereto have executed and delivered this Guaranty on the
date stated on the first page hereof

PERSONAL GUARANTORS

[Insert Name of Guarantor] [Insert Name of Spouse]

The development nghts and obligations of Developer, , to timely

develop and open CLUB PILATES Studios shall be within the following described area

DEVELOPER FRANCHISOR

CLUB PILATES FRANCHISE, LLC

By By
Shaim Grove, President
Name

Title

DEVELOPMENT SCHEDULE

1 Development Schedule

Developer,. agrees to timely open CLUB PILATES Studios m

compliance with the following development schedule (the "Development Schedule") Developer further
agrees that failure to timely open the Studios in compliance with the Development Schedule shall cause
the rights of exclusivity granted to Developer regarding the geographic area defined m Exhibit A to be
forfeited

The Development Schedule is as follows

Expiration of Development Number of New Unit Franchises that Number of Unit Franchises
Period Must be Opened and Commence that Must be Open and
Operations Within Development Operating by the Expiration of
Period the Development Period

2 Forfeiture of Rights of Exclusivitv

Developer's failure to comply with the Development Schedule in any manner shall be grounds for
Franchisor to (a) terminate the Development Agreement to which this Development Schedule is attached
as an Exhibit, or (b) in lieu of such termination, terminate any exclusive or other territonal rights that
Developer may have within the Development Area or otherwise imder the Development Agreement

APPROVED

DEVELOPER FRANCHISOR

CLUB PILATES FRANCHISE, LLC

By By
Shaun Grove, President
Name

Title

2015 Development Agreemenl Exhibits
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accuracy of this information. Any action you take upon the information you find on this website (FranChimp.com), is strictly at your own risk. We will not be liable for any losses and/or damages in connection with the use of our website.
EXHIBIT C TO AREA DEVELOPMENT AGREEMENT

FRANCHISE AGREEMENT

2015 Development Agreement Eidiibits
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accuracy of this information. Any action you take upon the information you find on this website (FranChimp.com), is strictly at your own risk. We will not be liable for any losses and/or damages in connection with the use of our website.
EXHIBIT D TO AREA DEVELOPMENT AGREEMENT

STATEMENT OF OWNERSHIP INTERESTS AND PRINCIPALS

The following is a list of shareholders, partners, members or other investors in Developer,

including all investors who own or hold a direct or indirect mterest in Developer, and a
descnption of the nature of their interest

Name Percentage of Ownership/Nature of Interest

B The following is a list of all of Pnncipals described in and designated pursuant to this Area
Development Agreement, each of whom shall execute the Confidentiality Agreement and
Ancillary Covenants Not to Compete substantially in the form set forth in Exhibit E of this Area
Development Agreement

DEVELOPER FRANCHISOR

CLUB PILATES FRANCHISE, LLC

By By
Shaun Grove, President
Name

Title

2015 Development Agreement - Exhibits
This document was downloaded from franchimp.com. All the information on this website is published in good faith and for general information purpose only. FranChimp.com does not make any warranties about the completeness, reliability, and
accuracy of this information. Any action you take upon the information you find on this website (FranChimp.com), is strictly at your own risk. We will not be liable for any losses and/or damages in connection with the use of our website.
EXHIBIT E TO AREA DEVELOPMENT AGREEMENT

CONFIDENTIALITY AGREEMENT AND

ANCILLARY COVENANTS NOT TO COMPETE

This Agreement is made and entered into this day of , 20 , between CLUB
PILATES FRANCHISE, LLC, a Delaware limited hability company ('Franchisor"),
("Developer"), and ("Covenantor")

RECITALS

WHEREAS, Franchisor has obtained the nght to develop a umque system (the ' System") for the
development and operation of CLUB PILATES Studios under the name and marks CLUB PILATES
("Studios"), and

WHEREAS, the System includes, but is not limited to, certam trade names, service marks,
trademarks, logos, emblems and indicia of ongin, including, but not limited to, the marks CLUB
PILATES and other trade names, service marks, trademarks, logos, msignia, slogans, emblems, designs
and commercial symbols as Franchisor may develop in the future to identify for the public the source of
services and products marketed under the marks and under the System and representing the System's high
standards of quality, appearance, service and all information relating to the System and to the
development and operation of the Studio, includmg, without limitation, the operating manual.
Franchisor's traimng program, members and supplier lists, or other information or know-how distinctive
to a CLUB PILATES Studio, all of which Franchisor may change, improve and further develop and
which Franchisor uses m connection with the operation of the System (collectively, the "Confidential
Information"), and

WHEREAS, the Proprietary Marks and Confidential Information provide economic advantages to
Franchisor and are not generally known to, and are not readily ascertainable by proper means by.
Franchisor's competitors who could obtain economic value from knowledge and use of the Confidential
Information, and

WHEREAS, Franchisor has taken and intends to take all reasonable steps to maintain the
confidentiality and secrecy of the Confidential Information, and

WHEREAS, Franchisor has granted Developer the limited nght to develop a CLUB PILATES
Studio using the System, the Proprietary Marks and the Confidential Information, pursuant to an Area
Development Agreement entered into on , 20 ("Area Development
Agreement"), by and between Franchisor and Developer, and

WHEREAS, Franchisor and Developer have agreed m the Area Development Agreement on the
importance to Franchisor and to Developer and other licensed users of the System of restncting the use,
access and dissemmation of the Confidential Information, and

WHEREAS, It is necessary for certain employees, agents, independent contractors, officers,

directors and equity interest holders of Developer, or any entity having an interest in Developer
("Covenantor") to have access to and to use some of all of the Confidential Information in the
management and operation of Developer's CLUB PILATES Studio using the System, and

WHEREAS, Developer has agreed to obtain from those covenantors wntten agreements
protecting the Confidential Information and the System against unfair competition, and

WHEREAS, Covenantor wishes and needs to receive and use the Confidential Information in the
course of his employment or association m order to effectively perform the services for Developer, and

WHEREAS, Covenantor acknowledges that receipt of and the right to use the Confidential
Information constitutes independent valuable consideration for the representations, promises and
covenants made by Covenantor

NOW, THEREFORE, in consideration of the mutual covenant and obligations contained in this
Agreement, the parties agree as follows

Confidentiality Agreement

1 Franchisor and/or Developer shall disclose to Covenantor some or all of the Confidential
Information relating to the System All information and matenals, including, without limitation, manuals,
drawings, specifications, techmques and compilations of data which Franchisor provides to Developer
and/or Covenantor are deemed Confidential Information for the purposes of this Agreement

2 Covenantor shall receive the Confidential Information m confidence and must, at all
times, maintain them in confidence, and use them only in the course of his employment or association
with a Developer and then only in connection with the development and/or operation by Developer of a
CLUB PILATES Studio for so long as Developer is licensed by Franchisor to use the System

3 Covenantor shall not at any time make copies of any documents or compilations
contaimng some or all of the Confidential Information without Franchisor's express written permission

4 Covenantor shall not at any time disclose or permit the disclosure of the Confidential
Information except to other employees of Developer and only to the limited extent necessary to train or
assist other employees of Developer in the development or operation of a CLUB PILATES Studio

5 Covenantor must surrender any material containing some or all of the Confidential
Information to Developer or Franchisor, upon request, or upon termination of employment by Developer,
or upon conclusion of the use for which the information or material may have been furnished to
Covenantor

6 Covenantor shall not at any time, directly or indirectly, do any act that would or would
likely be injurious or prejudicial to the goodwill associated with the Confidential Information and the
System

7 Franchisor loans all manuals to Developer for limited purposes only and they remain the
property of Franchisor and may not be reproduced, m whole or m part, without Franchisor's written
consent

Covenants Not to Compete

1 In order to protect the goodwill and unique qualities of the System and the confidentiality
and value of the Confidential Information during the term of this Agreement, and in consideration for the
disclosure to Covenantor of the Confidential Information, Covenantor further agrees and covenants as
follows

b Not to employ, or seek to employ, any person who is at the time or was within
the precedmg one hundred eighty (180) days employed by Franchisor, its affiliate or any Developer of
Franchisor, or otherwise directly or indu-ectly induce such person to leave that person's employment
except as may occur in connection with Developer's employment of that person if permitted under the
Area Development Agreement, and

c Except with respect to Studios operated under a valid and existing Franchise
Agreement between Developer (or Developer's affiliates) and Franchisor, own, maintain, operate, engage
m, or have any financial or beneficial interest m (including any interest m corporations, partnerships,
trusts, limited liability companies, umncorporated associations or joint ventures), advise, assist or make
loans to, any Competing Business (as defined below) or a business that is of a character and concept
similar to a CLUB PILATES Studio For purposes of this Agreement, a' Competmg Business" is defined
as any busmess which denves at least ten percent (10%) of its revenue from sales generated from the
provision of massages, skin care treatments or other Approved Products and Services that are offered at a
CLUB PILATES Studio, or any business which grants franchises or licenses to others to operate such a
Competing Business

2 In further consideration for the disclosure to Covenantor of the Confidential Information

and to protect the uniqueness of the System, Covenantor agrees and covenants that for two (2) years
following the e^lrller of the expiration, termination or transfer of all Developer's interest in the Area
Development Agreement or the termination of his association with or employment by Developer,
Covenantor will not without the prior written consent of Franchisor

a Divert or attempt to divert, directly or indirectly, any business, business

opportunity or customer of the Studios to any competitor,

b Employ, or seek to employ, any person who is at the time or was within the
preceding one hundred eighty (180) days employed by Franchisor, its affiliate or any franchisee of
franchisor, or otherwise directly or indirectly induce such persons to leave that person's employment, and

c Except with respect to Studios operated under Franchise Agreements between

Developer and its affiliates, and Franchisor or its affiliate or any of its subsidianes, own, maintain,
operate, engage in, or have any financial or beneficial interest in (including any interest m corporations,
partnerships, trusts, limited liability compames, unincorporated associations or joint ventures), advise,
assist or make loans to, any Competing Business or a business that is of a character and concept similar to
a CLUB PILATES Studio (i) within the Development Area granted to Developer, or (ii) within a forty
(40) mile radius of the penmeter of the Development Area being granted to Developer or any other
designated territory or development area licensed by Franchisor to a CLUB PILATES Studio as of the
date of expiration, termination or transfer of all Developer's mterest in the Area Development Agreement
or the termination of Covenantor s association with or employment by Developer

Miscellaneous

1 Developer shall make all commercially reasonable efforts to ensure that Covenantor acts
as required by this Agreement

2 Covenantor agrees that in the event of a breach of this Agreement, Franchisor would be
irreparably injured and be without an adequate remedy at law Therefore, in the event of a breach, or

2015 Development Agreement Exhibits
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accuracy of this information. Any action you take upon the information you find on this website (FranChimp.com), is strictly at your own risk. We will not be liable for any losses and/or damages in connection with the use of our website.
threatened or attempted breach of any of the provisions. Franchisor is entitled to enforce the provisions of
this Agreement and is entitled, in addition to any other remedies available to it at law or m equity,
includmg the right to terminate the Area Development Agreement, to a temporary and/or permanent
injunction and a decree for the specific performance of the terms of this Agreement, without the necessity
of showing actual or threatened harm and without being required to furnish a bond or other secunty

3 Covenantor agrees to pay all expenses (including court costs and reasonable attorneys'
fees) incurred by Franchisor and Developer in enforcing this Agreement

4 Any failure by Franchisor to object to or take action with respect to any breach of this
Agreement by Covenantor shall not operate or be construed as a waiver of or consent to that breach or
any subsequent breach by Covenantor

5 TFQS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED AND

ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF [INSERT STATE WHERE
THE STUDIO IS LOCATED] AND COVENANTOR HEREBY IRREVOCABLY SUBMITS
HIMSELF TO THE JURISDICTION OF THE STATE COURT CLOSEST TO FRANCHISOR'S
THEN-CURRENT HEADQUARTERS OR, IF APPROPRIATE, THE UNITED STATES DISTRICT
COURT FOR THE DISTRICT FOR [INSERT STATE WHERE THE STUDIO IS LOCATED]
COVENANTOR HEREBY WAIVES ALL QUESTIONS OF PERSONAL JURISDICTION OR VENUE
FOR THE PURPOSE OF CARRYING OUT THIS PROVISION COVENANTOR HEREBY AGREES
THAT SERVICE OF PROCESS MAY BE MADE UPON HIM IN ANY PROCEEDING RELATING
TO OR ARISING UNDER THIS AGREEMENT OR THE RELATIONSHIP CREATED BY THIS
AGREEMENT BY ANY MEANS ALLOWED BY [INSERT STATE WHERE THE STUDIO IS
LOCATED[OR FEDERAL LAW COVENANTOR FURTHER AGREES THAT VENUE FOR ANY
PROCEEDING RELATING TO OR ARISING OUT OF THIS AGREEMENT SHALL BE ONE OF
THE COURTS DESCRIBED ABOVE IN THIS SECTION, PROVIDED, HOWEVER, WITH
RESPECT TO ANY ACTION WHICH INCLUDES INJUNCTIVE RELIEF OR OTHER
EXTRAORDINARY RELIEF, FRANCHISOR MAY BRING SUCH ACTION IN ANY COURT IN
ANY STATE WHICH HAS JURISDICTION

6 The parties acknowledge and agree that each of the covenants contained in this
Agreement are reasonable limitations as to time, geographical area, and scope of activity to be restrained
and do not impose a greater restraint than is necessary to protect the goodwill or other business interests
of Franchisor The parties agree that each of the foregoing covenants shall be construed as independent of
any other covenant or provision of this Agreement If all or any portion of a covenant in this Agreement
IS held unreasonable or unenforceable by a court or agency having valid junsdiction in any unappealed
final decision to which Franchisor is a part. Covenantor expressly agrees to be bound by any lesser
covenant subsumed within the terms of the covenant that imposes the maximum duty permitted by law as
if the resulting covenant were separately stated m and made a part of this Agreement

7 This Agreement contains the entue agreement of the parties regarding the subject matter
of this Agreement This Agreement may be modified only by a duly authorized writing executed by all
parties

8 All notices and demands requu-ed to be given must be in writmg and sent by personal
delivery, expedited delivery service, certified or registered mail, return receipt requested, first-class
postage prepaid, facsimile or electromc mail, (provided that the sender confirms the facsimile or
electronic mail, by sending an onginal confumation copy by certified or registered mail or expedited
delivery service within three (3) business days after transmission), to the respective parties at the

If directed to Franchisor, the notice shall be addressed to

Club Pilates Franchise, LLC

Attn Shaun Grove
3185 Pullman Street
Costa Mesa, California 92626

If directed to Developer, the notice shall be addressed to

Attention

If directed to Covenantor, the notice shall be addressed to

Attention

Any notices sent by personal delivery shall be deemed given upon receipt Any notices,given by
facsimile or electronic mail shall be deemed given upon transmission, provided confirmation is made as
provided above Any notice sent by expedited delivery service or registered or certified mail shall be
deemed given three (3) business days after the time of mailing Any change in the foregoing addresses
shall be effected by giving fifteen (15) days written notice of such change to the other parties Business
day for the purpose of this Agreement excludes Saturday, Sunday and the following national holidays
New Year's Day, Martin Luther King Day, Presidents' Day, Memorial Day, Independence Day, Labor
Day, Columbus Day, Veterans Day, Thanksgiving and Chnstmas

9 The nghts and remedies of Franchisor under this Agreement are fully assignable and
transferable and mure to the benefit of its respective parent, successor and assigns The respective
obligations of Developer and Covenantor hereunder may not be assigned by Developer or Covenantor
without the pnor written consent of Franchisor

EV WITNESS WHEREOF, the undersigned have entered into this Agreement as witnessed by their
signatures below

FRANCHISOR DEVELOPER

CLUB PILATES FRANCHISE, LLC (If Developer is a corporation)

Name of Corporation

By By _
Title Title

Pnnted Name
Developer

Developer

(If Developer is a Limited Liability Company)

Name of Limited Liability Company

By .
Title

RECEIPTS

This Disclosure Document summarizes provisions of the franchise agreement and other information in plain
language Read this Disclosure Document and all agreements carefully

If Club Pilates Franchise, LLC offers you a franchise, it must provide this Disclosure Document to you 14 calendar
days before you sign a binding agreement with, or make a payment to, the franchisor or an affiliate in connection
with the proposed franchise sale

New York, Oklahoma and Rhode Island require that we give you this Disclosure Document at the earlier of the
first personal meeting or 10 business days before the execution of the franchise agreement, or other agreement,
or the payment of any consideration that relates to the franchise relationship

Michigan, Oregon and Wisconsin require that we give you this Disclosure Document at least 10 business days
before the execution of any binding franchise agreement, or other agreement, or the payment of any
consideration, whichever comes first

If Club Pilates Franchise, LLC does not deliver this Disclosure Document on time or if it contains a false or
misleading statement, or a material omission, a violation of federal and state law may have occurred and should
be reported to The Federal Trade Commission, Washington D C 20580 and the appropriate State Agency
identified on Exhibit B

The franchisor is Club Pilates Franchise, LLC located at 3185 Pullman Street, Costa Mesa, CA 92626 The name,
principal business address, and telephone number of each Franchise Seller offering the Franchise are Anthony
Geisler and Shaun Grove. 3185 Pullman Street, Costa Mesa, CA 92626, (949) 346-9794, Lance Freeman. St
Gregory Development Group, LLC, 7720 Montgomery Rd , Suite 200, Cincinnati, OFI4S236, (513) 264-6940

Issuance Date April 14, 2015, as amended October 28, 2015 The effective date in each state is listed on the
State Cover Page Club Pilates Franchise, LLC authorizes the agents listed in Exhibit B to receive service of process
for It

I have received a Franchise Disclosure Document dated April 14. 2015. as amended October 28. 2015 This
Disclosure Document included the following Exhibits
A FRANCHISE AGREEMENT AND EXHIBITS
B LIST OF STATE AGENTS FOR SERVICE OF PROCESS AND STATE ADMINISTRATORS
C FINANCIAL STATEMENTS
D STATEMENT OF PROSPECTIVE FRANCHISEE
E TABLE OF CONTENTS OF THE OPERATIONS MANUAL
F GENERAL RELEASE OF ALL CLAIMS
G STATE SPECIFIC ADDENDA
H LIST OF FRANCHISEES AND THEIR OUTLETS
I LIST OF FRANCHISEES WHO CEASED TO DO BUSINESS UNDER THE FRANCHISE AGREEMENT
J MULTI UNIT DEVELOPMENT AGREEMENT
K RECEIPTS

(Print Name) (Signature)

Date
Keep this copy for your records

ITEM 23 '
RECEIPT
J ' This Disclosure Document summarizes provisions of the franchise agreement and other information in plain
language Read this Disclosure Document and all agreements carefully

The franchisor is Club Pilates Franchise, LLC located at 3185 Pullman Street, Costa Mesa, CA 92626 The name,
principal business address, and telephone number of each Franchise Seller offering the Franchise are Anthonv
Geisier and Shaun Grove. 3185 Pullman Street, Costa Mesa, CA 92626, (949) 346-9794, Lance Freeman. St
Gregory Development Group, LLC, 7720 Montgomery Rd , Suite 200, Cincinnati, OH 4S236, (513) 264-6940

I have received a Franchise Disclosure Document dated April 14, 2015. as amended October 28, 2015 This
Disclosure Document included the following Exhibits
A FRANCHISE AGREEMENT AND EXHIBITS
B LIST OF STATE AGENTS FOR SERVICE OF PROCESS AND STATE ADMINISTRATORS
C FINANCIAL STATEMENTS
D STATEMENT OF PROSPECTIVE FRANCHISEE
E TABLE OF CONTENTS OF THE OPERATIONS MANUAL
F GENERAL RELEASE OF ALL CLAIMS
G STATE SPECIFIC ADDENDA
H LIST OF FRANCHISEES AND THEIR OUTLETS
I LIST OF FRANCHISEES WHO CEASED TO DO BUSINESS UNDER THE FRANCHISE AGREEMENT
J MULTI UNIT DEVELOPMENT AGREEMENT
K RECEIPTS
L

(Print Name) (Signature)

Date
Please sign this copy of the receipt, date your signature, and return this form to us as described in Item 23

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