In Process - Franchise Disclosure Documents

FRANCHISE DISCLOSURE DOCUMENT

SIT MEANS SIT FRANCHISE, INC.

a Nevada Corporation

2900 E. Patrick Lane, Suite 2A

Las Vegas, Nevada 89120

(702) 877-4581

[email protected]

www.sitmeanssit.com

The franchise offered is for the operation of a dog training business using the “Sit Means Sit” system and standards. The total investment necessary to begin operation of a Sit Means Sit franchise is from $21,125 to $93,850. This includes between $15,930 to $17,570 of which must be paid to the franchisor or its affiliate.

This disclosure document summarizes certain provisions of your license agreement and other information in plain English. Read this 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 payment to, the licensor or an affiliate in connection with the proposed franchise sale. Note,

however, that no governmental 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 disclosure in different formats, contact Gina Amandola at 2900 E. Patrick Lane, Suite 2A, Las Vegas, Nevada 89120, (702) 877-4581.

The terms of your contract will govern your franchise relationship. Don’t rely on the disclosure document alone to understand your contract. Read your entire contract carefully. Show your contract and this disclosure document to an advisor, like an attorney or an accountant.

Buying a franchise is a complex investment. The information is this disclosure document can help you make up your mind. More information on franchising, such as “A Consumer’s Guide to Buying 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, D.C. 20580. You can also visit the FTC’s home page at www.ftc.gov for additional information. Call your state agency or visit your public library for other sources of information on franchising.

There may also be laws on franchising in your state. Ask your state agencies about them.

Issuance date: May 21, 2014

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MICHIGAN SPECIFIC-NOTICE

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: (a) A prohibition of 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 this 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 its 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 thirty (30) days, to cure each 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 franchised business are not subject to compensation. This subsection applies only if: (i) the term of the franchise is less than five (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 six (6) months 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 of Michigan. 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. This 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:

(i) The failure of the proposed transferee to meet the franchisor’s then current reasonable qualification or standards.

(ii) The fact that the proposed transferee is a competitor of the franchisor or sub-franchisor.

(iii) The unwillingness of the proposed transferee to agree in writing to comply with all lawful obligations.

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(iv) 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.

(g) 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 purchase the assets of 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 the subdivision. (h) 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 provision has been made for providing the required contractual services. The fact that there is a notice of this offering on file with the attorney general does not constitute approval, recommendation, or endorsement by the attorney general.

Any questions regarding this notice should be directed to the Attorney General’s Department for

the State of Michigan, Consumer Protection Division, Franchise Section, 670 Law Building, 525 W.

Ottawa Street, Lansing, Michigan 48913, (517) 373-7117.

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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 A FRANCHISE BY A STATE DOES NOT MEAN THAT THE STATE RECOMMENDS THE FRANCHISE OR HAS VERIFIED THE INFORMATION IN THIS DISCLOSURE DOCUMENT.

Call the state administrators listed in Exhibit H for information about the franchisor, about other franchisors, or about franchising in your state.

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 LICENSE AGREEMENT STATES THAT NEVADA LAW GOVERNS THE AGREEMENT, AND THIS LAW MAY NOT PROVIDE THE SAME PROTECTIONS AND BENEFITS AS LOCAL LAW. YOU MAY WANT TO COMPARE LAWS.

2. THE FRANCHISE AGREEMENT REQUIRES YOU TO RESOLVE DISPUTES WITH US BY LITIGATION AND MEDIATION ONLY IN NEVADA. OUT-OF-STATE LITIGATION AND MEDIATION MAY FORCE YOU TO ACCEPT A LESS FAVORABLE SETTLEMENT FOR DISPUTES. IT MAY ALSO COST YOU MORE TO LITIGATE OR MEDIATE WITH US IN NEVADA THAN IN YOUR OWN STATE.

3. THE FRANCHISE AGREEMENT REQUIRES YOU TO WAIVE YOUR RIGHTS TO A CLASS ACTION AND TO JURY TRIAL. THE FRANCHISE AGREEMENT ALSO REQUIRES YOU TO INDEMNIFY US FOR CERTAIN LIABILITIES ARISING OUT OF THE OPERATION OF YOUR CENTER, INCLUDING WHEN THE ACTIVE OR PASSIVE NEGLIGENCE OF FRANCHISOR IS ALLEGED OR PROVEN.

4. THE FRANCHISE AGREEMENT REQUIRES YOU TO PAY US LIQUIDATED DAMAGES IN THE EVENT THAT THE FRANCHISE AGREEMENT IS TERMINATED WITH CAUSE.

5. THERE MAY BE OTHER RISKS CONCERNING THIS FRANCHISE.

We may use the services of one or more FRANCHISE BROKERS or referral sources to assist us in selling our franchise. A franchise broker or referral source represents us, not you. We pay this person a fee for selling our franchise or referring you to us. You should make sure to do your own investigation of the franchise.

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STATE EFFECTIVE DATES

The following states require that the Franchise Disclosure Document be registered or filed with the state, or be exempt from registration: California, Hawaii, Illinois, 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:

California Effective Date: _______________ Hawaii Effective Date: _______________ Illinois Effective Date: _______________ Indiana Effective Date: _______________ Maryland Effective Date: _______________ Michigan Effective Date: _______________ Minnesota Effective Date: _______________ New York Effective Date: _______________ North Dakota Effective Date: _______________ Rhode Island Effective Date: _______________ South Dakota Effective Date: _______________ Virginia Effective Date: _______________ Washington Effective Date: _______________ Wisconsin Effective Date: _______________

In all the other states, the effective date of this Franchise Disclosure Document is the issuance date of May 21, 2014.

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Table of Contents

Page

Item 1 The Franchisor and any Parents, Predecessors, and Affiliates ................................................... 1

Item 2 Business Experience ........................................................................................................................ 2

Item 3 Litigation .......................................................................................................................................... 2

Item 4 Bankruptcy ...................................................................................................................................... 3

Item 5 Initial Fees ........................................................................................................................................ 3

Item 6 Other Fees ........................................................................................................................................ 4

Item 7 Estimated Initial Investment .......................................................................................................... 9

Item 8 Restrictions on Sources of Products and Services ...................................................................... 11

Item 9 Franchisee’s Obligations .............................................................................................................. 15

Item 10 Financing ..................................................................................................................................... 16

Item 11 Franchisor’s Assistance, Advertising, Computer Systems, and Training ............................. 16

Item 12 Territory ...................................................................................................................................... 23

Item 13 Trademarks ................................................................................................................................. 26

Item 14 Patents, Copyrights, and Proprietary Information ................................................................. 27

Item 15 Obligation to Participate in the Actual Operation of the Franchise Business ....................... 29

Item 16 Restrictions on What the Franchisee May Sell......................................................................... 29

Item 17 Renewal, Terminations, Transfer, and Dispute Resolution .................................................... 30

Item 18 Public Figures .............................................................................................................................. 34

Item 19 Financial Performance Representations ................................................................................... 34

Item 20 Outlets and Licensee Information ............................................................................................. 34

Item 21 Financial Statements ................................................................................................................... 40

Item 22 Contracts ...................................................................................................................................... 40

Item 23 Receipts ........................................................................................................................................ 41

EXHIBITS:

A. License Agreement

B. General Release

C. Guaranty

D. Promissory Note

E. Form of Employee Confidentiality and Non-Competition Agreement

F. Licensee Information

G. Financial Statements

H. State Administrators and Agents for Service of Process

I. Manual Table of Contents

J. State Specific Addenda

K. Receipts

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Item 1

The Franchisor and any Parents, Predecessors, and Affiliates

The Franchisor

To simplify the language in this disclosure document, “we”, “us,” or “our” means Sit Means Sit Franchise, Inc., the licensor. “You” or “your” means the individual, corporation, partnership, limited liability company, or other entity who buys the license. If the licensee will operate through a corporation, partnership, limited liability company or other entity, “you” also includes the licensee’s owners or partners.

Our principal business address is 2900 E. Patrick Lane, Suite 2A, Las Vegas, Nevada 89120. We conduct business under the name of our corporate name and “Sit Means Sit,” as well as the trademarks described in Item 13 of this Disclosure Document (the “Marks”). We are a Nevada corporation, organized on January 20, 2009. We have offered licenses to operate “Sit Means Sit” dog training businesses (“Businesses”) since February 11, 2009. We have not previously engaged in any line of business or offered franchises for Businesses. We have not previously offered franchises in any other line of business, nor do we operate any Sit Means Sit businesses. We do not conduct any business activities other than franchising.

Our agents for service of process are disclosed in Exhibit H to this disclosure document.

Our Affiliates

Sit Means Sit, Inc. (“SMSI”), our affiliate, was incorporated in Nevada on January 20, 2006. It has operated a Sit Means Sit business similar to the type offered in this disclosure document since March 2006. From March 2006 until November 10, 2008, it licensed others to operate a Sit Means Sit business similar to those offered in this disclosure document by a Merchandising and Licensing Agreement (“MLA” or “Merchandising and Licensing Agreement”) on substantially different terms than those offered by this disclosure document. SMSI has not offered franchises in this or any other line of business. SMSI’s principal place of business is the same as ours.

We do not have any predecessors or parents, or any other affiliates that offer franchises or provide goods or services to you.

The Business You Will Conduct

We grant franchises for, and may operate, businesses under the “Sit Means Sit” trade name. You will sign a License Agreement (Exhibit “A” to this Disclosure Document) to operate a business under the “Sit Means Sit” name and service mark (the “Business”). You may operate one (1) licensed business and offer Authorized Products and Services (defined below) within your Trade Area (defined below). You must purchase or lease one or more trucks, sport-utility vehicles or other automobiles (“Vehicles”) to sell and perform Authorized Products and Services within your Trade Area. You may operate your business from your home or from a formal training facility in which you have your own space to conduct dog training classes (“Training Facility”). The Marks, Vehicles, Training Facility, and our methods of operation are collectively referred to in this disclosure document as the “System.”

The Market and Competition

The market for a “Sit Means Sit” business is well-developed. You will market your “Sit Means Sit” business to dog owners. You will compete with other business offering similar products and

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performing similar services, including other dog training and obedience companies, kennel clubs and some veterinary offices that provide canine training, some of which are part of national or regional franchised and non-franchised chains.

Industry Specific Laws

A wide variety of Federal, state, and local laws, rules, and regulations have been enacted that may impact the operation of your Business, and may include a requirement that you obtain an animal handler permit. Your Business will also be subject to various federal, state and local health, safety and sanitation laws that apply to businesses generally. You must investigate and comply with all 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.

Item 2

Business Experience

Chief Executive Officer: Fred Hassen

Mr. Hassen has served as our Chief Executive Officer since our formation on January 20, 2009. He has also been Chief Executive Officer of SMSI since January 2006.

President: Alfredo Rivera

Mr. Rivera has served as our President since our formation on January 20, 2009. He has also been President of SMSI since January 2006.

Item 3

Litigation

Maryland Consent Order (Case No. 2012-0362). On or about September 19, 2012, the Securities Division of the Office of the Attorney General of Maryland entered into a stipulated Consent Order with us and with our affiliate, Sit Means Sit, Inc. (“SMSI”) entered into a stipulated Consent Order in which SMSI acknowledged that Merchandising and Licensing Agreements (“MLAs”) that it had entered into with two different Maryland residents constituted “franchises” as defined under the Maryland Franchise Law. SMSI also acknowledged that SMSI was not registered to offer and sell franchises under the Maryland Franchise Law at the time SMSI entered into MLAs with the two Maryland residents and that SMSI did not provide those Maryland residents with an FDD registered under the Maryland Franchise Law prior to the sale of the SMSI MLAs. We further admitted that we offered a franchise to a prospective Maryland franchisee at a time that we were not registered to offer franchises under the Maryland Franchise Law.

In the Consent Order, the Maryland Securities Commissioner (the “Securities Commissioner”) concluded that SMSI violated §§14-214, 14-216, 14-228, and 14-229 of the Maryland Franchise Law, and that we violated §§14-214, 14-216, 14-228, 14-229, and 14-231 of the Maryland Franchise Law. As part of the Consent Order, we represented to the Securities Commissioner that: (1) we have developed and implemented new written compliance procedures to ensure that, in the future, we comply with the registration, disclosure and antifraud provisions of the Maryland Franchise Law, which compliance procedures we submitted to the Securities Commissioner; (2) we and SMSI would immediately and permanently cease from the offer and sale of franchises in violation of the Maryland Franchise Law; and that (3) the Consent Order is a discloseable order under the Maryland Franchise Law, and Item 3 of the

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NASAA Franchise Registration and Disclosure Guidelines and Amended FTC Franchise Rule. We also agreed to pay a $2,000 civil penalty to the Office of the Attorney General.

Minnesota Consent Order (Case No. FR2900235/DPK). On or about September 1, 2009, the Minnesota Department of Commerce and our affiliate, Sit Means Sit, Inc. (“SMSI”) entered into a stipulated Consent Order in which the state alleged that SMSI sold an unregistered franchise in that state, and SMSI, without admitting or denying any violation of law, agreed to pay a $1,000 civil penalty and comply with Minnesota franchise law.

Sit Means Sit Franchise, Inc. v. K9 Bootcamp, LLC, Terry Cook, Tara Cook, Nancy Hogle, Michael Marcum, and Allison Marcum In the United States District Court for the District of Nevada, Case 2:13-cv-01920-GMN-NJK. On October 21, 2013, we filed a Complaint against franchisee, K9 Bootcamp, LLC (“K9”) and its owners, Terry Cook, Tara Cook, Nancy Hogle, and Michael Marcum, as well as a former trainer of K9, Allison Marcum, who operated two Sit Means Sit franchises in Columbus, Ohio. Starting in June 2013 through October 2013, K9 failed to make continuing royalty fee and marketing contributions to us as required under its franchise agreements with us. Michael Marcum and Nancy Hogle (but not by K9’s other owners) sent us a notice of rescission, claiming that we had violated Ohio law in selling franchises to K9. We also had information that Allison Marcum was operating a dog training business that competed with K9 in violation of her Confidentiality and Non-Competition Agreement with us. We sued K9 for its failure to pay us those fees, alleging that K9 had breached its franchise agreements with us. Further, we sought declaratory and injunctive relief against Allison Marcum and her father, Michael Marcum, preventing Allison Marcum from competing with us and using our confidential information and preventing Michael Marcum from assisting her in doing so. Finally, we sued for a declaration that a notice of rescission sent to us by Michael Marcum and Nancy Hogle (but not by K9’s other owners) was invalid, and that we did not violate Ohio law in selling franchises to K9. Because we were negotiating with them, neither K9 nor any of the individuals we sued filed an appearance in the case. In December 2013, we entered into a confidential settlement agreement with all of the defendants resolving all claims between the parties. Under the terms and conditions of the settlement agreement: (a) K9 and the individual defendants paid us $14,000 for past-due royalty fees and marketing contributions and as an early termination fee; (b) we, K9, and the individual defendants agreed to terminate the franchise agreements; and (c) we, K9, and the individual defendants agreed to release one another from all claims. The case was dismissed, with prejudice, on January 15, 2014.

Other than these three actions, no litigation is required to be disclosed in this Item.

Item 4

Bankruptcy

No bankruptcies are required to be disclosed in this Item.

Item 5

Initial Fees

Deposit

You must pay us an application fee and deposit of $1,500 at the time you submit an application to become a franchisee of ours. We will use the application fee to conduct a credit and criminal background

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check, and to evaluate you as a franchisee candidate. In the event that you and we decide to commit to entering into a franchise agreement, the $1,500 deposit will be applied towards your initial franchise fee, described below. The application fee and deposit are nonrefundable under any circumstances; if we decide not to offer you a franchise or you decide not to purchase a franchise, we will not refund the application fee to you.

Initial Franchise Fee

You will pay us an initial fee of $15,000 when you sign the License Agreement, unless we agree to finance all or part of this amount (see Item 10). Except as described above, the initial fee is uniform for licenses currently being offered under this disclosure document.

If we determine that you or your employees’ progress during the Initial Training Program is unsatisfactory, we may terminate your License Agreement, in which case we will refund the Initial Fee, less the sum of $2,000 plus all direct and indirect costs and expenses incurred by us before termination of your License Agreement. We will refund the amount you paid for equipment, inventory and supplies if the equipment, inventory or supplies, as applicable, are returned to us unused or in “like new” condition.

Initial Training Fees

We provide the Initial Training Program at no additional cost for one trainee, and we will provide housing for one trainee during the Initial Training Program. After the first trainee, we will charge you a fee (currently, $2,500 per person) for each additional person that attends the Initial Training Program. For each additional trainee, you must also pay us $1,125 per person for housing during the Initial Training Program.

The fees for the additional trainee (including the fee for housing) are non-refundable under any circumstances.

Supply and Equipment Fees

You must purchase an initial inventory of training collars from SMSI. While we do not require you to buy a specific number of collars, we estimate that you will spend between $630 and $1,570 on your purchase of these collars.

If we determine that you or your employees’ progress during the Initial Training Program is unsatisfactory, we may terminate your License Agreement. We will refund the amount you paid for the training collars, if they are returned to us unused or in “like new” condition.

These fees are not refundable under any circumstances other than those described above.

Item 6

Other Fees1

Type of fee Amount Due Date Remarks

Continuing Royalty $600 per month. If paid on the first day of the calendar month that is not a weekend day or a holiday, the Continuing Royalty will be $500 for that calendar month only.

Payable by the 5th day of each calendar month; considered late if not paid by the 10th day of the calendar month.

We may adjust this amount no more frequently than annually based on the Consumer Price Index, U.S. Average, all items, or any replacement index which

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we select.

Marketing Contribution 1% of Gross Sales2 Same as Continuing Royalty

You must pay us monthly to support our advertising efforts for the System.3

Cooperative Advertising As determined by each Co-op and not to exceed 5% of Gross Sales.

Same as Continuing Royalty

You must contribute to the Advertising Co-op if we establish an Advertising Co-op Region for the region where your license is located.

Local Advertising Payment

The difference between the amount you spent on local advertising and 1% of your Gross Sales for the previous calendar quarter.

On invoice by us. If you fail to spend at least 1% of your Gross Sales on local advertising, you must pay us the difference between the amount you spent and 1% of your Gross Sales for the previous calendar quarter, which amount will be contributed to the Marketing Fund.

Background Checks Our costs to perform background checks, which are presently between $165.00 and $300.00 per background check.

On invoice by us. You must reimburse our costs to perform and update periodic background checks on you and your Authorized Trainers. We reserve the right to update background checks at your cost, typically no more frequently than annually.

Franchise Financial Database

Cost of a monthly license for the program, currently $14.95/month.

Upon invoice. You must pay us, or our designated third party supplier (currently Qvinci), to use this program.

Non-Compliance Assessment

$100 per occurrence, per week that you are not in compliance

Payable upon demand We have the right to charge this fee (in addition to our other rights and remedies) if you are not in compliance with our System standards.

Initial Training Fee After the first trainee, $2,500 per person for each person that attends the Initial Training Program

Before training We charge a fee for any additional personnel that attend the Initial Training Program.

Housing during Initial Training Program

$1,125 per person attending initial training

As incurred We will provide housing during our Initial Training Program for 1 person (not applicable if you are a transferee) at no charge. If you send additional

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personnel to attend the Initial Training Program, we will require you to pay this charge for housing

Additional Training Courses

As established by us. Fees will be uniform for all licensees. Currently $150 per person per day. You must pay for your own travel, food, and incidental expenses.

Prior to beginning of training

We will not charge a fee for any mandatory training courses which you must attend. However, we may charge a fee for any optional training courses which we may periodically offer, in our sole discretion. In addition to any training fee, you must pay all transportation costs, food, lodging and similar costs incurred in connection with attendance at any additional training courses.

Further Training As established by us. Fees will be uniform for all licensees. Currently $150 per person per day. You must pay for your own travel, food, and incidental expenses.

Upon demand Payable only if you request additional training or if we determine that your Business is not being operated according to our Policies or the License Agreement

Annual Convention Attendance Fee

Our then-current charge, currently $211.50 per person. You must pay for your own travel, food, and incidental expenses.

Payable after receipt of invoice.

We may charge you for your share of our expenses in holding an annual convention.

Transfer / Assignment The greater of (i) our out of pocket expenses associated with evaluating and documenting the proposed Assignment, (ii) $2,500, or (iii) 10% of the consideration paid for your Business

Estimate of transfer fee paid upon submission of request. Transfer fee must be paid before transfer

Applicable only if you choose to transfer your License Agreement. Our consent is required for any transfer.

Updated information for Business Entity Licensee

Our direct and indirect costs, including reasonable attorneys’ fees, to review any revised information for a business entity licensee

Upon demand You must notify us of any change in the legal entity of your Business.

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Under-Reporting of Gross Sales

Amount determined to be owed plus interest5 on the underpayment at the highest rate allowable by law (not to exceed 18%).

Upon demand Payable only if an audit or other investigation reveals an under-reporting or under-recording error.

Late Fee Interest of 10% per annum, or the highest interest rate allowable by law, whichever is less, on any unpaid amounts(with a minimum Fee of $25.00).

Upon demand Due only if you are late in paying any amounts owed to us.

Charges for unpaid checks, drafts or electronic payments

Our costs and expenses arising from the non-payment, including bank fees in the amount of at least $50.00 and other related fees incurred by us

Upon demand Payable only if any check, draft, electronic or other payment is unpaid because of insufficient funds or otherwise

Default Reimbursement You must reimburse our costs and expenses arising from your default under the License Agreement, including reasonable legal fees.

Within 5 days after you cure the default

Payable only if you default under your License Agreement. This includes our costs and expenses if you fail to de-identify any permitted Training Facility.

Toll-free Telephone Number Fee Charges

You must reimburse us for any telephone charges that we incur to receive and forward to you telephone calls that we receive at our toll free number.

On demand We may charge a reasonable fee designed to reimburse us for costs of establishing and operating the toll free call center. We do not currently operate a call center; as a result, we do not currently charge this fee.

Supplier Approvals Our costs of inspecting your proposed supplier facility and/or product and equipment and all product testing costs paid by us to third parties (including travel expenses), which we estimate to be between $3,000-$4000.

On demand Payable by your or the proposed Supplier only if you ask us to approve a Supplier.

Inspections You must reimburse us for all of our costs and expenses (including travel expenses) incurred in connection with our inspection of your

On demand You must reimburse our costs and expenses only if the inspection discloses any material failure to comply with our policies.

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Business location(s), which we estimate to be between $3,000-$4,000.

Indemnification Will vary under circumstances

As incurred You will defend suits at your own cost and hold us harmless against suits involving damages resulting from your operation of the Business

Liquidated Damages See Note 5 Upon Demand Payable only if we terminate the Franchise Agreement with cause, or if you cancel your Franchise Agreement prior to its expiration.

(1) All fees that we list above are imposed by and are payable to us or to SMSI, except those payable

to a Co-op. All fees paid to us are non-refundable under any circumstances once paid. Fees paid to vendors or other suppliers may or may not be refundable depending on the vendors and suppliers. All fees listed in this Item are uniformly imposed by us as to all franchisees.

(2) “Gross Sales” means all revenues received or receivable by you as payment (whether in cash, by

debit card or for credit or barter, or other means of exchange, for goods and services you sell, or promote or sell under the Marks, whether or not payment is received and including the full retail value of any gift certificate or coupon sold for use at your Business (fees retained by or paid to third party sellers of such gift certificates or coupons are not excluded from Gross Revenues)), during the term of your License Agreement, excluding: (i) sales taxes collected directly from your customers, and any sales, value added or other tax, excise or duty charged to customers charged to you by any governmental authority, based on your sales of specific goods or services; (ii) tips, gratuities or service charges; and (iii) proceeds from certain isolated sales of equipment and trade fixtures.

All your amounts you owe to us may, at our option, be required to be paid through an electronic depository transfer account (“Electronic Depository Transfer Account”). If required, you must set up an Electronic Depository Transfer Account and we will have access to this account for the purpose of receiving payment for Royalty Fees, advertising contributions, amounts due for your purchases from us and any other amounts which you owe to us.

(3) The marketing contribution will be in addition to the 1% of Gross Sales which you must spend on local advertising. Not all licensees are or will be required to contribute the same percentage of Gross Sales to the Marketing Fund.

(4) Interest begins from the date of the underpayment.

(5) If we terminate the Franchise Agreement with cause, you must pay us liquidated damages in the amount of $600, multiplied by the lesser of: (a) 24 (the number of months in two full years); or (b) if less than 24 months remain in the Term, the number of months remaining in the Term.

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Item 7

Estimated Initial Investment

YOUR ESTIMATED INITIAL INVESTMENT1

Type of expenditure Amount Method of

Payment

When Due To Whom Payment is

to be Made

Initial Fee (Note 1) $15,000 Lump Sum or As Arranged

When you sign your License Agreement

Us

Real Property and Leasehold Improvements (2)

$0 - $15,000 Lump Sum or As Arranged

Before Opening Outside Suppliers

Equipment, supplies, materials and signs

$300 - $1000 As Arranged Before Opening SMSI and Suppliers

Sit Means Sit Vehicle(s) (3)

$400 - $23,500 As Arranged Before Opening Auto Dealer

Computer Hardware and Software

$900 - $5,000 As Arranged Before Opening Outside Suppliers

Initial Training Fee (4)

$0 - $2,500 Lump Sum or As Arranged

Before Opening Us

Wages, Travel and Living Expenses During Training (5)

$620 - $3,680

As Incurred Before Opening Airlines, hotels, Restaurants and employees

Opening Inventory Collars

$630 - $1,570 As Arranged Before Opening SMSI and Suppliers

Pre-opening Advertising Includes brochures, business cards, Magnets

$200 - $700 As Incurred As Incurred Media and other suppliers

Insurance Deposits and Premiums (6)

$150 - $3,300 As Arranged As Arranged Insurance Companies

Licenses and Permits $25 to $700 As Incurred Before Opening Governmental Agencies

Professional Fees $0 - $3,000 As Incurred As Incurred Attorneys, Accountants, etc.

Demonstration Dog (7)

$50 - $7,500 Before Training Before Training Suppliers

Additional Funds – 3 Months (8)

$2,400 - $11,400 As Incurred As Incurred Employees, suppliers, utilities, landlords, etc.

TOTAL ESTIMATED INITIAL INVESTMENT (9)

$21,125 - $93,850

Note: These estimated initial expenses are our best estimate of the costs you may incur in establishing and operating your Business. Other than financing a portion of your initial fee under the circumstances identified in Item 10, we do not offer financing directly or indirectly for any part of the initial investment. The availability and terms of financing from third parties depend on many factors, including the availability of financing generally, your creditworthiness and collateral, and the lending policies of financial institutions from which you request a loan.

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The factors underlying our estimates may vary depending on a number of variables, and the actual investment you make in developing and opening your Business may be greater or less than the estimates given depending upon the location of your franchise, and current relevant market conditions. We do not know whether any of the money you pay to third parties will be refundable. The Initial Fee you pay us is refundable under the circumstances described in Item 5. In compiling this chart, we relied on the experience of our affiliate, SMSI, as the owner and operator of a Business similar to the franchise being offered to you, as well as on our own experience as the franchisor of Businesses.

1. We may agree to finance all or part of this amount (see Item 10).

2. The low estimate assumes that you will operate out of your residence without a formal Training Facility, so you will incur no rental charges or construction costs. If you do operate from a separate facility, locations might include strip malls or light industrial or commercial zones in which you will typically lease unimproved and unfurnished retail store front or warehouse space. For a leased Training Facility you can expect to prepay first and last months rent (which we estimate will total about $6,000) and spend an additional $6,000 to $9,000 to construct and improve the space before opening. These figures are represented in the high estimate and based on a facility ranging in size from 1,000 square feet to 3,500 square feet in Las Vegas, Nevada; however, rent can vary widely and is dependent upon factors such as size, location, demand, general economic conditions of the town or city in which your Training Facility is located, the condition of the premises and lease negotiation rent reductions. In the very unlikely case that you purchase a location or construct a free standing building, your initial investment will be much greater, the exact amount depending on the size and location of the building.

The amount for real estate improvements will depend upon the size of the space, the condition of the premises, landlord construction allowances, the cost of hiring any necessary subcontractors, and costs of materials. This amount also may include the purchase of heating, ventilating, and/or air conditioning systems for the Business. Depending on the specific improvements you choose to make, this amount may be higher.

3. The low estimate assumes that you already own a suitable vehicle and use minor decaling. You must purchase or lease one or more Vehicles meeting our policies and specifications. Promptly following the lease of your Vehicle(s) you must make certain modifications and additions to the vehicle(s) as we require, including, installing decals, logos, and racks.

4. We will train one person at no additional charge (excluding a transferee). The low estimate assumes you will have only one trainee, and will incur no additional charge for training, and the high estimate contemplates the Initial Training Fee for a second trainee. You must pay an Initial Training Fee of $2,500 for the second and each additional person to attend the Initial Training Program (all transferees will pay these amounts). For second and each additional person you bring to training, you must also pay us a housing fee of $45 per day for each day that person attends training.

5. You must pay the expenses of all persons attending the Initial Training Program including transportation. The low estimate assumes travel-related costs to train 1 person for 21 days in Las Vegas, Nevada and that you are within driving distance and incur $200 for gas. The high estimate assumes two persons and that they will travel by air and incur $1,000 in airfare, meals and wages. The amount will depend, in part, on the distance the attendees must travel.

6. This is an estimated down payment against the annual premiums you must pay for the insurance required under the License Agreement and Manuals. This estimate is for workers’ compensation,

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errors and omissions, automobile, and comprehensive general liability insurance. The exact dollar amount of your insurance payment will be determined by the geographic location of the Business and the number of employees you are covering.

7. We require you to have a “demonstration dog,” trained with our methods, for use in marketing your business. The range reflected above contemplates your either paying adoption fees for a dog, which are generally around $50, or your buying a dog for your business, which can be as much as $7,500.

8. These amounts are the minimum recommended levels to cover your operating expenses for three (3) months, assuming no revenue during this period. They cover monthly telephone charges, our minimum fees, and fuel for your vehicle to conduct marketing. Because we do not expect most licensees to lease a formal Training Facility, the low figures do not include rent. If you do rent a facility, you should expect approximately an additional $9,000 for 3 months rent (which is included in the high estimate). The figures do not include any provision for your salary or living expenses, nor do they contemplate that you will hire a separate trainer or incur other employee wages. Also, we cannot guarantee that this amount will be sufficient. Additional working capital may be required if sales are low or fixed costs are high. We do not generally suggest paid media advertising, so these estimates do not contemplate media advertising

9. This Item includes our estimates of your initial startup expenses and funds for additional inventory and additional funds for the operation of the Business. These expenses include payroll costs. These figures are estimates and we cannot guarantee that you will not have additional expenses starting the Business. Your costs will depend on factors such as: how much you follow our methods and procedures; your management skill, experience and business acumen; local economic conditions; the local market demand for your product; the prevailing wage rate; competition; and the sales level reached during the initial period.

You should conduct your own independent investigation of the costs of opening a dog training business in the geographic area in which you intend to open the Business. You should also review the figures set forth in this Item carefully with a business advisor before making any decision to purchase this franchise.

Item 8

Restrictions on Sources of Products and Services

Standards and Specifications

You must establish and operate your Business in compliance with your License Agreement and the standards and specifications contained in the confidential Manuals (“Manuals”) loaned to you by us. We will communicate our standards and specifications to you in writing through the Manuals.

In order to maintain our standards of consistent, high quality products and services, customer recognition, advertising support, value and uniformity in Businesses, you must purchase all of your required décor, inventory, goods, equipment, supplies, forms, products, services, and advertising materials used in or sold through your Business, per our specifications and standards, only from us or our approved or designated suppliers and distributors.

If we do not authorize a product, service, or supplier, you are prohibited from using it in your Business. It is a material breach of your License Agreement if you buy products, equipment, supplies,

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inventory, goods or services from anyone other than our designated or approved suppliers and distributors (which may include us or our affiliates) without our prior written approval.

We formulate and modify our standards and specifications based on the market for dog training businesses in general, as well as competitive and economic conditions, based on the experience of our affiliate’s operation of a dog training facility as well as the experience of our franchisees. We will communicate our standards and specifications to you in writing through the Manuals. We do not make our criteria for selecting approved suppliers available to our franchisees, nor do we make our specifications known to suppliers.

We do not provide or withhold material benefits to you based on your use of designated or approved suppliers.

Supplier Approvals; Specifications

We may also designate certain products, accessories, raw materials, equipment, uniforms, supplies, packaging, forms, computer hardware, software, modems and peripheral equipment and other products, supplies and equipment, other than Designated Products, which you may or must use and/or offer and sell in connection with your Business (“Ancillary Products”). You may, but are not required to, purchase Ancillary Products from us or our affiliates. You may use, offer or sell only the Ancillary Products that we have expressly authorized. You may purchase authorized Ancillary Products from us, our affiliate or a producer, manufacturer, distributor, or supplier (“Supplier”) that we designate or approve.

If you want to purchase products from a Supplier that we have not designated or approved, you may request, in writing, that we approve the Supplier and you or the supplier must reimburse us all of our reasonable costs incurred in reviewing the proposed Supplier, including travel expenses related to inspecting, re-inspecting and auditing the Supplier’s facilities and equipment, and all product testing costs paid by us to third parties. We will evaluate the supplier to determine whether, in our sole discretion, the supplier and its products are of the quality and standards we require. We may revoke our approval of a Supplier at any time. We may, but are not obligated to, publish the standards to which we measure our Suppliers. At your request, we will provide the general, but not the manufacturing specifications for Ancillary Products if the specifications are not contained in the Manuals. We will notify you of our decision within 60 days after we receive your request for approval and all requested back-up information.

Each Supplier that we designate or approve must comply with our usual and customary requirements regarding insurance, indemnification, and non-disclosure, and must demonstrate: (a) its ability to supply an Ancillary Product meeting our specifications, (b) its reliability with respect to delivery and the consistent quality of its products or services; and (c) its ability to meet other requirements which we determine to be in the best interest of the license system.

Required Purchases Or Leases

Real Estate

You are not required to operate the Business at a formal Training Facility. If you elect to operate from a facility other than your residence, the Training Facility must be located within your Trade Area, it must meet our standards and specifications and be accepted by us. If the Training Facility is not within a personal residence and is leased or subleased, you must submit a copy of your lease to us for our review and acceptance. We are not an approved supplier of site leases.

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Vehicles

A substantial portion of your Business will be conducted using a truck, sport-utility vehicle or other vehicle (“Vehicle”) to deliver products and perform services at private and public locations within your Trade Area. You must promptly purchase or lease at least 1 Vehicle, unless you already own a suitable vehicle that meets our specifications, as described below. We are not an approved supplier of the Vehicle.

Each Vehicle must be in good condition, with no noticeable damage to the body or paint (ordinary wear and tear excepted). We do not require you to have any specific make, model, or year vehicle. We do not issue specifications or standards for the Vehicle to approved suppliers.

Merchandise, Materials, Supplies and Services

Under the Franchise Agreement, you are permitted only to offer and sell the dog training services and classes and related products like training collars and accessories, as well as other products and services which we may authorize from time to time (“Authorized Products and Services”). You may not provide, produce, advertise for sale, sell or give away any goods or services unless they have been approved by us as an Authorized Product or an Authorized Service.

We may periodically require that you purchase, use, offer, promote and/or maintain in stock products, including dog collars, dog care products, dog training products, dog toys, food and treats, leashes, collars, bite suits, apparel, and other goods, training and other equipment, uniforms, supplies, packaging, business cards, forms, computer hardware, software, modems and peripheral equipment and other items which are produced or manufactured in accordance with our proprietary specifications and/or formulas, and which we select as designated products (“Designated Products”), and specified products that bear the “Sit Means Sit” mark or marks (“Sit Means Sit Brand Products”). You must purchase Designated Products and Sit Means Sit Brand Products only from us, our affiliates, or from parties we designate.

Our affiliate, SMSI, is the only approved supplier of the following categories of goods and services which you must use in your Business: training, training collars, leashes, and training cots. Neither we, nor our affiliates, are currently the only approved suppliers of any other Designated Products or Sit Means Sit Brand Products, but we and our affiliates reserve the right to be the only approved suppliers of those products.

At all times during the term of your License Agreement, you must purchase and maintain in inventory the types and quantities of Designated and Ancillary Products as are needed to meet reasonably anticipated consumer demand. Except for products you sell to National Accounts, you may only sell products at retail, and not for resale. All packaging and similar articles must conform to our specifications, be purchased from us or a Supplier, and, if we require, must be imprinted with our Marks. We must approve the way you use our Marks on any materials or products that you use that you do not purchase from us or our affiliates.

We may establish and maintain a warranty program as we deem appropriate. If we establish a warranty program, you must deliver the warranties to your customers on the forms, terms and conditions we specify. You must perform promptly all of the terms and conditions of all warranty programs which we specify.

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Insurance

You must maintain suitable insurance coverage and minimum amounts specified in the License Agreement, Manuals or by written notice, including workers’ compensation insurance as required by applicable law, errors and omissions, automobile, and comprehensive general liability insurance in the minimum amount of $1,000,000. All policies must name us and our designated affiliates as an additional insured. You may obtain additional insurance coverage as you feel necessary. Premiums depend on the insurance carrier’s charges, terms of payment, and your history. You may purchase your insurance from any carrier subject to our approval, not to be unreasonably withheld. You must submit proof of insurance to us before opening. We are not an approved supplier of insurance.

Advertising

All advertising and promotion by you, in any manner or medium, must be conducted in a dignified manner and must conform to our standards and specifications. You are responsible for all costs of such advertising and promotion. We reserve the right to require you to purchase advertising and promotional material directly from us, our affiliate(s), or approved suppliers. We are not the only supplier of advertising materials, but we reserve the right to be.

Computer System and Proprietary Software

You must purchase or lease and maintain a personal computer system (the “Computer System”) as specified in the Manuals or by us in writing. You do not have to obtain the Computer System from any particular supplier so long so long as it meets our minimum requirements. You will be required to maintain the Computer System in good repair and working order, including installing program software updates specified or supplied by us or purchased from Approved Suppliers. We also may require you to sign a license agreement to license or sublicense certain computer software that we own or license (“Proprietary Software”). This includes, but is not limited to, our Qvinci franchise financial database program; you must also have a PC desktop version of QuickBooks that is less than three years old. If we require you to license or sublicense Proprietary Software, we (or our designee) will provide support services to you regarding the Proprietary Software at the then-current rates. We are not an approved supplier of the Computer System or Proprietary Software, but we reserve the right to be.

Proportion of Required Purchases and Leases to All Purchases and Leases

We estimate that all required purchases and leases are between 55% and 72% of the cost of establishing a franchise, and that your ongoing inventory and lease expenses are between 7% and 25% of operational costs thereafter.

We estimate that less than 25% of your expenditures for leases and purchases in establishing your Business and of your expenditures for leases and purchases on an ongoing basis during the operation of your business will be for goods and services which are subject to sourcing restrictions (that is, which must meet our standards and specifications, or which must be purchased from suppliers which we designate or approve).

Purchasing Cooperatives, Purchasing Arrangements, Rebates, Payments, and Derived Revenue

We have not yet, but may in the future, establish purchasing or distribution cooperatives. Although we have not done so as of the date of the Disclosure Document, we may negotiate volume buying arrangements, including price terms, with Suppliers for the benefit of licensees. We may negotiate alternative purchase arrangements with suppliers and distributors of approved products for the benefit of

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our franchisees and we reserve the right to receive rebates on volume discounts from our purchase of products that we may re-sell to you.

We or our affiliates may or will derive revenue from required purchases or leases by licensees, if purchased from us or our affiliates. During our fiscal year ending December 31, 2013, we received $9,000 on account of licensee purchases and leases, representing 1.33% of our total revenue of $676,326. Our affiliate, SMSI, according to its unaudited financial records, received approximately $1,660,801.32 during its fiscal year ending December 31, 2013 on account of licensee purchases from SMSI. In addition, SMSI is expecting to receive a 3% rebate from its supplier on all of its purchases of Sit Means Sit training collars.

None of our officers owns an interest in any unaffiliated supplier, but they do own an interest in us and SMSI.

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 in other

items of this disclosure document.

Obligation Section In

License Agreement Disclosure Document

Item

a. Site selection and acquisition/lease Section 4.3 Items 8 & 11

b. Pre-opening purchases/leases Section 4.1 Item 8

c. Site development and other pre-opening requirements

Section 4.1 Items 7 & 11

d. Initial and ongoing training Article 6 Item 11

e. Opening Section 4.4 None

f. Fees Article 5 Items 5 & 6

g. Compliance with standards and policies/Operating Manual

Article 7 Item 11

h. Trademarks and proprietary information Article 12 Items 13 & 14

i. Restrictions on products/services offered Sections 7.3, 7.4, 7.10, 7.12 and 9.2

Item 16

j. Warranty and customer service requirements Section 10.4.2 Item 8

k. Territorial development and sales quotas None Item 12

l. Ongoing product/service purchases Article 10 Item 8 and 6

m. Maintenance, appearance, and remodeling requirements

Section 4.2 Item 8

n. Insurance Article 17 Items 8

o. Advertising Article 8 Items 6 & 11

p. Indemnification Sections 4.3.1, 14.2.4, 18.1 and 18.2

Item 6

q. Owner’s participation/ management/staffing Section 7.2 Items 11& 15

r. Records/reports Sections 11.1 and 11.4 Item 6

s. Inspections/audits Sections 11.2 and 11.5 Items 6 & 11

t. Transfer Sections 14.2, 14.3 and 14.4

Item 17

u. Renewal Sections 3.2, 3.3 and 3.4 Item 17

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Obligation Section In

License Agreement Disclosure Document

Item

v. Post-termination obligations Article 16 Item 17

w. Non-competition covenants Section 13.1 Item 17

x. Dispute resolution Article 20 Item 17

y. Other Not applicable Not applicable

Item 10

Financing

We may offer to finance a portion of your initial fee, in which case you will sign a Secured Promissory Note (Exhibit “D”). As of the date of this Disclosure Document, we presently charge interest at a rate of between 7% and 10% compounded annually (not to exceed the highest rate allowed by law) but we reserve the right to change the interest rate to reflect increases in prevailing interest rates. The exact rate we charge for interest (between 7% and 10%) will be determined by your credit rating. The term of financing will typically be for 36 months, but may vary as we may determine on a case by case basis taking into account your individual needs and credit worthiness, among other factors. You may prepay all or any portion of your indebtedness without penalty.

If you fail to cure any default in the payment of any installment under the note within 5 days after written notice, we can at our option accelerate the entire amount of the debt, demand all overdue payments, repossess all of your equipment and other personal property, and terminate your license agreement and all other agreements you have with us. We can also recover from you our costs of collection, including court costs and attorney’s fees. The entire remaining balance of principal and accrued interest under your Secured Promissory Note is due on any sale or other transfer of your business. The Secured Promissory Note provides that you waive presentment, demand, protest, notice of protest, notice of dishonor, any requirement that we proceed against any other person, demand of performance, notice of sale and advertisements of sale, any right of subrogation to us, and any right to the collateral until you satisfy all of your obligations.

You may pay the entire remaining balance of principal and accrued interest under your Secured Promissory Note at any time with no prepayment penalty.

To secure your obligations under your License Agreement and any Secured Promissory Note, you grant us a security interest in all of your personal property used in operating your franchise, including inventory, fixtures, furniture, equipment, accounts, supplies and products. If you are a corporation or other business entity, we may require your owners to guarantee all of your obligations to us (Exhibit “C”).

Presently, it is not our practice or intent to sell, assign, or discount to a third party all or part of the financing arrangement, nor do we receive any consideration for placing financing with third party lenders. We do not guarantee any note, lease or other obligation of yours.

Item 11

Franchisor’s Assistance, Advertising, Computer Systems, and Training

Except as listed below, Sit Means Sit Franchise, Inc. is not required to provide you with any

assistance.

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Pre-Opening Obligations. Before you open your Business, we will:

1. Accept or reject a site you propose for your Business. We are not obligated to assist you in locating a site. You may operate the Business from your residence and do not need a formal training facility. If you choose to operate your Business from a Training Facility, you must locate a site within your Trade Area and meet our current standards and specifications. We do not own the premises and lease it to you. Upon receiving from you and reviewing the information that you provide to us regarding a proposed site, we will either accept or reject the proposed site. We do not select a site for you.

The factors we consider in accepting sites include general location and neighborhood, demographics, traffic patterns, parking, size, physical characteristics of existing buildings and lease terms. We will endeavor to approve or reject your proposed location within 14 days after your submission. We may terminate your License Agreement if you do not begin operating your business within four months of signing the License Agreement. (License Agreement §4.3.2)

2. Provide you with our guidelines and specifications for Vehicles in the Manuals and other written materials. These materials may include requirements relating to make, model, year, color and body wrap or other advertising. You must promptly purchase one or more Vehicles you will use to deliver products and perform training services at within your Trade Area. You are solely responsible for purchasing or leasing your Vehicle(s), which must conform to our standards and specifications. (License Agreement, Section 4.1.2)

3. Provide an Initial Training Program to you, described below. (License Agreement, § 6.1)

4. We will make available a copy of our Manuals on line via our corporate resource page to use during the term of the License Agreement. The Manuals contain our standard operational procedures, policies, rules and regulations with which you must comply. Attached as Exhibit I to this disclosure document is a copy of the table of contents of our Manuals that are in effect as of the date of this disclosure document. The table of contents indicates the number of pages devoted to each subject. The total number of pages in the Manuals is 116. (License Agreement, § 7.6.3)

Time to Open

We estimate the typical length of time between signing a License Agreement and opening a new Business is between 2 to 4 months after you sign your License Agreement. Factors affecting this length of time (and which may extend it beyond the range given) can include your ability to obtain leases and/or financing for your Vehicles, ability to obtain a demonstration dog, and how soon you can begin and complete your training. If you wish to lease a space for your Business, factors such as your ability to obtain a lease, financing or building permits, zoning and local ordinances, weather conditions, shortages, or delayed installation of tenant improvements, fixtures, furniture, equipment, and signs can also affect this length of time.

Unless we otherwise agree in writing, you must commence operating your Business within 60 days after you complete the Initial Training Program, and in any event within 4 months following execution of the License Agreement.

Post-Opening Obligations: During your operation of the Business, we will:

1. At your reasonable request for assistance, provide you with assistance and advice from our headquarters staff, field representatives, training staff and other designated representatives with respect to technical and sales support and general advice and assistance relating to the operation of your

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Business by telephone, electronic mail, facsimile or other means of communication. If any advice, consultation or training is provided at your request or if we determine that your Business is not being operated in accordance with our policies, you must reimburse our expenses and pay our then current training fee. We may also make available additional optional services, for example accounting support, for which we may charge a separate fee. (License Agreement § 6.3)

2. Periodically designate products and services as “Authorized Products and Services” and we will periodically designate certain products as “Designated Products” or “Ancillary Products” which you must stock and provide. (License Agreement, §§ 7.3, 10.2 and 10.3)

3. Approve or disapprove any advertising, direct mail, identification and promotional materials and programs you propose to use in connection with local advertising. (License Agreement, § 8.1)

4. Conduct an annual convention for the System. You, your Authorized Trainer or an individual designated by us must attend our annual convention. We may charge an attendance fee for the convention. The convention typically takes place in Las Vegas, Nevada (although we have the right to conduct the convention in a different location) and lasts 3 days. You must pay all transportation costs, food, lodging and similar costs incurred in connection with attendance at the annual convention, and you must stay at the host hotel facility. (License Agreement, § 5.6)

Post-Opening Optional Assistance. During your operation of the Business, we may:

5. Establish an Intranet through which our licensees may communicate with each other, and through which we may communicate with you and will provide the Manuals, updates to the Manuals, and other confidential information to you. We will have sole discretion and control over all aspects of the Intranet, including content and functionality. We may also choose to dismantle it any time. (License Agreement, § 7.12)

6. Designate geographic areas for the establishment of regional advertising cooperatives (“Ad Co-Ops”). We describe the Ad Co-Ops later in this Item. (License Agreement, § 8.3)

7. Institute, maintain and administer a central advertising account (the “Marketing Fund”) for such advertising or public relations programs, as we, in our sole discretion, may deem appropriate to promote Businesses locally, regionally, or nationally. We describe the Marketing Fund later in this Item. (License Agreement, § 8.4)

8. Coordinate the presence of the System on the Internet, including but not limited to e-commerce, web site use, social media and networking sites, and cyberspace applications. This includes all national, regional, state, and local websites regarding Businesses and our franchisees. We will have sole discretion and control over the design and contents of any website. If we operate such a website, the website will include a section that provides the address and telephone number of your Business, except that we reserve the right to de-list or remove your Business from the website if you are not in compliance with the terms of the License Agreement. We also have the right to control all use of social media (including social networking sites like Facebook, MySpace, Twitter, LinkedIn, Plaxo, and others) by you that mentions or uses the Marks. License Agreement, § 9.1)

9. Designate certain National Accounts. We describe the National Accounts later in this Item. (License Agreement § 7.12).

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10. Operate one or more T-1 links free telephone numbers (which may be toll free) to be used in connection with the operation of Sit Means Sit Businesses (“Call Center”) to refer potential clients to you and all of our other licensees. We describe the telephone numbers and Call Center later in this Item. (License Agreement § 8.5).

There is no specified date or period of time for us to complete our obligations stated above. Other than those mentioned above, we do not provide other supervision, guidance, or services during the operation of your Business. National Accounts

National Accounts are: any (i) potential or existing commercial customer that has multiple sites, offices, or retail premises located within and outside of your Trade Area, and (ii) any pet store, veterinarian, charitable organization which trains seeing-eye or service dogs, or similar or related business whose clientele include potential customers for Authorized Products and Services.

To competitively attract and effectively service National Accounts, we may establish policies governing the manner that National Accounts are solicited and serviced, including reserving to us, our affiliates or even to other licensees, the exclusive right to solicit, enter into and service national or regional contracts with National Accounts. You may not solicit National Accounts without our written consent. We may offer you a subcontract to furnish Authorized Products and Services on our behalf to National Accounts located in your Trade Area in our sole discretion and subject to the applicable customer’s approval and terms and conditions. You are not obligated to accept any subcontract for a National Account. If we offer you a subcontract for a National Account and you accept the offer, you must sign a subcontract in the form we prescribe. If you decline the offer, or if you accept the offer, but we are advised by the National Account or we believe in good faith that the National Account is dissatisfied with your work, or it is otherwise necessary in our judgment in order to preserve the National Account or our reputation, we may offer the subcontract for the National Account to another licensee or service the National Account ourselves. (License Agreement § 7.12)

Advertising

Marketing Fund (License Agreement §8.4)

We will administer and direct all marketing and advertising programs and control the creative concepts, materials and media used, media placement and allocation. Media placement may be on an international, national, regional or local basis. The media we use may include print, television, radio, electronic or other media. We need not make expenditures for you that are equivalent or proportionate to your contributions. We need not ensure that you or any particular licensee benefits directly or proportionately from fund advertising. We are not required to spend any amount on advertising in the area where your Trade Area is located. The Marketing Fund is not a trust and we are not a fiduciary. You must contribute 1% of your Gross Sales to the Marketing Fund. Not all licensees will be obligated to contribute the same amount. For example, certain licensees who purchased licenses from us prior to our offering franchises were not obligated to contribute to the Marketing Fund. Each Business that we or our Affiliate operates will also contribute to the Marketing Fund on the same basis, and in the same amounts, as our licensees.

The Marketing Fund may be used to meet all costs of administering, directing, preparing, placing and paying for international, national, regional or local advertising to promote and enhance the image, identity or patronage of Businesses owned by us or our affiliates and by licensees. We may conduct all advertising in-house, or use a national or regional advertising agency. We may transfer contributions to

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the Marketing Fund to a separate entity to whom we will delegate the responsibility of operating and maintaining the Marketing Fund, deposit all Marketing Fees into a separate account, or administratively segregate on our books and records the marketing contributions we receive from licensees. We are not obligated to maintain fund contributions and income earned by the fund in a separate account.

The Marketing Fund will not be used for advertising or promotion whose sole purpose is to solicit the sale of franchises. However, we may allocate a reasonable amount of the Marketing Fund toward the cost of our website's maintenance and further development, and a portion of the website may relate to our franchise opportunity. Other advertising and promotional material may also reflect the availability of franchises.

We may spend in any fiscal year an amount greater or less than the aggregate contributions to the Marketing Fund in that year and may advance or cause the Marketing Fund to borrow funds to cover deficits or invest surplus funds. If we spend less than the total of all contributions to the Marketing Fund during any fiscal year, we will accumulate those sums for use in later years. If we or an affiliate advance money to the Marketing Fund beyond what we must contribute on account of our or affiliate-owned Businesses, we or it will be entitled to reimbursement. Any interest earned on monies held in the Marketing Fund will be contributed or allocated to the Marketing Fund. Although we intend the Marketing Fund to be perpetual, we can terminate it. We will not terminate the fund until it has spent all money in the fund for advertising and promotional purposes.

The Marketing Fund is not audited. Within 120 days following the ending of each fiscal year, at your request we will make available to you an unaudited statement showing contributions to and expenditures of the Marketing Fund.

During our fiscal year ending December 31, 2013, we spent $79,919.07 for the Marketing Fund, which represents 100% of all monies we received from our licensees during our 2013 fiscal year. Of those funds, 100% was spent for media placement and 0% was spent on administrative expenses.

Local Advertising (License Agreement §§8.2, 8.5)

We will allow you to use your own marketing materials if your marketing materials use the Marks correctly, comply with System Standards and applicable law, and have been expressly approved by us in writing before their use. All advertising, promotion, and marketing must be completely clear, factual, and not misleading, and must conform to both the highest standards of ethical advertising and marketing and the advertising and marketing policies that we periodically require. Before you use them, you must send us or our designated agency for review samples of all advertising, promotional, and marketing materials that we have not prepared or previously approved. If you have not received a response from us within 15 days of the date that you submit advertising materials to us for approval, they will be deemed disapproved. You may not use any advertising, promotional, or marketing materials that we have not approved or have disapproved.

At our request, all advertising relating to your Business in your Trade Area must include a reference to the telephone number we designate, if any.

Co-Op Advertising (License Agreement § 8.3)

We may designate, change, dissolve or merge regions (“Advertising Co-Op Region”) within which your Business operates. The region we designate may comprise a Designated Market Area established periodically by Nielson Media Research, an Area of Dominant Influence established periodically by Arbitron, or a standard metropolitan statistical area or other geographic area we establish,

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and will function for the purpose of creating a cohesive team (“Advertising Co-Op”) to coordinate advertising and marketing efforts. If we establish an Advertising Co-Op in your region, we will be responsible for administering it. If we or an affiliate of ours owns a Business in an area covered by an Advertising Co-Op Region, that Business will be required to participate in the Advertising Co-Op.

Each Advertising Co-Op Region will operate from written governing documents, which will be available for your review upon request. You must subscribe to and be a member of the Advertising Co-Op and must execute a written subscription agreement on the form we require. If you are a member of an Advertising Co-Op, you and all other licensees who are members, must contribute to the Advertising Co-Op in such amount as the Co-Op determines, but which will not exceed 5% of your Gross Sales. The entire amount contributed to an Advertising Co-Op each calendar year, if any, will be credited against your local advertising requirement described above. Each Advertising Co-Op will decide how to use the contributions, subject to our approval. Periodically, we may propose certain general or specific uses of the contributions and each member of the Advertising Co-Op will vote on our proposal. All advertising, including advertising conducted by Advertising Co-Ops, must be approved by us.

At all meetings of Advertising Co-op Regions, each participating franchisee is entitled to one vote per Business that a franchisee operates in the Advertising Co-op Region and we and our affiliates are entitled to one vote for each company-owned or affiliate-owned Business in the Advertising Co-op Region.

We expect each Advertising Co-op to prepare an unaudited statement showing contributions to and expenditures of the Advertising Co-op within 120 days following the end of our fiscal year, a copy of such statement(s), if any, prepared by such Advertising Co-op will be provided to you upon your request.

As of the date of this disclosure document, we have not formed any Advertising Co-op Regions.

Advertising Council

There is no advertising council composed of licensees that advises us on advertising policies. The License Agreement does not give us the power to form, change or dissolve an advertising council.

Computer System

You must purchase, use and maintain the Computer System as specified in the Manuals or by us in writing. The Computer System must meet our minimum requirements, which currently include a computer with the following minimum specifications: Pentium 4 2.8Ghz, 2Gb Ram; 120Gb Hard Drive. You may purchase the Computer System from any supplier so long as it meets our minimum requirements. You are not required to buy or use an electronic cash register.

You must connect the Computer System to a dedicated telephone line (or other communications medium we specify) at all times and be capable of accessing the Internet via a designated third party network. You must also obtain all software and hardware, as we specify, including digital still and video cameras, to enable you to send and receive e-mail and digital photos and video and audio signals of completed customer projects in the form and manner we prescribe. The Computer System will store the business records of your business, including sales and customer information. We have the right to independently access all information collected or compiled by or in accordance with your use of the Computer System or Proprietary Software at any time without first notifying you via any means, including electronic polling communications.

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You must purchase any upgrades, enhancements or replacements to the Computer System that we require and there are no contractual limitations on the frequency or cost of required upgrades. (License Agreement § 7.5.1) The approximate initial cost to you for the Computer System is $900 to $5,000. We estimate that the annual cost of optional or required updating or upgrading to be less than $500, but we expect that you will have to update, upgrade or replace your Computer System approximately every three years. We estimate that the replacement Computer System will cost from $500 to $4,800. We recommend that you save a reasonable amount each year in anticipation of this expense. As of the date of this disclosure document, we have not specified any optional or required maintenance or support contracts, and therefore, we have not included the cost of hardware and software maintenance agreements, if any.

Neither we, nor any affiliate or third party, is obligated to provide ongoing maintenance, repairs, upgrades, or updates to the Computer System. We currently do not require that you purchase a maintenance, repair, upgrade or update service contract for the Computer System, but we reserve the right to do so in the future. The current annual cost of a service contract is about $1,500.

We may require you to sign a license agreement to license or sublicense our Proprietary Software. If we require you to license or sublicense Proprietary Software, we (or our designee) will provide support services to you regarding the Proprietary Software at the then-current rates. You must incorporate any changes we make to the Proprietary Software within 30 days of receiving notice from us. (License Agreement § 7.5.2)

Training (License Agreement, Article 6)

Before you commence operation of your Business, we will provide our Initial Training Program to one individual for no fee. (License Agreement § 6.1.1) You must have at least one Authorized Trainer that has satisfactorily completed out Initial Training Program to our satisfaction before you begin operating your Business. After the first trainee, our current fee is $2,500 per person that attends the Initial Training Program the Initial Training Program, plus $1,125 per person for housing during the Initial Training Program. You must bear all travel, food, incidental, and other expenses incurred by you and your personnel in connection with attending the Initial Training Program.

The Initial Training Program will take place at our training facility in Nevada or at another place we designate. (License Agreement § 6.1.1) If we determine that you or any of your employee’s progress during the Initial Training Program is unsatisfactory, we may terminate your License Agreement, in which case we will refund a portion of the Initial Fee to you, but we will not refund any of the training or housing fees for the additional people who attend the Initial Training Program with you. (License Agreement § 6.1.2)

We may choose not to provide the Initial Training Program if you or your Authorized Trainer has previously completed the Initial Training Program in connection with another Business; or if your License Agreement is a Successor License Agreement. (License Agreement § 6.1.6)

The Initial Training Program consists of approximately 150 hours of training over roughly a 21 day period, and will take place primarily at or close to our corporate facility in Las Vegas, Nevada. The following table describes our Initial Training Program:

TRAINING PROGRAM

Subject Hours of Classroom

Training Hours of On-The-

Job Training Location

Dog Training 8 hrs. 138 hrs

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Business/Marketing 4.75 hrs. 11 hrs. Las Vegas, NV

Business Office 1.75 hrs. 0

Miscellaneous Dog Training (specific problem issues)

2.75 hrs. 0

Personal Dog Training 0 16 hrs.

Total 17.25 hrs. 172 hrs.

We will hold training as frequently as we determine necessary. Training is presently conducted

under the supervision of our President, Alfredo Rivera, who has 25 years of experience in dog training (15 of those years Mr. Rivera has spent training dogs for competition). Mr. Rivera also has 25 years of experience working in the corporate world, and has significant experience working in marketing, back office, and personnel issues in that capacity. Mr. Rivera has worked with us since we began offering licenses. Training may also be conducted by other instructors who have at least one year experience in the Sit Means Sit System. Training materials will include our Manuals.

We may, no more frequently than annually, require you to attend additional training courses or programs (“Additional Training”). We may also make optional training courses or programs available to you or your employees at locations we select, to instruct you on new procedures or programs which we consider to be of major importance, which will include dog training techniques, business operations, and marketing. The duration of these Additional Training courses will be two to three days. The location of these Additional Training courses will be Las Vegas, Nevada for national mandatory Additional Training courses. For regional and local mandatory training courses, the location will vary based on your region, or location, but the Additional Training will be within your region or local area.

We will not charge a fee for Additional Training that we require you and/or your personnel to attend; however, we may establish charges for optional Additional Training courses that we make available to you. Our current fee optional Additional Training courses are $150 per attendee, per day. Regardless of whether the Additional Training course is mandatory or optional, you will bear all expenses for you and your personnel while attending Additional Training, regardless of whether the Additional Training is required or optional. (License Agreement § 6.4)

We may periodically schedule an annual convention or other system-wide or regional meeting at locations that we choose. If we schedule this annual convention or meeting, at least one person (either you, your Authorized Trainer, or another employees of yours whom we designate or approve), unless excused by us for good cause. You must pay all travel expenses that you or your personnel incur in connection with attending these meetings. We have the right to charge you a reasonable convention attendance fee to cover our costs associated with holding a convention, which is currently $160 per attendee, per day. (License Agreement §§ 5.6 and 6.5)

You must train each of your employees who will conduct dog training to our satisfaction in accordance with the Manuals. Before you begin operation of your Business, and at all times during the Term of your license, you must employ the number of trained employees and dog trainers necessary, in our judgment, to adequately operate the Business. (License Agreement § 6.2)

Item 12

Territory

You will receive an exclusive territory in your Trade Area (defined below).

The franchise that we grant to you will not be for a specific location, but instead will be for the right to operate a single Business within a specific geographic area (the “Trade Area”). You and we will

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mutually select, define and agree upon your Trade Area before you sign the License Agreement. Your Trade Area will be described on Exhibit A to your License Agreement and may be defined by reference to streets, natural boundaries or zip codes or may be one or more cities, counties or states, or some other defined area, as constituted on the date of the License Agreement. You may not relocate your Trade Area. If the boundary of the Trade Area is a street (including where the Trade Area is defined as a zip code, and the boundary of the zip code is defined as a named street), the center of the named street is the boundary.

Your Trade Area will contain a “dog population” of between 20,000 and 40,000. We determine “dog population” by using United States Census data (for humans). We determine “dog population” by applying the following formula:

(1) Divide total population by 2.5 to obtain “household population”

(2) Multiply household population x .372 to obtain “dog-owning households”

(3) Multiply dog-owning households by 1.7 to obtain “dog population.”

The minimum Trade Area which we will grant will contain at least 20,000 in total dog population. The exact boundaries of your Trade Area will depend on Trade Areas population density, the number of dogs in the area, the need for dog training classes within the area, and the territorial rights which have previously been given to existing licensees, including those in the surrounding areas.

Except as described below, during the term of your License Agreement, neither we nor any of our affiliates will conduct dog training classes, nor license others to do so, within your Trade Area.

We expressly reserve all other rights. These include the unrestricted right to engage in the activities listed below.

(a) We reserve the right to own or operate (i) “Sit Means Sit” Businesses at any location outside of your Trade Area, and (ii) business which may be similar to Sit Means Sit Businesses but which operate under names other than “Sit Means Sit” at any location within or outside of your Trade Area, whether or not those businesses use any portion of the Sit Means Sit System.

(b) We reserve the right to manufacture, produce, license, distribute and market products that are the same as, similar to, or different from the products that we authorize you to sell (whether or not under the Marks), including books, videos, instructional materials, dog care products, dog training products, dog toys, foods and treats, leashes, collars, apparel and other retail items at or through alternative channel of distribution, including or not limited to any outlet (within or outside of your Trade Area), including specialty stores and through any distribution channel, at wholesale or retail, including by means of the Internet, Internet web site, mail order catalogs, telephone infomercials, direct mail advertising and other distribution methods.

(c) We reserve the right to acquire or be acquired by, and subsequently operate and license others to operate non-“Sit Means Sit” businesses which may offer goods and services similar to or competitive with goods and services offered by your Business or related goods and services at any location and of any type or category whatsoever, within or outside of your Trade Area.

(d) We reserve the right to solicit, sell and service National Accounts wherever located, including in your Trade Area.

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(e) We reserve the right to advertise within and travel through your Trade Area.

We will not provide any compensation to you if we exercise any of our rights listed above.

We may temporarily permit you to operate your Business in areas contiguous to your Trade Area that have not been assigned to another Sit Means Sit licensee (an “Unassigned Area”). If we allow you to do so, we may impose certain restrictions and terms (including signing a separate written agreement) and the right may be exclusive or non-exclusive. You are not allowed to construct or operate a physical office, training center or any type of sales or training facilities outside of your Trade Area. You do not receive any right of first refusal or other rights of any type to acquire additional franchises because of your operations in an Unassigned Area and we may cancel or modify your right to operate in an Unassigned Area at any time. You may (for a maximum of 15 days) provide Authorized Products and Services for which appointments were received before we gave you notice to cease operating in an Unassigned Area. Except as described in this paragraph, we do not allow you to solicit or accept business from customers outside of your Trade Area.

You may not use other channels of distribution, such as the Internet, catalog sales, telemarketing or other direct marketing to make sales within or outside of your Trade Area.

There is no minimum sales quota, but we do expect you to use your best efforts to promote and increase the sales and service of the Business and to effect the widest and best possible distribution, sale and placement, solicitation and servicing of all potential customers for authorized Sit Means Sit services throughout the Trade Area. We have the right to terminate our grant, or reduce the size, of your Trade Area if you default under the License Agreement for, among other things, failing to maintain our standards or failure to pay royalty and other fees when they become due. There are no other circumstances under which we will modify your rights in the Trade Area.

On renewal, acquiring a successor franchise, or transferring your franchise, your Trade Area may be modified. Depending on the then-current demographics of the Trade Area, and on our then-current standards for territories, if the Trade Area is larger than our then-current standard trade area, we may require you or the transferee to accept a successor franchise trade area or a transfer trade area smaller than the Trade Area we grant to you under this offering.

You are not required to operate your Business from a formal training facility. If you intend to operate from an office and/or facility (the “Training Facility”) other than your residence, you must obtain our advance consent and approval of the Training Facility. The Training Facility must be located within the Trade Area and you may not establish, construct, maintain or operate a physical office, or any type of sales or training facility outside of the Trade Area. You may not relocate the Training Facility without our prior written consent. If we consent to any relocation, you must de-identify the former Training Facility in the manner described in the License Agreement with respect to your obligations upon termination and expiration.

We do not customarily grant options, rights of first refusal or similar rights to acquire additional franchises, although we do retain the right to grant such options or rights within our sole discretion. In order to acquire the right to open additional franchise locations under the Marks and the System in areas contiguous or noncontiguous to your territory, you must apply to us, obtain our approval, pay a new Initial Fee as determined by us, and execute a new License Agreement for each location you desire to open. There is no guarantee that any such territory will be available to you at the time of your application or that you will be able to obtain our approval.

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If you fail to cure curable defaults or commit incurable defaults under your License Agreement, we may terminate your License Agreement. There are no other circumstances under which we may modify your territorial rights.

We and our affiliates do not operate or franchise any business under a different trademark or service mark, and we and our affiliates currently do not have plans to do so.

Item 13

Trademarks

We license you the right to operate a Business under the name “Sit Means Sit.” You may also use our other designated current or future trademarks to operate your Business. By principal trademark we mean primary trademarks, service marks, names, logos, and commercial symbols used to identify your Business. Fred Hassen is the owner of the “Sit Means Sit” trademarks in the United States and has licensed us to offer and sell licensees, and to sublicense the right to use the principal marks in connection with the operation of Businesses. Mr. Hassen owns the following trademark registrations, which are listed on the Principal Register of the U.S. Patent and Trademark Office:

MARK

REGISTRATION NUMBER

(APPLICATION NUMBER) REGISTRATION DATE

(FILING DATE)

SIT MEANS SIT 3,076,692 4-Apr-06

SIT MEANS SIT 3,704,665 3-Nov-09

3852127

28-Sep-10

(85/770428) (November 2, 2012)

We have filed all required affidavits relating to the registered Mark shown above.

We and Fred Hassen have signed a Trademark and Intellectual Property License Agreement under which Mr. Hassen has licensed us to use and sublicense the use of the Marks, for a period of 50 years commencing January 1, 2009 and continuing from year to year after that unless either of us elects not to renew at the end of the initial 50 year term or any one year renewal term. Mr. Hassen has agreed to assign the Trademark and Intellectual Property License Agreement to SMSI, which will assume his obligations under the Trademark and Intellectual Property License Agreement. There are no circumstances when the agreement may be cancelled or modified. No affidavits have been required to be filed. Other than the license agreement referred to above, no agreements presently limit our right to use or license the use of these trademarks.

We also have common law rights in the Marks by virtue of using them in interstate commerce. We may have the right, as a matter of common law, to exclude other users from using the same or confusingly similar marks for similar products or services within the area of geographical influence of our company and/or our licensees. The specific legal rights which you and we have in a particular dispute would depend upon all the facts and circumstances surrounding the dispute.

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There are no currently effective material determinations of the United States Patent and Trademark Office, the Trademark Trial and Appeal Board, or any state trademark administrator or court; or any pending infringement, opposition, or cancellation proceeding, or any pending material federal or state court litigation involving the trademarks. We do not know of any superior prior rights or infringing uses that could materially affect your use of the Marks.

You must follow our rules when you use our Marks. You cannot use a name or Mark 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 our registered name in connection with the sale of an unauthorized product or service or in a manner not authorized in writing by us.

You must notify us immediately in writing of any apparent infringement of, challenge to, or unauthorized use of the “Sit Means Sit” name or Marks which comes to your attention, including any claim, suit or demand against you, including litigation or administrative proceedings. We have the right to take actions we deem appropriate to protect our name or marks but we are not obligated by the License Agreement to do so. You may not settle or compromise any trademark claim without our express written consent.

We have the sole right to control, defend, compromise or settle any litigation or proceedings at our sole cost and expense, using attorneys of our own choosing and you must cooperate fully with us in the defense of this claim. You may participate at your own expense in defense or settlement (in that event, we will not indemnify you against the costs you incur), but our decisions about the matter will be final.

If we must stop using the Marks by court order, or as a result of any settlement of any claim by a third party, or if we deem it necessary or appropriate to change the Marks in order to mitigate any potential exposure or damages arising under any claim by a third party, they we will provide you with written notice of our decision to change the Business name, in which event you will have 30 days after the date of the notice (or a shorter time if required by a court order or settlement agreement) within which you may terminate your License Agreement. If you do not terminate your License Agreement, you must promptly change your Business name to the name we designate. We are not liable for any losses or any consequential damages, including lost future profits, resulting from or arising out of any claims by a third part relating to your use of the Marks.

Periodically, in the Manuals or in directives or supplemental bulletins, we may add to, delete, or modify any or all of the Marks. You must modify or discontinue the use of a Mark, at your expense, if we modify or discontinue it. We will not compensate you for any modification or discontinuation of the Marks. You must adopt any new Mark we adopt. Except as described above, you must implement any change to our Marks within 60 days after notice to you.

Item 14

Patents, Copyrights, and Proprietary Information

Patents and Copyrights

No patents are material to the franchise. We own certain copyrights in the Manuals, marketing materials, software, and other copyrightable items under the System. While we claim copyrights in these and similar items used in operating a Business, we have not registered these copyrights with the United States Registrar of Copyrights but need not do so to protect them. You may use these items only as we specify while operating your Business and must stop using them if we direct you to do so.

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We will make available to you our confidential franchise business Manuals on line via our corporate resource page, which you will be permitted to use during the term of your Business. The Manuals are our property and you may not duplicate, copy, disclose or disseminate the contents of the Manuals at any time, without our express written consent. We may modify or supplement the Manuals upon notice or delivery to you. Upon the termination or non-renewal of your License Agreement, you must delete or destroy all copies of any information from the Manuals if you have them in any form.

We do not know of any infringing uses that could materially affect your use of the copyrights, trade secrets, processes, methods, procedures, or other proprietary information described above. There are no agreements currently in effect that limit our rights to use or license the above-mentioned copyrights in any manner. There currently are no effective determinations of the Patent and Trademark Office, the Copyright Office (Library of Congress), or any court regarding any of the copyrighted materials. We are not required by any agreement to protect or defend any patent, trademark, or copyright.

Confidential Information

You may not copy, divulge or use any confidential information, which may include our policies and the contents of our Manuals, marketing concepts, customer lists and information, and operating methods and techniques (the “Confidential Materials and Practices”) during or after the term of your License Agreement, except in the operation of your Business under a valid License Agreement. The License Agreement provides that you will not acquire any interest in the Confidential Materials and Practices other than the right to utilize it in the development and operation of a Business during the term of the License Agreements, and that the use or duplication of the Confidential Materials and Practices in any other business would constitute unfair competition. You must follow all reasonable procedures we prescribe to prevent unauthorized use and disclosure of our Confidential Materials and Practices. You must inform your employees that have access to the Confidential Materials and Practices of their obligation to keep the information confidential and we may require that they sign a written non-disclosure agreement or acknowledgment. A copy of our current form of Employee Confidentiality and Non-Competition Agreement is attached as Exhibit “E.”

You must promptly notify us when you learn of an unauthorized use of the confidential information or any Copyrighted Work. We do not have to take any action against any unauthorized user of the confidential information or Manual, but will respond to this information as we think appropriate. We are not obligated to indemnify you for losses brought by a third party concerning your use of this information. We have the right to control any litigation concerning any Copyrighted Work. We are not required to participate in your defense or indemnify you for expenses or damages involving a copyright that we license to you.

You must not use, in advertising or any other form of promotion, the copyrighted materials of ours without the appropriate notices which may be required by law or us, including ©, or other copyright registration notices where applicable.

Improvements

If you make or acquire any improvements, including any enhancements, adaptations, derivative works, modifications or new processes (“Improvements”) in the operation of the Business, you will grant-back exclusive rights in these Improvements to us in consideration of the grant of the franchise and without the payment of additional consideration. We may include any Improvements we made or acquired in our technology, including any and all intellectual property rights of ours and affiliate or services and products of the Business, Manual and the System for use by all of our franchisees, licensees, us or any affiliate. If we seek patent protection or copyright registration for any Improvements, we will

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do so at our own expense. You will sign or have the creator sign all documents necessary to enable us to apply for intellectual property rights protection and to secure all rights to these Improvements. You must agree that this does not constitute our consent to your modification of any of our technology or the creation of any derivative work based on any of our copyrights and you must obtain our express written consent before making the modification or derivative work.

Item 15

Obligation to Participate in the Actual Operation of the Franchise Business

You are not obligated to participate personally in your business, but you must designate an individual acceptable to us who will be principally responsible for communicating with us about business, operational and other ongoing matters concerning your Business. If you are a business entity, we do not require that the designated individual be one of your owners. The designated individual must (a) devote full time and best efforts solely to the operation of your Business and to no other business activities, (b) meet our educational, experience, financial and other reasonable criteria, and (c) unless we agree otherwise, must attend and successfully complete our Initial Training Program.

If you are an entity, all of your direct and indirect stockholders, members, partners or trustees, and other persons that control the entity’s voting rights must sign an agreement (Exhibit “C” - Guaranty) assuming and agreeing to discharge all obligations of the “Licensee” under the License Agreement and Promissory Note.

You must inform your employees that have access to the Confidential Materials and Practices of their obligation to keep the information confidential and we may require that they sign a written non-disclosure agreement or acknowledgment, and your employment agreement also must contain a covenant against competition within a geographic area and for a length of time designated by us. A copy of our current form of Employee Confidentiality and Non-Competition Agreement is attached as Exhibit “E.”

Item 16

Restrictions on What the Franchisee May Sell

You may sell and offer only those products and services that we approve (“Authorized Products and Services”) in connection with your Business. You may not offer for sale any products or services not specifically approved by us in writing, and you may not use your Business Vehicle(s) or premises (if you have a Training Facility) for any other purpose than the operation of a Sit Means Sit Business and the sale of products or services approved by us. You must offer any products and/or services that we designate as required products and/or required services in the Manual (or otherwise in writing). There are no limits on our ability to make changes to the products or services we require you to sell.

You may not offer, sell or provide any Authorized Products or Services with any trademark, service mark, logo type or commercial symbol of any other person or business entity without our express written consent.

You may not sell products through other channels of distribution such as wholesale, Internet or mail order sales. You may not sell products or services, or advertise products or services, within another franchisee’s Trade Area. You may not sell products through other channels of distribution such as wholesale, Internet or mail order sales. You may not establish an account or participate in any social networking sites (including, without limitation, Facebook, MySpace, Twitter or any other social or professional networking site or blog) or mention or discuss the franchise, us or any of our affiliates, without our prior written consent and as subject to our on-line policy. Our on-line policy may completely prohibit you from any use of the Marks in social networking sites or other on-line use. Otherwise, we

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place no restrictions upon your ability to serve customers provided you do so from the location of your Business in accordance with our policies.

Item 17

Renewal, Terminations, 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.

Provision Section in License Agreement

Summary

a. Length of the franchise term § 3.1 10 years from the effective date of the License Agreement.

b. Renewal or extension of the term

§ 3.2 If you are in good standing, you may enter into 1 successor license agreement, with a 10 year term. You have no further right to enter into additional successor license agreements, but may apply for the right to operate a Business under a new license agreement.

c. Requirements for franchisee to renew or extend

§§ 3.2 - 3.4 You must: (i) notify us between 9 and 12 months before your License Agreement expires that you intend to exercise your right to a successor license agreement; (ii) have complied with your obligations under your initial license agreement, the Manuals and all other agreements then in effective between you and us or our affiliates and all agreements between you and Suppliers; must comply with our then-current qualification and training requirements; (iii) all trainers must possess a valid driver’s license for the state in which your Trade Area is located; (iv) not have committed 3 or more material breaches during any 12 month period; (v) sign a general release; and (vi) sign a new license agreement, which may differ from the current form of license agreement. Although this table uses the term “renewal,” it refers to extending our relationship at the end of your initial term and you must, at our option, sign a new license agreement that may have materially different terms and conditions than your original contract.

d. Termination by franchisee § 15.8 You may terminate if we materially default, and if we do not cure the default within 60 days after our receipt or written notice from you detailing the alleged default.

e. Termination by Franchisor without cause

None The License Agreement does not provide for termination without cause.

f. Termination by Franchisor with cause

§§ 15.1 – 15.7 We can terminate only if you default under your License Agreement.

g. “Cause” defined – curable § 15.4 You have 5 days to cure non-payment of fees and

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Summary

defaults 10 days to cure defaults not listed in Sections 15.2 and 15.3 of your License Agreement.

h. “Cause” defined – non-curable defaults

§15.2 – 15.3 Non curable defaults are: (i) bankruptcy or insolvency; (ii) a judgment against you remains unsatisfied; (iii) your business or assets are seized, taken over or foreclosed upon; (iv) a levy of execution of attachment up on License Agreement or upon any property used in the Business; (v) if you allow or permit any judgment to be entered against us or any of its our affiliates, arising out of or relating to the operation of the Licensed Business; (vi) if you, your Authorized Trainer(s), or any trainer is convicted of or pleads guilty or nolo contendere to a felony or any other crime (including any crime or offense relating to the operation of a motor vehicle) or offense which may adversely affect our reputation and the system; (vii) imminent danger to the public health and safety violations; (viii) failure to comply with your confidentiality or non-competition provisions of your license agreement; (ix) abandonment; (x) Assignment without our consent; (xi) you commit more than two defaults in any twelve-month period, even if you have cured them; (xii) violation of law which is not cured within 10 days; (xiii) knowingly maintaining false books, underreporting or under recording of Gross Sales, certain underreporting or under-recording; (xiv) trademark and confidential information misuse; (xv) misrepresentations in connection with the acquisition of the license.

i. Franchisee’s obligations on termination/non-renewal

Article 16 You must stop using our Marks; stop using all photographs, images, videos, testimonials and advertisements; pay all amounts due to us; return the Manuals, all training materials, CD ROMs, DVDs, records, customer lists, files, advertising and promotional materials and all other written materials incorporating our trade secrets; makes cosmetic changes to your Vehicle(s) so that they no longer resemble our proprietary design; upon receiving notice from us, assign to us or our designee (or, at our election, terminate) all voice and data telephone numbers used in connection with your Business; authorize and instruct the telephone company and all listing agencies of the termination of your right to use any telephone number or listing associated with your Business and authorize and instruct the telephone companies and listing agencies to transfer and assign the telephone numbers and directory listing to us, sign and deliver to us all documents that must be filed with any governmental agency indicating that you are no longer licensed to use our Marks. See also “r” below.

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Summary

j. Assignment of contract by Franchisor

§ 14.1 We may transfer the License Agreement without your consent. There are no restrictions on our right to assign.

k. “Transfer” by franchisee – defined

§ 14.2.1 and Appendix 1 (Defined as “Assignment”)

Includes transfer of the agreement, assets or sale of stock, or change in ownership of a licensee which is an entity. You may transfer the License Agreement and all rights under the License Agreement subject to certain restrictions.

l. Franchisor approval of transfer

§ 14.2 Transfers require our express written consent. We have the right to approve all transfers, but will not unreasonably withhold approval.

m. Conditions for franchisor approval of transfer

§§ 14.2 & 14.4 New licensee must qualify, assume the License Agreement or sign a new License Agreement, complete training, refurbish or replace, if necessary the Vehicle(s) used in connection the Business to conform to our current specifications. You must not be default under the terms of your License Agreement or any other related agreements with us or under any agreement with our affiliates or the Manuals. You must: provide us with an estoppel agreement and a list of all persons having an interest in the License Agreement or in the Licensee; pay all amounts then-due to us; sign a general release; sign a guarantee; provide us with all documents relating to the transfer, disclose to us all material information that we request regarding the transferee, the purchase price, and the terms of the transfer, and pay an administrative / transfer fee. If we determine that the assignee must attend the Initial Training Program, you must pay our then current training fee and our travel expenses to provide training. (See also “r” below). If the new licensee is a business entity, all owners of an interest in the new licensee must sign a guaranty.

n. Franchisor’s right of first refusal to acquire franchisee’s business

§ 14.3 We can match any offer for your Business. You must give us written notice of intent to sell or otherwise transfer the License Agreement. We have 60 days from the date that you give us written notice to determine whether we will exercise our right of first refusal. We have the right of first refusal to purchase the Business or assets for which you have received a good faith offer to purchase, on the same terms as contained in the offer.

o. Franchisor’s option to purchase franchisee’s business

None No provision.

p. Death or disability of franchisee

§ 15.3.2 Same requirements as for transfer in "m" above, however, we will allow up to 6 months after your death or disability for your heirs, personal representatives or conservators (“Heirs”) to (a) assume your License Agreement or enter into a new license agreement (for which we will not charge an initial fee or transfer fee) or (b) sell the Business to an assignee approved by us. Upon the

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Summary

death or legal incapacity of one of your owners owning 25% or more of the equity or voting power of a corporate or limited liability company Licensee, or a general or limited partner owning 25% or more of any of the partnership rights of a Licensee which is a partnership, we will allow a period of up to 6 months after the death or legal incapacity for your Heirs to get our consent to the transfer or assignment of the stock, membership interests or partnership rights to the Heirs or to another person we accept. If, within the 6 month period, the Heirs fail either to enter into a new license agreement or to sell the Business to a person we approve, or fail either to get our consent to the Assignment of the stock, membership interest or partnership rights to the Heirs or to another person we accept, the License Agreement will automatically terminate.

q. Non-competition covenants during the term of the franchise

§ 13.1.1 You cannot engage in “Competitive Activities,” defined as: owning, operating, lending, advising, employing or having any financial interest in any business that engages in providing dog training services, or training others who provide dog training.

r. Non-competition covenants after the franchise is terminated or expires

§ 13.1.2 Except with our express written consent, you must not have any involvement in any Competitive Activities (defined above), for 2 years at: (i) any site within your Trade Area; (ii) any other geographic areas where you have operated the Business; or (iii) the designated trade area of other Sit Means Sit licensees. Also, except with our express written consent, you may not solicit business from an individual or business entity that was one of your customers during the 12 month period preceding the termination of your License Agreement.

s. Modification of the agreement

§ 21.7 The License Agreement may be modified only by written agreement between the parties. The Manuals are subject to change by us in our sole discretion, and you are required to comply with any such changes made by us.

t. Integration/Merger clause §21.7 Only the terms of the Franchise Agreement and other related written agreements are binding (subject to applicable state law). Any representations or promises outside of the disclosure document and franchise agreement may not be enforceable.

u. Dispute resolution by arbitration or mediation

Article 20 Both of us agree to attempt to resolve any dispute in a non-binding mediation held in Las Vegas, Nevada before commencing any proceeding.

v. Choice of forum § 20.2 Subject to state law, all proceedings will be held in Las Vegas, Nevada. Both of us waive the right to a trial by jury. See any state-specific addendum

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Summary

attached to this disclosure document in “Exhibit J.”

w. Choice of law § 21.6 Subject to state law, Nevada law applies. See any state-specific addendum attached to this disclosure document in “Exhibit J.”

Item 18

Public Figures

We do not use any public figures to promote this franchise.

Item 19

Financial Performance Representations

The FTC’s Franchise Rule permits a licensor to provide information about the actual or potential financial performance of its license and/or licensor-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 licensor provides the actual records of an existing outlet you are considering buying; or (2) a licensor supplements the information provided in this Item 19, for example, by providing information about possible performance at a particular location or under particular circumstances.

We do not make any representations about a licensee’s future financial performance or the past financial performance of company-owned or licensed outlets. 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 outlet, however, we may provide you with actual records of that outlet. If you receive any other financial performance information or projections of your future income, you should report it to our management by contacting Fred Hassen, 2900 E. Patrick Lane, Suite 2A, Las Vegas, Nevada 89120, (702) 877-4581; the Federal Trade Commission; and the appropriate state regulatory agencies.

Item 20

Outlets and Licensee Information

Before we began offering licenses, our affiliate, SMSI, granted licenses to conduct “Sit Means Sit” dog training businesses under Merchandising and Licensing Agreements (“MLAs”). The MLAs have materially different terms, and use a substantially different form of agreement. MLAs are different from the franchise offered under this disclosure document because MLAs contain substantially less restrictions and controls over the way those licensees do business.

SMSI no longer offers MLAs. We have included information about these MLAs in this Item 20.

Table No. 1 Systemwide Business Summary For Years 2011 through 2013

Business Type Year Businesses at the Start of the Year

Businesses at the End of the Year Net Change

Franchised Businesses

2011 45 58 +13

2012 58 68 +10

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Business Type Year Businesses at the Start of the Year

Businesses at the End of the Year Net Change

2013 68 80 +12

MLA Businesses* 2011 12 8 -4

2012 8 3 -5

2013 3 2 -1

Company- and Affiliate-Owned

2011 1 1 0

2012 1 1 0

2013 1 1 0

Total Businesses 2011 58 66 +8

2012 67 72 +5

2013 72 83 +11

Table No. 2-1

Transfers of Businesses from Licensees to New Owners (other than the Licensor) For Years 2011 through 2013

State Year Number of Transfers

California 2011 0

2012 1

2013 0

Colorado 2011 0

2012 1

2013 0

Illinois 2011 0

2012 0

2013 1

Nevada 2011 0

2012 0

2013 1

Totals 2011 0

2012 2

2013 2

Table No. 2-2

Transfers of MLAs to New Owners (other than SMSI) For Years 2011 through 2013

State Year Number of Transfers

Totals* 2011 0

2012 0

2013 0

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*There were no transfers of MLAs in any state during the years 2011 through 2013.

Table No. 3-1 Status of Licensed Businesses For Years 2011 through 2013*

State Year

Outlets at

Start of

Year

Outlets

Opened

Terminat

ions

Non-

Renewals

Reacquired

by Licensor

Ceased

Opera-

tions –

Other

Reasons

Outlets at

End of

the Year

Arizona 2011 1 1 0 0 0 0 2

2012 2 0 0 0 0 0 2

2013 2 1 0 0 0 0 3

Arkansas 2011 0 0 0 0 0 0 0

2012 0 0 0 0 0 0 0

2013 0 1 0 0 0 0 1

California 2011 6 0 1 0 0 0 5

2012 5 2 1 0 0 0 6

2013 6 2 1 0 0 1 6

Connecticut 2011 0 0 0 0 0 0 0

2012 0 1 0 0 0 0 1

2013 1 0 0 0 0 0 1

Florida 2011 2 5 1 0 0 0 6

2012 6 1 1 0 0 0 6

2013 6 0 0 0 0 0 6

Georgia 2011 3 0 0 0 0 0 3

2012 3 0 0 0 0 0 3

2013 3 0 1 0 0 0 2

Hawaii 2011 1 0 0 0 0 0 1

2012 1 0 0 0 0 0 1

2013 1 0 0 0 0 0 1

Idaho 2011 1 0 0 0 0 0 1

2012 1 0 0 0 0 0 1

2013 1 0 0 0 0 0 1

Illinois 2011 3 1 0 0 0 0 4

2012 4 0 0 0 0 0 4

2013 4 2 0 0 0 1 5

Kentucky 2011 0 0 0 0 0 0 0

2012 0 1 0 0 0 0 1

2013 1 0 0 0 0 0 1

Maryland 2011 0 1 0 0 0 0 1

2012 1 1 0 0 0 0 2

2013 2 2 0 0 0 0 4

Massachusetts

2011 0 1 0 0 0 0 1

2012 1 0 0 0 0 0 1

2013 1 0 0 0 0 0 1

Michigan 2011 1 1 0 0 0 0 2

2012 2 1 0 0 0 0 3

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State Year

Outlets at

Start of

Year

Outlets

Opened

Terminat

ions

Non-

Renewals

Reacquired

by Licensor

Ceased

Opera-

tions –

Other

Reasons

Outlets at

End of

the Year

2013 3 1 0 0 0 0 4

Minnesota 2011 1 0 0 0 0 0 1

2012 1 0 0 0 0 0 1

2013 1 0 0 0 0 0 1

Missouri 2011 1 0 0 0 0 0 1

2012 1 0 0 0 0 0 1

2013 1 0 0 0 0 0 1

Nevada 2011 4 1 0 0 0 0 5

2012 5 1 0 0 0 0 6

2013 6 1 0 0 0 1 6

New Jersey 2011 2 0 0 0 0 0 2

2012 2 0 0 0 0 0 2

2013 2 0 0 0 0 0 2

New York 2011 1 0 0 0 0 1 0

2012 0 2 0 0 0 0 2

2013 2 1 1 0 0 0 2

2011 0 1 0 0 0 0 1

2012 1 1 0 0 0 0 2

2013 2 0 0 0 0 0 2

Ohio 2011 4 0 0 0 0 0 4

2012 4 0 0 0 0 0 4

2013 4 1 0 0 0 0 5

Oregon 2011 0 0 0 0 0 0 0

2012 0 1 0 0 0 0 1

2013 1 0 0 0 0 0 1

Oregon 2011 0 1 0 0 0 0 1

2012 1 0 0 0 0 0 1

2013 1 0 0 0 0 0 1

Pennsylvania

2011 0 0 0 0 0 0 0

2012 0 0 0 0 0 0 0

2013 0 1 0 0 0 0 1

Texas 2011 4 4 1 0 0 0 7

2012 7 1 0 0 0 2 6

2013 6 3 0 0 0 0 9

Utah 2011 1 0 0 0 0 0 1

2012 1 0 0 0 0 0 1

2013 1 0 0 0 0 0 1

Wisconsin 2011 0 0 0 0 0 0 0

2012 0 1 0 0 0 0 1

2013 1 2 0 0 0 0 3

Wyoming 2011 0 1 0 0 0 0 1

2012 1 1 0 0 0 0 2

2013 2 0 0 0 0 0 2

Total 2011 45 18 4 0 0 1 58

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State Year

Outlets at

Start of

Year

Outlets

Opened

Terminat

ions

Non-

Renewals

Reacquired

by Licensor

Ceased

Opera-

tions –

Other

Reasons

Outlets at

End of

the Year

Outlets 2012 58 16 4 0 0 2 68

2013 68 18 3 0 0 3 80

*If multiple events occurred affecting an outlet, this table shows the event that occurred last in time.

Table No. 3-2 Status of MLAs

For Years 2011 through 2013*

State Year

Outlets at

Start of

Year

Outlets

Opened

Termin

ations

Non-

Renewals

Reacquired

by

Licensor

Ceased

Opera-

tions –

Other

Reasons

Outlets at

End of the

Year

California 2011 2 0 0 0 0 0 2

2012 2 0 0 0 0 0 2

2013 2 0 0 1 0 0 1

Georgia 2011 1 0 0 0 0 0 1

2012 1 0 0 1 0 0 0

2013 0 0 0 0 0 0 0

Idaho 2011 1 0 0 0 0 0 1

2012 1 0 0 1 0 0 0

2013 0 0 0 0 0 0 0

Maryland 2011 1 0 1 0 0 0 0

2012 0 0 0 0 0 0 0

2013 0 0 0 0 0 0 0

Missouri 2011 1 0 0 0 0 0 1

2012 1 0 0 0 0 0 1

2013 1 0 0 0 0 0 1

New Jersey 2011 1 0 0 0 0 0 1

2012 1 0 1 0 0 0 0

2013 0 0 0 0 0 0 0

New York 2011 0 0 0 0 0 0 0

2012 0 0 0 0 0 0 0

2013 0 0 0 0 0 0 0

Oklahoma 2011 1 0 0 0 0 0 1

2012 1 0 1 0 0 0 0

2013 0 0 0 0 0 0 0

Pennsylvania 2011 2 0 2 0 0 0 0

2012 0 0 0 0 0 0 0

2013 0 0 0 0 0 0 0

Texas 2011 1 0 1 0 0 0 0

2012 0 0 0 0 0 0 0

2013 0 0 0 0 0 0 0

Washington 2011 1 0 0 0 0 0 1

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State Year

Outlets at

Start of

Year

Outlets

Opened

Termin

ations

Non-

Renewals

Reacquired

by

Licensor

Ceased

Opera-

tions –

Other

Reasons

Outlets at

End of the

Year

2012 1 0 0 1 0 0 0

2013 0 0 0 0 0 0 0

Total U.S. 2011 12 0 4 0 0 0 8

2012 8 0 2 3 0 0 3

2013 3 0 0 1 0 0 2

*If multiple events occurred affecting an outlet, this table shows the event that occurred last in time.

Table No. 4 Status of Company- and Affiliate-Owned Businesses

For Years 2011 through 2013

State Year

Outlets at

Start of

Year

Outlets

Opened

Outlets

Reacquired

from

Licensee

Outlets

Closed

Outlets

Sold to

Licensee

Outlets at

End of the

Year

Nevada 2011 1 0 0 0 0 1

2012 1 0 0 0 0 1

2013 1 0 0 0 0 1

Totals 2011 1 0 0 0 0 1

2012 1 0 0 0 0 1

2013 1 0 0 0 0 1

Table No. 5

Projected Openings As of December 31, 2013

State

Franchise

Agreements Signed

But Outlet Not

Opened

Projected New

Franchised Outlets

in the Next Fiscal

Year

Projected New

Company-Owned

Outlets in the Next

Fiscal Year

Arizona 0 1 0

California 0 2 0

Florida 0 2 0

New York 0 1 0

Ohio 0 1 0

Oregon 0 1 0

Texas 0 1 0

Washington 0 1 0

Wisconsin 1 1 0

Total 1 11 0

Attached as Exhibit F-2 is the name, address and last known telephone number of all licensees of

ours who had an outlet terminated, cancelled, not renewed, or otherwise voluntarily or involuntarily

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ceased to do business during 2013 or who have not communicated with us or our Affiliate within 10 weeks of the issuance date of this disclosure document.

If you buy this franchise, your contact information may be disclosed to other buyers when you leave the franchise system.

Some of our current and former franchisees have signed confidentiality clauses with us during the last three years limiting their ability to discuss their personal experience as a franchisee in the System. In some instances, current and former franchisees sign provisions restricting their ability to speak openly about their experience with Sit Means Sit Franchise, Inc. You may wish to speak with current and former franchisees, but be aware that not all such franchisees will be able to communicate with you.

We have not created, sponsored or endorsed any trademark-specific franchisee organizations associated with our franchise system. We are not aware of any trademark-specific franchisee organization associated with our franchise system, nor have we been requested to include any trademark-specific franchisee organization in this Disclosure Document.

Item 21

Financial Statements

Our audited financial statements as of December 31, 2011, December 31, 2012, and December 31, 2013 are attached as Exhibit G.

We have also attached unaudited financial statements dated April 30, 2014. THESE FINANCIAL STATEMENTS ARE PREPARED WITHOUT AN AUDIT. PROSPECTIVE FRANCHISEES OR SELLERS OF FRANCHISES SHOULD BE ADVISED THAT NO CERTIFIED PUBLIC ACCOUNTANT HAD AUDITED THESE FIGURES OR EXPRESSED HIS/HER OPINION WITH REGARD TO THEIR CONTENT OR FORM.

Item 22

Contracts

Attached are the current forms of the following agreements:

A. License Agreement Addenda To License Agreement

A: Trade Area B: Licensee Information C: Electronic Funds Transfer Authorization and Auto Debit Form D: Collateral Assignment of Phone Numbers, Internet Addresses, and Social Media

Identities E: Compliance Questionnaire

F: Deposit Receipt

B. General Release

C. Continuing Guaranty D. Promissory Note E. Form of Employee Confidentiality and Non-Competition Agreement J. State Specific Addendum

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Item 23

Receipts

You will find copies of a detachable receipt in Exhibit K at the end of this disclosure document.

In Process

Exhibit A

License Agreement

In Process

TABLE OF CONTENTS

ARTICLE 1 DEFINITIONS & APPLICABLE INFORMATION ........................................................ 1 1.1 Certain Definitions and Applicable Information ........................................................................ 1

ARTICLE 2 GRANT .................................................................................................................................. 2 2.1 Grant ............................................................................................................................................... 2 2.2 No Sublicensing Rights .................................................................................................................. 2 2.3 Territorial Rights ........................................................................................................................... 2 2.4 Temporary Additional Trade Area .............................................................................................. 3

ARTICLE 3 TERM .................................................................................................................................... 3 3.1 Term ................................................................................................................................................ 3 3.2 Successor Agreement ..................................................................................................................... 3 3.3 Form and Manner of Exercising Successor Agreement Right ................................................... 3 3.4 Conditions Precedent to Entering into a Successor License Agreement .................................. 4 3.5 Notice Required by Law ................................................................................................................ 4

ARTICLE 4 LICENSED BUSINESS ........................................................................................................ 5 4.1 Required Equipment; Vehicles ..................................................................................................... 5 4.2 Maintaining Vehicles ..................................................................................................................... 5 4.3 Training Facility ............................................................................................................................ 5 4.4 Commencement of Business and Continuous Operation ........................................................... 6

ARTICLE 5 PAYMENTS .......................................................................................................................... 6 5.1 Initial Fee ........................................................................................................................................ 6 5.2 Continuing Royalty ........................................................................................................................ 6 5.3 Marketing Contribution ................................................................................................................ 6 5.4 Timing of Payment ......................................................................................................................... 7 5.5 EFT .................................................................................................................................................. 7 5.6 Convention Attendance; Fees ....................................................................................................... 7 5.7 Inflation Adjustments .................................................................................................................... 7 5.8 Other Payments .............................................................................................................................. 7 5.9 Application of Funds...................................................................................................................... 8 5.10 Interest and Charges for Late Payments ............................................................................... 8

ARTICLE 6 TRAINING ............................................................................................................................ 8 6.1 Initial Training Program ............................................................................................................... 8 6.2 Staff ................................................................................................................................................. 9 6.3 On-going Advice and Assistance ................................................................................................... 9 6.4 Additional Training ....................................................................................................................... 9 6.5 Annual Convention ...................................................................................................................... 10

ARTICLE 7 STANDARDS OF OPERATOR QUALITY AND SERVICE ........................................ 10 7.1 Compliance with Applicable Law ............................................................................................... 10 7.2 Responsible Person ...................................................................................................................... 10 7.3 Product Line and Service ............................................................................................................ 10 7.4 Sale at Retail; Containers Fixtures and Other Goods .............................................................. 11 7.5 Computer System ......................................................................................................................... 11 7.6 Manuals ......................................................................................................................................... 12 7.7 Notification of Legal Proceedings ............................................................................................... 13 7.8 Signs, Designs and Forms of Publicity ....................................................................................... 13 7.9 Uniforms and Employee Appearance ........................................................................................ 13 7.10 Co-Branding .......................................................................................................................... 14 7.11 Intranet ................................................................................................................................... 14 7.12 National Accounts.................................................................................................................. 14 7.13 Improvements.. ...................................................................................................................... 14

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ARTICLE 8 ADVERTISING .................................................................................................................. 15 8.1 General Requirements ................................................................................................................. 15 8.2 Local Advertising ......................................................................................................................... 15 8.3 Co-op Advertising ........................................................................................................................ 16 8.4 Marketing Fund ........................................................................................................................... 17 8.5 Telephone Numbers and Directory Advertising ....................................................................... 19 8.6 Promotional Campaigns .............................................................................................................. 19

ARTICLE 9 INTERNET AND INTERNET SALES ............................................................................ 19 9.1 Internet ......................................................................................................................................... 19 9.2 Internet Sales ................................................................................................................................ 20 9.3 Internet Referral Sources ............................................................................................................ 20

ARTICLE 10 DISTRIBUTION AND PURCHASE OF EQUIPMENT, SUPPLIES, AND OTHER

PRODUCTS ........................................................................................................................................ 20 10.1 Inventory ................................................................................................................................ 20 10.2 Designated Products .............................................................................................................. 20 10.3 Ancillary Products ................................................................................................................. 21 10.4 Purchases from Licensor or its Affiliates ............................................................................ 22 10.5 Customer Reporting; Comment Cards ............................................................................... 23

ARTICLE 11 REPORTS, BOOKS AND RECORDS, INSPECTIONS .............................................. 24 11.1 General Reporting ................................................................................................................. 24 11.2 Under-Reporting ................................................................................................................... 24 11.3 Employment Practices .......................................................................................................... 24 11.4 Books and Records ................................................................................................................ 25 11.5 Inspections .............................................................................................................................. 25

ARTICLE 12 MARKS ............................................................................................................................. 25 12.1 Use of Marks .......................................................................................................................... 25 12.2 Non-Use of Trade Name ........................................................................................................ 26 12.3 Non-ownership of Marks ...................................................................................................... 26 12.4 Defense of Marks ................................................................................................................... 26 12.5 Prosecution of Infringers ...................................................................................................... 26 12.6 Modification of Marks .......................................................................................................... 27 12.7 Acts in Derogation of the Marks .......................................................................................... 27 12.8 Assumed Name Registration ................................................................................................ 27

ARTICLE 13 COVENANTS REGARDING OTHER BUSINESS INTERESTS .............................. 27 13.1 Non-Competition ................................................................................................................... 27 13.2 Trade Secrets ......................................................................................................................... 28 13.3 Effect of Applicable Law ...................................................................................................... 29 13.4 Business Practices .................................................................................................................. 29 13.5 Survival .................................................................................................................................. 30

ARTICLE 14 ASSIGNMENT.................................................................................................................. 30 14.1 Assignment by Licensor ........................................................................................................ 30 14.2 Assignment by Licensee ........................................................................................................ 30 14.3 Right of First Refusal ............................................................................................................ 32 14.4 Business Entity Licensee ....................................................................................................... 33 14.5 Non-Waiver of Claims. .......................................................................................................... 34

ARTICLE 15 DEFAULT AND TERMINATION ................................................................................. 34 15.1 General ................................................................................................................................... 34 15.2 Automatic Termination Without Notice ............................................................................. 34 15.3 Option to Terminate Without Notice ................................................................................... 34 15.4 Termination With Notice and Opportunity To Cure ......................................................... 35 15.5 Reimbursement of Licensor Costs ....................................................................................... 36

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15.6 Cross-Default ......................................................................................................................... 36 15.7 Notice Required By Law ....................................................................................................... 36 15.8 Licensor Default .................................................................................................................... 37

ARTICLE 16 RIGHTS AND OBLIGATIONS UPON TERMINATION ........................................... 37 16.1 General ................................................................................................................................... 37

ARTICLE 17 INSURANCE ..................................................................................................................... 38 17.1 Insurance ................................................................................................................................ 38 17.2 Use of Proceeds ...................................................................................................................... 38

ARTICLE 18 RELATIONSHIP OF PARTIES ..................................................................................... 38 18.1 Relationship of Licensee to Licensor ................................................................................... 38 18.2 Indemnity by Licensee .......................................................................................................... 39

ARTICLE 19 NOTICES .......................................................................................................................... 39 19.1 General ................................................................................................................................... 39

ARTICLE 20 MEDIATION; WAIVER OF JURY TRIAL; VENUE ................................................. 40 20.1 Mediation ............................................................................................................................... 40 20.2 Waiver of Jury Trial; Venue ................................................................................................ 40

ARTICLE 21 MISCELLANEOUS PROVISIONS ............................................................................... 41 21.1 Licensor’s Right To Cure Defaults ...................................................................................... 41 21.2 Waiver and Delay .................................................................................................................. 41 21.3 Survival of Obligations ......................................................................................................... 42 21.4 Successors and Assigns; Benefit ........................................................................................... 42 21.5 Joint and Several Liability .................................................................................................... 42 21.6 Governing Law ...................................................................................................................... 42 21.7 Entire Agreement .................................................................................................................. 42 21.8 Titles For Convenience ......................................................................................................... 43 21.9 Gender and Construction ..................................................................................................... 43 21.10 Severability ...................................................................................................................... 43 21.11 Counterparts ................................................................................................................... 43 21.12 Fees and Expenses ........................................................................................................... 43

ARTICLE 22 ACKNOWLEDGMENTS ................................................................................................ 44 22.1 General ................................................................................................................................... 44 22.2 Due Execution ........................................................................................................................ 45

In Process

LICENSE AGREEMENT

This LICENSE AGREEMENT is made this ___ day of ________, 20__ (“Effective Date”) by and between SIT MEANS SIT FRANCHISE, INC., a Nevada corporation (“Licensor”), and ____________________________________________, [ ] an individual, as sole proprietor, OR [ ] ____________________________________, a(n) ________________________ (“Licensee”), with reference to the following facts:

A. Licensor owns the right to license certain proprietary and other property rights and interests in the “Sit Means Sit” trademark and service mark, and such other trademarks, service marks, logo types, insignias, trade dress, designs, and commercial symbols as Licensor may from time to time authorize or direct Licensee to use in connection with the operation of the Licensed Business (“Marks”).

B. Licensor has the right to sublicense, a system for the operation of businesses providing dog training services and the sale of dog care products, dog training products, dog toys, food and treats, leashes, collars, apparel, and other goods and services, which system includes various operating methods, techniques, Policies, products, distinctive signs, Trade Secrets, record-keeping and marketing techniques (the “System”).

C. Licensee wants to obtain the right to operate a Business in strict accordance with the System and Policies established by Licensor, and Licensor is willing to grant Licensee such right under the terms and conditions of this Agreement.

NOW, THEREFORE, the parties agree as follows:

ARTICLE 1

DEFINITIONS & APPLICABLE INFORMATION

1.1 Certain Definitions and Applicable Information. In this Agreement the following terms shall have the meanings set forth in this Section 1.1 (see Appendix 1 for additional defined terms):

1.1.1 “Authorized Trainer” means (a) Licensee, if licensee is an individual, or (b) __________________, or such other individual hereafter designated by Licensee, and accepted by Licensor (and until subsequently disapproved by Licensor), who Licensee warrants and covenants has the authority to act on behalf of Licensee during the Term.

1.1.2 “Initial Fee” means $_________, payable (check applicable):

in full on the Effective Date.

$______ on the Effective Date, and delivery of a promissory note in form prescribed by Licensor in the face amount of $_________, payable in 36 equal monthly installments with interest at ____% per annum, unless otherwise agreed.

1.1.3 “Business Address” means: _____________________________________________________________________ _____________________________________________________________________ _____________________________________________________________________

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ARTICLE 2

GRANT

2.1 Grant. Licensor awards, and Licensee accepts, the right and obligation, during the Term, to use and display the Marks, and to use the System to operate one (1) Business solely within the Trade Area, in strict compliance with the terms of this Agreement.

2.2 No Sublicensing Rights. Licensee shall not subdivide, sublicense, subfranchise, subcontract, sublease, or enter into any management agreement providing to a third party the right to operate the Licensed Business, or to use the Marks or System.

2.3 Territorial Rights.

2.3.1 Except as stated in Section 2.3.2, during the Term neither Licensor nor any Affiliate of Licensor will conduct or license others to conduct dog training classes within the Trade Area, using the Marks.

2.3.2 Licensee agrees that Licensor and/or its Affiliates may engage in any business activity whatsoever in or outside the Trade Area except as Licensor is restricted by Section 2.3.1, and that this Agreement does not confer upon Licensee any right to participate in or benefit from any such other business activity, regardless of whether it is conducted under the Proprietary Marks. Licensor’s rights to engage in other business activities are specifically reserved and may not be qualified or diminished in any way by implication. Licensor expressly reserves all other rights all other rights, including, the exclusive, unrestricted rights, in its discretion, directly and indirectly, itself and through its employees, Affiliates, representatives, licensees, assigns, agents and others to:

(a) own or operate: (1) “Sit Means Sit” Businesses, at any location outside the Trade Area, and without regard to their proximity to the Trade Area, and (2) businesses, including those that may be the same as or similar to a Business, which operate under names other than “Sit Means Sit” at any location, and of any type whatsoever, without regard to their proximity to the Trade Area and whether or not such businesses use any portion of the System;

(b) offer and sell within and outside Licensee’s Territory, and under the Marks, any and all products or services and/or their components (including those used or sold by the Licensed Business), whether or not a part of the System, through any method of distribution other than a Business situated within the Trade Area including, without limitation, such alternative channels of distribution as the Internet/worldwide web; any other form of electronic commerce; “800” or similar toll-free telephone numbers; supermarkets, specialty stores, grocery stores and convenience stores; mail order; catalogs; television sales (including infomercials); direct mail advertising, or, any other channel of distribution whatsoever except for a Business;

(c) purchase, merge, acquire, be acquired by or Affiliate with an existing competitive or non-competitive franchise or non-franchise network, chain or any other business regardless of the location of that other business’ facilities, and that following such activity Licensor may operate, franchise or license those other businesses and/or facilities under any names or marks other than (while this Agreement is in effect) the Marks, regardless of the location of these businesses and/or facilities, which may be within the Trade Area or immediately proximate to the Trade Area;

(d) solicit, sell to and service National Accounts wherever located, including in the Trade Area, provided that Licensor may, in its discretion, establish and modify or withdraw, from time to time, the terms and conditions upon which Licensee may solicit or service National Accounts

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subject to Section 7.12. Only Licensor will have the right to enter into contracts with National Accounts (which may include facilities within the Trade Area); and

(e) advertise within and travel through the Trade Area.

2.4 Temporary Additional Trade Area.

2.4.1 In its sole discretion, Licensor may, upon written request of Licensee, authorize Licensee on a temporary and either exclusive or non-exclusive basis, or otherwise, to operate the Licensed Business in areas contiguous to the Trade Area which have not been assigned to any another licensee (each a “Unassigned Area”), upon such terms and subject to such conditions (which may include the execution of a separate written agreement), and during such time period(s), as Licensor may determine. Licensee may not establish, construct, maintain or operate a physical office, training center, or any type of sales or training facility outside of the Trade Area.

2.4.2 Licensee will not receive any right of first refusal or any other type of rights to an Unassigned Area because it operates or operated in that Unassigned Area. Licensor may sell any Unassigned Area territory at any time, without giving Licensee advance notice. If Licensor authorizes Licensee to operate outside the Trade Area, such authorization is subject to Licensor’s right to rescind, cancel, amend or modify the authorization in any manner it deems appropriate. After Licensor gives notice to cease operating in the Unassigned Area, Licensee may (for a maximum of 15 days) provide Authorized Products and Services for which appointments orders were received before Licensor gave Licensee notice to cease operating in the area. Licensee will, without compensation, orderly transition Licensee’s customers in the applicable Unassigned Area to Licensor’s designee, if asked to do so.

ARTICLE 3

TERM

3.1 Term. The “Term” of this Agreement begins on the Effective Date and continue for a

period of 10 years, unless sooner terminated in accordance with this Agreement.

3.2 Successor Agreement. Provided that Licensor is then offering franchises in the same

state in which the Trade Area is located, Licensee will have the right at the expiration of the Term (the “Successor Agreement Right”) to enter into a new License Agreement in the form then generally being offered to prospective Licensor’s “Sit Means Sit” licensees operating in the state in which the Trade Area is located, which may be substantially different from this License Agreement in all material respects, including without limitation a smaller Trade Area, higher Continuing Royalty, and a higher Marketing Contribution (the “Successor License Agreement”) for a 10 year period (the “Successor Term”). The term of the Successor License Agreement will commence upon the date of expiration of the Term; provided, however, that: (a) Licensee will not be required to pay an initial fee upon execution of the Successor License Agreement; and (b) the available rights to obtain successor terms will be modified to conform to the Successor Agreement Right granted above.

3.3 Form and Manner of Exercising Successor Agreement Right. Licensee shall exercise the Successor Agreement Right, if at all, strictly in the following manner:

3.3.1 Between 9 months and 12 months before the expiration of the Term, Licensee must notify Licensor in writing (“Notice of Election”) that it intends to exercise the Successor Agreement Right. No sooner than immediately after the expiration of any waiting period(s) required by Applicable law and no more than 30 days after Licensee receives Licensor’s franchise disclosure document (if

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applicable), Licensee must execute the copies of the Successor License Agreement and return them to Licensor.

3.3.2 If Licensee exercises the Successor Agreement Right in accordance with Section 3.3.1 and satisfies all of the conditions contained in Section 3.4, Licensor will execute the Successor License Agreement and deliver one fully executed copy to Licensee.

3.3.3 If Licensee fails timely to perform any of the acts, or timely deliver any of the notices required pursuant to the provisions of Sections 3.3 or 3.4, such failure shall be deemed an election by Licensee not to exercise its Successor Agreement Right and shall automatically cause Licensee’s Successor Agreement Right to lapse and expire.

3.4 Conditions Precedent to Entering into a Successor License Agreement. Licensee’s Successor Agreement Right is conditioned upon Licensee’s fulfillment of each and all of the following conditions precedent:

3.4.1 At the time Licensee delivers its Notice of Election to Licensor, and at all times until the commencement of the Successor Term, Licensee shall have fully performed all of its material obligations under this Agreement, the Manuals and all other agreements then in effect between Licensee and Licensor or its Affiliates, and all agreements between Licensee and Suppliers.

3.4.2 Licensee shall not have been convicted of any felony, or of any crime relevant to the operation of the Licensed Business.

3.4.3 The person(s) designated by Licensee as trainers will each possess a valid driver’s license for the state in which the Trade Area is located.

3.4.4 Without limiting the generality of Section 3.4.1, Licensee must not have received from Licensor 3 or more notices of material default of this Agreement during any 36-month period during the Term, regardless of whether such defaults were cured.

3.4.5 Concurrently with the execution of the Successor License Agreement, Licensee shall, and shall cause each of its Affiliates to, execute and deliver to Licensor a general release on the form required by Licensor (Licensor’s current required form is attached to the Franchise Disclosure Document as Exhibit B), of any and all known and unknown claims against Licensor and its Affiliates and their Owners, officers, directors, agents, and employees.

3.4.6 Licensee shall comply with Licensor’s then-current qualification and training requirements and shall pay all Travel Expenses incurred in connection with such training.

3.5 Notice Required by Law. If Applicable Law requires that Licensor give notice to Licensee prior to the expiration of the Term, this Agreement shall remain in effect on a week to week basis until Licensor has given the required notice. If Licensor is not offering new franchises, is in the process of revising, amending or renewing its form of License Agreement or franchise disclosure document, or is not lawfully able to offer Licensee its then-current form of License Agreement, at the time Licensee delivers its Notice of Election, Licensor may (i) offer to renew this Agreement upon the same terms set forth herein for a term equal to the Successor Term, or (ii) offer to extend the Term on a week to week basis following the expiration of the Term for as long as it deems necessary or appropriate so that it may lawfully offer its then-current form of License Agreement.

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3.6 Interim Period. If Licensee does not sign the Successor Franchise Agreement prior to the expiration of this Agreement and continues to accept the benefits of this Agreement after the expiration of this Agreement, then at Licensor’s option, this Agreement may be treated either as: (i) expired as of the date of expiration, with Licensee operating without a franchise to do so and in violation of Licensor’s rights; or (ii) continued on a month-to-month basis (“Interim Period”) until one party provides the other with written notice of such party’s intent to terminate the Interim Period, in which case the Interim Period will terminate 30 days after receipt of the notice to terminate the Interim Period. In the latter case, all obligations of Licensee shall remain in full force and effect during the Interim Period as if this Agreement had not expired, and all obligations and restrictions imposed on Licensee upon expiration of this Agreement shall be deemed to take effect upon termination of the Interim Period.

ARTICLE 4

LICENSED BUSINESS

4.1 Required Equipment; Vehicles.

4.1.1 Licensor will provide Licensee with copies of the Policies for required equipment (including computer equipment), inventory, supplies, materials, and signs. Licensee shall at its sole cost and expense promptly obtain such equipment, inventory, supplies, materials, and signs in accordance with the Policies, unless Licensor otherwise agrees in writing.

4.1.2 Licensee must have one or more trucks or sport-utility vehicles (each a “Vehicle” and more than one “Vehicles”) to sell and perform Authorized Products and Services within the Trade Area. Each Vehicle must meet Licensor’s then-current Policies, including, among other things, specifications relating to the required quantity, make, model, year, color, and body wrap or other advertising. Licensee must, promptly following the purchase or lease of a Vehicle and prior using a Vehicle for the Licensed Business, make such modifications and additions to the Vehicle as required by Licensor, including, applying and installing all decals, logos, wraps and racks specified by Licensor.

4.2 Maintaining Vehicles. Licensee shall maintain the condition and appearance of all Vehicles in first class condition and repair and in a level of cosmetic appearance that is consistent with the image of Businesses as clean, efficient and well-operated. If at any time in Licensor’s reasonable judgment, the state of repair, appearance (including logos, decals and/or signs) or cleanliness of Licensee’s Vehicles fail to meet the Policies, Licensee shall immediately upon receipt of notice from Licensor specifying the action to be taken by Licensee (within the time period specified by Licensor), correct such deficiency, modify, repair, refurbish, and/ or replace the Vehicles, as applicable, and make such modifications and additions to their appearance as may be required.

4.3 Training Facility. Licensee is not required to operate the Business at a formal training facility. If Licensee intends to operate from a facility other than his or her residence, Licensee shall obtain Licensor’s advance consent and approval of any site which Licensee proposes to use as its business office and/or training facility (the “Training Facility”). Any Training Facility must be located within the Trade Area and Licensee may not establish, construct, maintain or operate a physical office, or any type of sales or training facility outside of the Trade Area. The location of the Training Facility must meet the Policies. Licensee must at all times maintain, at its sole expense, the interior and exterior of the Training Facility, in first class condition and repair, and in compliance with all applicable laws, rules, regulations and the Manual. Prior to purchasing or obtaining a lease for any real property, Licensee must submit to Licensor such information regarding the proposed site(s) and neighboring areas as Licensor requires, in the form(s) prescribed by Licensor. Licensor may accept or reject a proposed site in its sole discretion.

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4.3.1 Licensee may not relocate the Training Facility without Licensor’s prior written consent. If Licensor consents to any relocation, Licensee must de-identify the former Training Facility in the manner described in this Agreement with respect to Licensee’s obligations upon termination and expiration, and must reimburse and indemnify Licensor from any direct and indirect losses, costs and expenses, including attorneys’ fees, arising out of Licensee’s failure to do so.

4.3.2 If the Training Facility is not within a personal residence and is leased or subleased: (i) the Lease for the Training Facility must name Licensee as the sole lessee thereunder and may not be assigned or sublet without Licensor’s prior written consent; and (ii) Licensor will have the right to review and accept or reject the Lease, a true and correct copy of which shall be delivered to Licensor prior to its execution. Licensor may require the Lease to provide that Licensor or its designee an option, without cost or expense to Licensor or such designee, to assume the Lease, or execute a substitute lease on the same terms, in the event of termination or expiration of this Agreement for any reason, and Licensee will reimburse Licensor or its designee for any expenses incurred by them to cure Licensee’s breach of the Lease. The covenants of Licensee contained in this Section 4.3.2 shall survive the termination of this Agreement. Licensor’s review and acceptance of the Lease is solely for Licensor’s benefit and is solely an indication the Lease meets Licensor’s Policies at the time of acceptance for the Lease (which may be different than the requirements of this Agreement) such review and acceptance will not be construed as any express or implied representation or warranty that the Lease complies with Applicable Law or represents a transaction that is fair or in Licensee’s best interest.

4.4 Commencement of Business and Continuous Operation. Prior to the day that Licensee commences operation of the Licensed Business, Licensee shall provide photographs, video images, and other information requested by Licensor to confirm that the Vehicle(s) and, if applicable, the Training Facility, conform(s) to the Policies. Licensor may, prior to the day that Licensee commences operation of the Licensed Business, perform an inspection of the Vehicle(s) and, if applicable, the Training Facility, to ensure that they conform to the Policies. Licensee may not commence operation of the Licensed Business until Licensee has received written authorization to do so from Licensor, which authorization may be conditional and subject to Licensor’s receipt of further information and/or inspection. Unless Licensor otherwise agrees in writing, Licensee must commence the operation of the Licensed Business within 60 days after completion of the Initial Training Program, and in any event within 4 months following execution of this Agreement. Upon and after opening, Licensee must operate the Licensed Business not less than 4 days and 40 hours per week.

ARTICLE 5

PAYMENTS

5.1 Initial Fee. Upon execution of this Agreement, Licensee must pay Licensor the Initial Fee. The Initial Fee is fully earned upon execution, and is not refundable in whole or in part.

5.2 Continuing Royalty. Beginning with the Reporting Period in which Licensee completes

the Initial Training Program, Licensee must pay to Licensor a continuing royalty (the “Continuing Royalty”) in an amount equal to $600 per Reporting Period. However, if Licensee pays the Continuing Royalty to Licensor on or before the first day of the Reporting Period that is not a weekend or holiday, Licensee’s Continuing Royalty for that Reporting Period only will be $500. The amount of the Continuing Royalty is subject to adjustment in accordance with Section 5.7.

5.3 Marketing Contribution. Licensee shall pay to Licensor, simultaneously with its

Continuing Royalty, a marketing contribution (the “Marketing Contribution”) equal to 1% of Licensee’ Gross Sales during the preceding Reporting Period. Licensor will administer the Marketing Fund in the manner provided in Section 8.4 (the “Marketing Fund”).

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5.4 Timing of Payment. No later than 5th day of each Reporting Period, Licensee shall calculate and remit to Licensor the Continuing Royalty and Marketing Contribution. Licensee shall timely pay all other amounts owing and its Affiliates in accordance with the terms, conditions and Policies in effect from time to time, including purchases as stated in Article 10. Licensee’s Continuing Royalty and Marketing Contribution payments will be considered late if not received by Licensor by the 5th day of each Reporting Period.

5.5 EFT. Licensee shall instruct its bank to make all payments due under this Agreement directly to Licensor from Licensee’s account, by electronic funds transfer or such other automatic payment mechanism which Licensor may designate (“EFT”). Licensee shall execute or re-execute and deliver to Licensor the current form of EFT authorization form, attached hereto as Addendum “C”, as well as all pre-authorized check forms and other instruments or drafts required by Licensor’s bank to enable Licensor to draw all sums payable under the terms of this Agreement. Licensee shall also maintain a single bank account for such payments and shall maintain the minimum balance in such account as Licensor may reasonably specify. Licensee shall not alter or close such account except upon Licensor’s prior written approval.

5.6 Convention Attendance; Fees. Licensor may require Licensee, and such of Licensee’s personnel as are designated by Licensor, to attend certain mandatory regional or national meetings, including the “Sit Means Sit” annual convention. Licensor may charge a reasonable attendance fee per person for each mandatory meeting. Licensee will bear all Travel Expenses and other costs of attendance.

5.7 Non-Compliance Assessment. Upon the occurrence of an event of default by Licensee, Licensor has the right, upon written notice to Licensee, to impose a separate default fee equal to one hundred dollars ($100) per breach, per week (“Default Fee”). The Default Fee is intended to compensate Licensor for the administrative costs it incurs by monitoring, notifying and following up with Licensee after a default has occurred. Each Default Fee is in addition to any other rights and/or remedies that Licensor may have including, without limitation, its right to terminate this Agreement.

5.8 Inflation Adjustments. No more frequently than annually, Licensor may adjust the

dollar amounts stated in this Agreement in proportion to the change in the Consumer Price Index, U.S. Average, all items, maintained by the U.S. Department of Labor (or any replacement index selected by Licensor) as compared to the previous year or the last year in which an adjustment was made (or if no adjustment has been made the year of the Effective Date), as selected by Licensor.

5.9 Other Payments.

5.9.1 Licensee shall pay to Licensor, its Affiliates and designees, as applicable, promptly when due:

(a) Amounts incurred by Licensor to perform and update periodic background checks on Licensee and its trainers;

(b) All amounts advanced by Licensor or which Licensor has paid, or for which Licensor has become obligated to pay on behalf of Licensee for any reason whatsoever;

(c) The amount of all sales, use, personal property and similar taxes, which may be imposed upon Licensee, but required to be collected or paid by Licensor: (i) on account of Licensee’s Gross Sales, or (ii) on account of fees collected by Licensor from Licensee (but excluding Licensor’s ordinary income taxes). Licensor may collect the taxes in the same manner as Continuing Royalties are collected and promptly pay the tax collections to the appropriate Governmental Authorities;

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provided, however, that unless Licensor so elects, it shall be Licensee’s responsibility to pay all sales, use, income, or other taxes imposed now or in the future by any Governmental Authorities on fees paid by Licensee to Licensor; and

(d) All amounts due for any reason, including on account of purchases of goods, supplies or services relating to the Licensed Business.

5.9.2 Licensee shall remain current and fully comply and perform each of its obligations to its landlord, vendors and Suppliers.

5.10 Application of Funds. If Licensee becomes delinquent in the payment of any obligation

to Licensor or its Affiliate under this Agreement or any other agreement, Licensor shall have the absolute right to apply any payments received from Licensee to any obligation owed to Licensor or its Affiliate, notwithstanding any contrary designation by Licensee.

5.11 Interest and Charges for Late Payments. If Licensee fails to pay to Licensor all sums

owed to Licensor or its Affiliates promptly when due, Licensee shall pay interest on the unpaid amounts from the date due, at 10% per annum, or the highest rate allowable under Applicable Law, whichever is less. If any check, draft or electronic transfer is unpaid because of insufficient funds or otherwise, Licensee must pay Licensor’s expenses arising from such non-payment, including bank fees in the amount of at least $50.00.

ARTICLE 6

TRAINING

6.1 Initial Training Program.

6.1.1 Licensee must employ at least one Authorized Trainer. The initial Authorized Trainer shall successfully complete, to Licensor’s satisfaction, an initial training program in Licensor’s System, dog training techniques, methods of operation, Policies, Licensor’s philosophy and culture, marketing, and any other topics as Licensor may determine necessary or appropriate (but not including instruction regarding matters which would ordinarily be known by a licensed contractor) (the “Initial

Training Program”). Licensor may modify the content and manner of conducting the Initial Training Program in its discretion from time to time. At no extra charge, Licensor shall provide the Initial Training Program at a training facility in Nevada or such other location specified by Licensor, to one individual selected by Licensee (the “Initial Attendee”). The Initial Training Program shall consist of approximately 150 hours over roughly a 21-day period and will be provided by Licensor prior to the opening of the Licensed Business. Licensee must not commence to operate under the Marks or System until the Initial Attendee has completed the Initial Training Program to Licensor’s satisfaction. All Initial Training Program attendees must execute a confidentiality and non-competition agreement on a form of agreement prescribed by Licensor.

6.1.2 Should Licensor determine that the Initial Attendee’s progress during the Initial Training Program is unsatisfactory, Licensor may terminate this Agreement, in which case it will refund the Initial Fee, less the sum of $2,000 plus all direct and indirect costs and expenses incurred by Licensor prior to such termination. Licensee acknowledges that whether or not a person has satisfactorily completed the Initial Training Program will be determined by Licensor in its sole discretion.

6.1.3 Upon Licensee’s reasonable request and upon payment of the applicable Initial Training Fee and Licensor’s then-current daily charge for housing during the Initial Training Program, Licensor will permit additional employees of Licensee to attend the Initial Training Program.

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6.1.4 Licensee shall pay all Travel Expenses, other than the lodging provided by Licensor, incurred by the Initial Attendee and any other person that attends the Initial Training Program on behalf of the Licensee in connection with attendance of the Initial Training Program.

6.1.5 Licensor will not pay any compensation for services performed by trainee(s) in connection with training or other assistance, including providing services for Licensor, its Affiliate or for another licensee.

6.1.6 Licensor may, in its discretion elect not to provide the Initial Training Program to Licensee if: (i) as of the Effective Date, Licensee or its Authorized Trainer has previously attended and successfully completed the Initial Training Program in connection with the operation of another Business, or (ii) this Agreement is executed as a Successor License Agreement.

6.1.7 Licensor’s acceptance of an Authorized Trainer shall not constitute Licensor’s endorsement of such individual or a guarantee by Licensor that such individual will perform adequately, and Licensor will have the right to subsequently disapprove or challenging that individual’s qualifications or performance.

6.2 Staff. Licensee shall cause all of Licensee’s employees and who will conduct dog

training to be trained in accordance with the Manuals and to Licensor’s satisfaction. Licensee will ensure that the Licensed Business is supervised by the Authorized Trainer. Licensor reserves the right to require all persons that conduct dog training to attend and successfully complete the Initial Training Program. Before Licensee first commences operation of the Licensed Business, and at all times during the Term, Licensee shall employ the number of trained employees and dog trainers as is necessary, in Licensor’s judgment, to adequately operate the Licensed Business.

6.3 On-going Advice and Assistance.

6.3.1 Licensee will have the right, at no additional charge, to inquire of Licensor’s headquarters staff, field representatives, training staff and other designated representatives with respect to technical and sales support, and general advice and assistance relating to the operation of the Licensed Business by telephone, electronic mail, facsimile or other means of communication as Licensor deems appropriate, and Licensor shall use its best efforts to diligently respond to such inquiries in order to assist Licensee in the operation of the Licensed Business. At no time shall reasonable assistance be interpreted to require Licensor to pay any money to Licensee or to defer Licensee’s obligation to pay any sums to Licensor. In addition, Licensor may make available additional optional services, such as accounting support, for which it may charge a separate fee.

6.3.2 If any advice, consultation or training is provided in the Trade Area at Licensee’s request or because Licensor determines that the Licensed Business is not being operating in accordance with the Policies or this Agreement, Licensor may require Licensee to pay such charges as may be then in effect, and to reimburse Licensor for all Travel Expenses and similar costs incurred by Licensor and its personnel in connection with such advice, consultation or training.

6.4 Additional Training. Licensor may, from time to time, at its discretion, (i) require Licensee and its employees, or any of them, to attend additional training courses or programs (“Additional Training”) during the Term, or (ii) make available to Licensee or its employees, or any of them, optional Additional Training during the Term. The Additional Training may be held on a national or regional basis at locations selected by Licensor to instruct Licensee with regard to new procedures or programs which Licensor deems, in its reasonable judgment, to be of material importance. The time and place of the Additional Training courses shall be chosen by Licensor. Licensor will not charge a fee for

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any Additional Training courses which Licensee is required to attend, provided, however, Licensor may establish charges for optional Additional Training courses made available to Licensee. In addition to any charge Licensor may establish, Licensee shall pay all Travel Expenses incurred in connection with attending at such Additional Training courses. Licensor shall pay no compensation for any services performed by trainee(s) in connection with the Additional Training.

6.5 Annual Convention. Licensor may from time to time, schedule an annual convention or other-system wide or regional meeting at a time and location to be chosen by Licensor. If Licensor schedules such convention or meeting, Licensee and such of Licensee’s personnel designated by Licensor shall attend such convention or meeting, unless Licensor otherwise excuses Licensee upon a showing of good cause but Licensor shall not require Licensee’s attendance more than once per calendar year. Licensee shall pay all Travel Expenses incurred by Licensee and its personnel in connection with attending such convention or meeting, and must pay Licensor its then-current fee for conducting the meeting or convention, as published in the Manuals. Licensee and its personnel must pay for and stay at the host hotel facility for the annual convention or meeting.

ARTICLE 7

STANDARDS OF OPERATOR QUALITY AND SERVICE

7.1 Compliance with Applicable Law. Licensee represents, warrants and covenants to

Licensor that it has and shall maintain throughout the Term, all bonds, licenses, permits and government approvals necessary to operate and conduct the Licensed Business. Licensee must operate the Licensed Business as a clean, orderly, lawful and respectable place of business in accordance with the Policies, and shall comply with Applicable Law. Licensee must cause all Vehicles to be operated by licensed and insured drivers and not cause or allow any Vehicle or Licensed Business to be used for any immoral or illegal purpose. Licensee must in all dealings with its customers, suppliers, and public officials adhere to high standards of honesty, integrity, fair dealing and ethical conduct and refrain from engaging in any action (or failing to take any action) that may cause Licensor to be in violation of any Applicable Law or this Agreement. Licensee shall refrain from engaging in action (or failing to take any action), which in the sole opinion of Licensor, causes or could cause damage, harm or injury to the Marks, the System and/or the “Sit Means Sit” brand or reputation.

7.2 Responsible Person. Licensee shall designate an individual employed by Licensee

(which may be Licensee if Licensee is an individual) who will be principally responsible for communicating and coordinating with Licensor regarding business, operational and other ongoing matters concerning this Agreement and the Licensed Business. Such person shall have the full authority to act on behalf of Licensee in regard to performing or administering this Agreement and shall be vested with the authority and responsibility for the day-to-day operations of the Licensed Business. The designated individual shall: (a) devote full time and best efforts solely to the operation of the Licensed Business and to no other business activities; (b) meet Licensor’s educational, experience, financial and other reasonable criteria for such position, as set forth in the Manuals or otherwise in writing by Licensor; and (c) be fully trained in accordance with Article 6. Licensor’s acceptance of such person does not constitute Licensor’s endorsement of him or her.

7.3 Product Line and Service.

7.3.1 Licensee shall advertise, sell and provide all and only Authorized Products and Services at, from, or in connection with the Licensed Business. Without limiting the foregoing, Licensee acknowledges that Authorized Products and Services may differ at other Businesses, and may vary depending on the geographic location of the Trade Area or other factors. Licensee shall not provide, produce, advertise for sale, sell or give away any goods or services unless the same product has been

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approved in the Manuals as part of the Authorized Products and Services and has not been thereafter disapproved in writing by Licensor. All Authorized Products and Services shall be provided and sold under the specific name designated by Licensor. Licensee shall not cease offering any of the Authorized Products or Services, except as Licensee may be notified or instructed, from time to time, by Licensor in writing. Licensee must, upon receipt of notice from Licensor, sell and provide additional Authorized Products and Services according to the instructions and within the time specified in the notice. Licensee shall cease selling and providing any previously approved or discontinued Authorized Product or Service within 30 days after receipt of notice that the product is no longer approved.

7.3.2 All products, services, and materials sold or provided by Licensee shall be of the highest quality, and shall conform strictly with Applicable Law, the instructions provided by Licensor or contained in Manuals, and with the further requirements of Licensor as they are communicated to Licensee from time to time.

7.3.3 Licensee agrees to exert its best efforts to aggressively market and sell Authorized Products and Services and to capitalize on the full potential of the Licensed Business throughout the entire Trade Area.

7.3.4 Licensee agrees to cooperate with Licensor and other licensees of Licensor and shall actively participate in any and all sales, public relations, advertising, cooperative advertising and purchasing programs or promotional programs (including, without limitation, product give-away promotions) which may be developed and implement by Licensor. Participation may include loyalty programs, prize promotions, and other marketing campaigns and programs.

7.4 Sale at Retail; Containers Fixtures and Other Goods. Licensee agrees that, except to

the extent that Licensee provides Authorized Products and Services to National Accounts pursuant to the Policies, the Authorized Products and Services shall be sold and provided at retail, and not for resale. All items bearing the Marks shall bear accurate reproductions of the Marks as required by Licensor. All packaging and like articles used in connection with the Licensed Business shall conform to the Policies, shall be imprinted (if required by Licensor) with the Marks and shall be purchased by Licensee from Licensor, or a distributor or manufacturer approved in writing by Licensor, as provided in Article 10. No item of merchandise, products, signs, supplies, or equipment may be used in connection with the Licensed Business or the sale or provision of Authorized Products and Services unless the same shall have been approved in writing by Licensor.

7.5 Computer System.

7.5.1 Licensee shall purchase, use and maintain a personal computer system as specified in the Manuals or otherwise by Licensor in writing for use in connection with the Licensed Business (the “Computer System”). Licensee must maintain an e-mail account and connect the Computer System to a dedicated telephone line (or other communications medium specified by Licensor) at all times and be capable of accessing the Internet via a designated third party network. Licensee must obtain all software and hardware, including digital still and video cameras, as Licensor may specify to enable Licensee to send and receive e-mail and digital photos and streaming video or other multimedia signals and information, and Licensee shall, from time to time, upon Licensor’s request, transmit digital photos and video and audio signals of completed customer projects in the form and manner prescribed by Licensor. Licensee shall purchase any upgrades, enhancements or replacements to the Computer System and/or hardware and software as Licensor may from time to time require. Licensee must at all times ensure that Licensor and its representatives have full and complete access to the Computer System and the files stored therein via any means specified by Licensor, including electronic access. Licensee shall ensure that only adequately trained employees, in Licensor’s discretion, shall conduct transactions using

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only the Computer System. Licensee shall purchase any upgrades, enhancements or replacements to Licensor System and/or hardware and software as Licensor may from time to time require.

7.5.2 Licensee shall, at Licensor’s request, license or sublicense from Licensor or its designee certain computer software designated by Licensor and used in the operation of the Computer System which is owned or licensed by Licensor (“ Proprietary Software”) and Licensee shall enter into a software (sub)license agreement on Licensor’s or such designee’s then-current form. From time to time, Licensee shall purchase any upgrades, enhancements or replacements to the Proprietary Software. Licensor may provide to Licensee, for a reasonable fee, such support services relating to the Proprietary Software as Licensor deems advisable. Licensee must incorporate any required modifications or additions to the Proprietary Software within 30 days after receiving written notice from Licensor, unless a longer time period is stated in the notice.

7.5.3 Licensee shall, at Licensor’s request, accept debit cards, credit cards, or other non-cash systems specified by Licensor to enable customers to purchase the products and/or services offered by the Licensed Business. Licensee must comply with any compliance program or security standards implemented by the banking industry, credit card companies or other similar regulations as directed by Licensor and Licensee shall bear all expenses associated with such programs.

7.6 Manuals. Licensee must operate the Licensed Business in strict compliance with the Manuals and the Policies, as they are amended by Licensor from time to time.

7.6.1 Licensor has the right to modify the Manuals at any time and from time to time by the addition, deletion or other modification to the provisions thereof. The subject matter of the Manuals may include, without limitation, matters such as: forms; information relating to product and service specifications; dog training techniques; standards, specifications and methods of providing or selling Authorized Products and Services; adding to, deleting from or modifying the Authorized Products and Services; standards; cash control; sales and labor forecasting; purchase orders; general operations; labor schedules; personnel; Gross Sales reports; payroll procedures; customer warranty, service and return policies; training and accounting; safety; design specifications and color of uniforms; display of signs and notices; authorized and required equipment, including specifications therefor; Mark usage; insurance requirements; standards for management and personnel; hours of operation; formats for Advertisements; standards of maintenance and appearance of the Vehicles used in connection with the Licensed Business; procedures upon the occurrence of a Crisis Management Event; required notices to customers as to how to contact Licensor to submit complaints; and such other matters and Policies as Licensor may reasonably elect to include which relate to the System or the franchise relationship. In the event of the occurrence of a Crisis Management Event, Licensor may also establish emergency procedures pursuant to which Licensor may require Licensee to, among other things, temporarily cease operating the Licensed Business, in which event Licensor shall not be liable to Licensee for any losses or costs, including consequential damages or lost profits occasioned thereby. In the event of any dispute as to the contents of the Manuals, the terms and contents of the master copy maintained by Licensor shall be controlling.

7.6.2 Licensor has the right to develop, operate and change the System in any manner, and Licensor shall have the right to add to, amend, replace, or modify the Manuals at any time, but no such additions, replacements, or modifications shall alter Licensee’s fundamental status under this Agreement. Amendments, replacements and modifications to the Manuals shall become effective upon delivery of written or electronic notice to Licensee unless a longer period is specified or set forth in this Agreement. Electronic notice may be given through e-mail, postings to the Intranet, or other electronic means. Licensee agrees that Licensor reserves the right and privilege, in its discretion, to vary the Manuals and Policies for any licensee based on the peculiarities of any condition or factors that Licensor

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considers important to that Licensee’s successful operation. Licensee agrees to implement any such System modifications as if they were part of the System at the time Licensee signed this Agreement.

7.6.3 Unless Licensee is already a party to a License Agreement with Licensor, Licensor shall provide to Licensee means to access the Manuals electronically through Licensor’s corporate resource page or otherwise. The Manuals are highly confidential documents which contain certain trade secrets of Licensor. Licensee shall not make, or cause or allow to be made, any copies, reproductions or excerpts of all or any portion of the Manuals without Licensor’s express prior written consent. Following the expiration or termination of this Agreement, Licensee shall return the Manuals to Licensor and, if the Manuals, or any part thereof, are in electronic form, permanently delete the same. The Manuals shall be an integral part of this Agreement and any reference made to them in this Agreement, or in any amendments, exhibits, appendixes, or schedules to it, will mean the Manuals kept current by amendments from time to time.

7.7 Notification of Legal Proceedings. Licensee shall notify Licensor in writing promptly but not in event more than 10 days after Licensee receives actual notice of (a) any incident that may adversely affect the operation or the reputation of Licensee, the Licensed Business or other “Sit Means Sit” Businesses or the goodwill associated with the Marks, or the financial condition of Licensee or its Affiliates; any guarantor of Licensee’s obligations under this Agreement, or the Licensed Business; (b) any legal action (including any arrest, commencement of a suit or proceeding, or threat thereof) against Licensee or any of its Owners, the Authorized Trainer or other trainer(s); (c) the issuance of any order, writ, injunction, award, or other decree of any court, agency, or other Governmental Authority, including any citation, fine or closing order, or (d) any other adverse inquiry, notice, demand or sanction received by Licensee relating to the Licensed Business; including any alleged violation of any Applicable Law, and Licensee shall provide Licensor with copies of all related correspondence and other communications and information relating thereto. Upon the occurrence of a Crisis Management Event, Licensee shall immediately (in no event more than 24 hours following) inform Licensor’s President (or as otherwise instructed in the Manuals) by telephone. Licensee shall cooperate fully with Licensor with respect to Licensor’s response to the Crisis Management Event. Licensee hereby authorizes and agrees to cooperate with Licensor and its representatives and agents, and shall cause each of its Owners, Affiliates, the Authorized Trainer and other trainers to grant their authorization and cooperation, to conduct periodic background investigations, including criminal background checks, automobile insurance and department of motor vehicle checks, financial and credit reports, and other investigations as Licensor deems necessary or appropriate in connection with the operation of the Business. Licensee shall promptly upon request reimburse Licensor for its direct and indirect costs of conducting such investigations.

7.8 Signs, Designs and Forms of Publicity. Licensee shall maintain, as applicable, suitable signs, logos, vehicle wraps, decals and/or emblems at or on each Vehicle used in connection with the Licensed Business, all of which shall conform in all respects to the Policies and the layout and design plan approved by Licensor, subject only to restrictions imposed by Applicable Law. Without limiting the foregoing, Licensee shall identify the Licensed Business as an independently owned and operated licensee of Licensor, in the form and manner specified by Licensor, including on all invoices, letterhead, order forms, receipts, checks, business cards, on other notices provided by Licensee and in other media and Advertisements as Licensor may direct from time to time.

7.9 Uniforms and Employee Appearance. Licensee shall wear, and shall cause each of its

employees while at work to wear, uniforms of such color, design, and other specifications as Licensor designates from time to time at such times as specified by Licensor in the Manuals, and present a neat and clean public image and impression and be free from foul odors. Licensee shall comply and cause its employees to comply with Policies which Licensor may establish and modify from time to time,

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including restrictions and prohibitions concerning employees wearing uniforms while not at work, or while working at any other job other than his or her job with Licensee.

7.10 Co-Branding. Licensee may not offer, sell or provide Authorized Products and Services

in connection with any trademark, service mark, logo type or commercial symbol other than the Marks, without Licensor’s prior written consent.

7.11 Intranet. Licensor may establish an Intranet (or Extranet) through which Licensor and its licensees may communicate with each other, and through which Licensor may disseminate the Manuals, updates thereto and other confidential information. Licensor shall have sole discretion and control over all aspects of the Intranet, including its content and functionality. If Licensor establishes such an Intranet (or Extranet), Licensee shall acquire, maintain and update, as reasonably necessary, a computer and Internet browser to enable Licensee to participate on Licensor’s Intranet. If Licensor establishes such Intranet, Licensor shall have no obligation to maintain the Intranet indefinitely and may dismantle it at any time without liability to Licensee. All information, statements, or postings made on the Intranet site will be deemed the sole and exclusive property of Licensor. Licensee shall have the mere privilege, and not the right, to use the Intranet, subject to Licensee’s compliance with Licensor Policies.

7.12 National Accounts. Licensee acknowledges that to competitively attract and effectively

service National Accounts, Licensor may establish Policies governing the manner in which National Accounts are solicited and serviced, including reserving to Licensor or its Affiliates, or even other licensees, the exclusive or non-exclusive right to solicit particular National Accounts or types and/or categories of National Accounts, and requiring Licensee to obtain Licensor’s prior consent before soliciting National Accounts. Licensee will comply with all National Account Policies. Licensee acknowledges that Licensor makes no promise that any particular amount of National Account business will be provided within the Trade Area. Licensee expressly acknowledges that Licensor may offer to subcontract Licensee to furnish Authorized Products and Services on Licensor’s behalf to National Accounts in Licensor’s sole discretion and subject to the applicable customer’s approval and terms and conditions, and Licensee’s execution of a subcontract in the form prescribed by Licensor. If Licensor offers Licensee such a subcontract, Licensee will not be obligated to accept it. However, if Licensee declines, or if Licensee accepts but Licensor is advised by the National Account or Licensor believes in good faith that the National Account is dissatisfied with Licensee’s work, or it is otherwise necessary in Licensor’s judgment in order to preserve the National Account or Licensor’s reputation Licensor may itself perform such services or may subcontract such services to an independent subcontractor.

7.13 Improvements. If Licensee, its employees, any Owner of Licensee, or any Restricted Person develops any new concept, process or improvement in the operation or promotion of a Sit Means Sit® Business (an “Improvement”), Licensee agrees to promptly notify Licensor and provide Licensor with all necessary related information, without compensation. Any such Improvement shall become Licensor’s sole property and Licensor shall be the sole owner of all related patents, patent applications, and other intellectual property rights. Licensee and Licensee’s Owners hereby assign to Licensor any rights Licensee or Licensee’s Owners may have or acquire in the Improvements, including the right to modify the Improvement, and waive and/or release all rights of restraint and moral rights therein and thereto. Licensee and Licensee’s Owners agree to assist Licensor in obtaining and enforcing the intellectual property rights to any such Improvement in any and all countries and further agree to execute and provide Licensor with all necessary documentation for obtaining and enforcing such rights. Licensee and Licensee’s Owners hereby irrevocably designate and appoint Licensor as agent and attorney-in-fact for Licensee and for them to execute and file any such documentation and to do all other lawful acts to further the prosecution and issuance of patents or other intellectual property right related to any such Improvement. In the event that the foregoing provisions of this Section 7.13 are found to be invalid or otherwise unenforceable, Licensee and Licensee’s Owners hereby grant to Licensor a worldwide,

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perpetual, non-exclusive, fully-paid license to use and sublicense the use of the Improvement to the extent such use or sublicense would, absent this Agreement, directly or indirectly infringe on Licensee or Licensee’s Owners’ rights in it.

7.14 Customer Relations. Licensee must give prompt, courteous and efficient service to the public and operate the Licensed Business in compliance with the Manuals to preserve and enhance the value and goodwill of the Marks and the System. Licensee will uphold, and take reasonable steps to ensure that Licensee’s Authorized Trainer and employees uphold, high standards of honesty, integrity, and fair dealing in dealing with the general public, customers of the Licensed Business, other franchisees and Licensor. Licensee must promptly return, within one (1) business day, all calls from potential or actual customers. Licensee must keep all appointments made with customers. If Licensee is unable to keep an appointment due to an emergency or other circumstances beyond Licensee’s reasonable control, Licensee will call the customer at least three (3) hours before the set appointment time to reschedule. Licensee will respond promptly to all complaints received from Licensee’s clients or other individuals in an attempt to resolve the dispute in a reasonable business manner.

ARTICLE 8

ADVERTISING

8.1 General Requirements.

8.1.1 Licensee shall only use and display Advertisements provided or approved by Licensor and shall use and display them in accordance with the Policies. Licensee must obtain Licensor’s prior written approval to use and/or display Advertisements (including as to the choice of medium) not provided by Licensor. The materials shall be deemed disapproved if Licensor has not approved such materials within 15 days of submission by Licensee. All Advertisements that Licensee creates or originates must be factual, ethical and in good taste in the judgment of Licensor. Licensee shall refrain from using any Advertisement which, in the opinion of Licensor, may be injurious to the business of Licensor or the goodwill associated with the Marks, the System or other Businesses.

8.1.2 Licensee’s Advertisements shall be placed or appear only in media which are targeted to reach consumers within Trade Area. Licensor will not approve requests to advertise in a way that aims at a significantly larger market than the Trade Area without a showing of necessity or good cause from Licensee. Licensor may require, among other things, that Licensee submit to Licensor an accurate sample and all relevant details concerning the media in which Licensee proposes to place the Advertisement for the purpose of obtaining Licensor’s approval. If approved, Licensor may, but shall not be obligated to, require that all such Advertisements conspicuously include the addresses of other Businesses located in the geographic area covered by the selected media or format, together with one or more legends prescribed by Licensor, including legends disclosing that the offer is valid only at the Licensed Business, and may not be valid at other non-participating Businesses.

8.1.3 All Advertisements and other advertising materials or concepts created by Licensee and approved by Licensor are the sole and exclusive property of Licensor. Licensor may require Licensee to cease using any advertising materials which it has previously approved and Licensee shall cease using such materials upon written notice.

8.2 Local Advertising. During each calendar quarter, Licensee shall expend an amount equal to not less than 1% of its Gross Sales for the preceding calendar quarter for permitted local advertising and promotion relating to the Licensed Business. Upon request of Licensor, Licensee shall deliver to Licensor, copies of invoices showing Licensee’s local advertising expenditures. If the invoices submitted do not demonstrate expenditures of at least the minimum amount required for local advertising

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during any calendar quarter, Licensee shall pay to Licensor the amount necessary to total Licensee’s required local advertising expenditures during the applicable calendar quarter, less Licensee’s actual expenditures on local advertising. Those funds will be used as part of the Marketing Fund. Expenditures used by Licensee for market-wide or other research, seminars, entertainment, fees paid to consultants not approved by Licensor, incentive programs, charitable contributions, press parties, or specialty items (unless part of a market-wide program approved by Licensor and the cost of the same is not recovered by promotion) shall not be credited toward the local advertising expenditures required by this Section. The entire amount contributed to an Advertising Co-op each calendar year, if any, pursuant to Section 8.3 shall be credited against Licensee’s local advertising requirement described in this Section.

8.3 Co-op Advertising. Licensor shall have the right at any time to designate, and from time

to time to redefine, a region (the “Advertising Co-op Region”) within which the Licensed Business operates, which region may comprise a Designated Market Area established periodically by Nielson Media Research, an Area of Dominant Influence established periodically by Arbitron, a standard metropolitan statistical area or such other geographic area region established by Licensor from time to time to identify the market area in which the Licensed Business operates, which shall function for the purpose of creating a cohesive team (an “Advertising Co-op”) to coordinate advertising, marketing efforts and programs and maximizing the efficient use of local and/or regional advertising media.

8.3.1 If and when Licensor creates an Advertising Co-op for the region in which the Licensed Business operates, Licensee (and, if Licensor or an Affiliate of Licensor owns a Business in such Advertising Co-op Region, then Licensor or such Affiliate), shall become a subscriber and member of the Advertising Co-op and shall execute a subscription agreement on a form prescribed by Licensor, and participate therein in accordance with the Subscription Agreement and the Certificate of Incorporation and Bylaws of such Advertising Co-op. The geographic size, configuration and content of such regions, when and if established by Licensor, shall be binding upon Licensee, all other Businesses similarly situated who are by the terms of their license agreements required to participate, and Licensor or such Affiliate of Licensor, if it operates a Business in the Advertising Co-op Region; provided that Licensor alone may from time to time (but not more frequently than one time per calendar year) amend the geographic size, organization, configuration and content of such Advertising Co-op Region. At all meetings of such Advertising Co-op, each participating Licensee, as well as Licensor (or its Affiliate), if applicable, shall be entitled to one vote for each Business located within such Advertising Co-op Region. Licensor may change, dissolve, or merge Advertising Co-Op Regions in Licensor’s sole discretion.

8.3.2 Licensee and other licensees who are members of the Advertising Co-op will contribute to the Advertising Co-op such amount as is determined by vote of the Advertising Co-op, in an amount not to exceed 5% of Gross Sales of each Advertising Co-op member’s Business(es) located in the region. The precise amount of such contribution shall be established from time to time by the Advertising Co-op, but not more frequently than annually. Payments will be made each Reporting Period, on the same days as the Continuing Royalty payments.

8.3.3 Subject to Section 8.1, each Advertising Co-op will decide as to the usage of funds contributed pursuant to Section 8.3.2 for media time, production of media materials, whether for radio, television, newspapers or store level materials such as flyers, or posters, or for any other type of advertising or marketing use, and then such Advertising Co-op shall in writing request approval from Licensor to use said funds in said manner. Licensor shall not withhold approval unreasonably, but no placement of advertising or commitment of advertising funds on behalf of an Advertising Co-op may be made without Licensor’s prior written approval. Licensor reserves the right to establish Policies concerning the operation of the Advertising Co-op, advertising agencies retained by the Advertising Co-op, and advertising programs conducted by the Advertising Co-op. From time to time Licensor may propose certain general or specific uses of the contributed funds, and in each instance Licensee shall

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attend (by any means permitted by the Advertising Co-op) and vote (by any means permitted by the Advertising Co-op) at a meeting of the Advertising Co-op during which its proposal will be considered. Any disputes (other than pricing, which cannot be discussed between or among the Advertising Co-Op members) arising among or between Licensee, other licensees, and/or the Advertising Co-Op may be resolved by Licensor, and its decision will be final and binding. Licensor may require each Advertising Co-op to prepare an unaudited statement showing contributions to and expenditures of the Advertising Co-op within 120 days following the end of Licensor’s fiscal year, a copy of such statement(s), if any, prepared by such Advertising Co-op will be provided to Licensee upon Licensee’s request.

8.4 Marketing Fund.

8.4.1 Licensee’s Marketing Contribution shall be contributed to the Marketing Fund. An amount equal to all Marketing Fund revenues and allocations will be expended for international, national, regional, or local advertising, public relations or promotional campaigns or programs designed to promote and enhance the image, identity or patronage of licensed and Licensor and Affiliate owned Businesses. These expenditures may include: (a) creative development, production and placement of print advertisements, commercials, musical jingles, decals, radio spots, audio advertising, point of purchase materials, direct mail pieces, literature, outdoor advertising, door hangers, electronic media advertisements, pay-per-click internet advertisements, and other advertising and promotional materials; (b) creative development, preparation, production and placement of video, audio and written materials and electronic media, (c) purchasing artwork and other components for advertising; (d) media placement and buying, including all associated expenses and fees; (e) administering regional and multi-regional marketing and advertising programs; (f) market research, marketing studies and customer satisfaction surveys, including the use of secret shoppers; (g) development, production and acquisition of premium items, giveaways, promotions, contests, public relations events, and charitable or nonprofit events; (h) creative development of signage, posters, and individual décor items including graphics; (i) recognition and awards events and programs; (j) system recognition events, including periodic international, national and regional conventions and meetings; (k) website, extranet and/or Intranet development, implementation and maintenance; (l) development, implementation and maintenance of a website that permits electronic commerce and/or related strategies; (m) retention of advertising and promotional agencies and other outside advisors, including retainers and management fees; (n) public relations and community involvement activities and programs; (o) expenditures for activities conducted for the benefit of co-branding, or other arrangements where Authorized Products and Services are offered in conjunction with other marks or through alternative channels of distribution; and (p) expenditures with others joint marketing campaigns, jointly developed advertising and other joint programs.

8.4.2 Licensor shall determine, in its discretion, the cost, media, content, format, style, timing, allocation and all other matters relating to such advertising, public relations and promotional campaigns. Licensee acknowledges that not all licensees are or shall be required to contribute, or contribute the same percentage of Gross Sales, to the Marketing Fund. Licensor is not required to allocate or expend Marketing Fund contributions or allocations so as to benefit any particular licensee, or group of licensees on a pro rata or proportional basis or otherwise. Except as directed in writing by Licensor, Licensee must participate in all advertising, marketing, promotions, research and public relations programs instituted by Licensor through the Marketing Fund. The Marketing Fund shall, as available, provide to Licensee marketing, advertising and promotional formats and sample materials at the Marketing Fund’s actual cost of producing such items, plus shipping and handling. Any additional advertising shall be at the sole cost and expense of Licensee.

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8.4.3 Without limiting the foregoing, Licensor may do any of the following:

(a) employ individuals, consultants or advertising or other agencies, including consultants or agencies owned by, operated by Licensor or its Affiliates, to provide services for the Marketing Fund;

(b) compensate Licensor and/or its Affiliates for internal expenses, including salaries, overhead and administrative expenses incurred in connection with the operation of its marketing/advertising department(s), and the administration of the Marketing Fund, and to otherwise compensate Licensor and/or its Affiliates for expenses related to the operation of the Marketing Fund;

(c) pay for or charge the Marketing Fund for attorneys’ fees and other costs related in any way to claims against Licensor, any of its Affiliates, and/or the Marketing Fund regarding or in connection with the Marketing Fund. However, Licensor will reimburse the Marketing Fund for any attorneys’ fees and/or costs paid by the Marketing Fund in connection with any action in which Licensor is finally found to have acted unlawfully or to be guilty of wrongdoing with respect to the Marketing Fund;

(d) defer, waive and/or compromise claims with respect to the Marketing Fund;

(e) take legal or other action against any licensee(s) in default of their obligations to the Marketing Fund and settle or compromise claims (and to pay related attorneys’ fees and costs); and

(f) merge or combine the Marketing Fund with any marketing fund otherwise established for Businesses.

8.4.4 Licensor may, but is not required to: (i) transfer the Marketing Contributions to a separate Business Entity to whom Licensor has assigned or delegated the responsibility to operate and maintain the Marketing Fund, (ii) deposit the Marketing Contributions into a separate account maintained by Licensor, or (iii) administratively segregate on its books and records all Marketing Contributions received from Licensee. Nothing in this Agreement shall be deemed to create a trust fund, a fiduciary relationship or similar relationship, and Licensor may commingle Marketing Contributions with its general operating funds and expend such sums in the manner provided. For each Business that Licensor or any of its Affiliates operate, Licensor or such Affiliate will allocate to the Marketing Fund the amount that would be required to be contributed to the Marketing Fund if it were a licensed Business under Licensor’s then-current form of license agreement as of the date of the opening of such Business.

8.4.5 If less than the total of all contributions and allocations to the Marketing Fund are expended during any fiscal year, such excess may be accumulated for use during subsequent years. Licensor may spend in any fiscal year an amount greater or less than the aggregate contributions to the Marketing Fund in that year and may cause the Marketing Fund to borrow funds to cover deficits or invest surplus funds. If Licensor (or an Affiliate) advances money to the Marketing Fund, it will be entitled to be reimbursed for such advances. Any interest earned on monies held in the Marketing Fund will be contributed or allocated to the Marketing Fund. Licensor may suspend or terminate the Marketing Fund, however, prior to termination, all funds must be expended.

8.4.6 The Marketing Fund will be accounted for separately; provided, however, this separate accounting will not limit Licensor’s right to commingle Marketing Contributions with general operating funds. The Marketing Fund may be used to pay all administrative and other costs of the

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Marketing Fund related to its activities and purposes and/or as authorized by the relevant franchise or license agreements. All taxes of any kind incurred in connection with or related to the Marketing Fund, its activities, contributions and/or any other aspect of the Marketing Fund, whether imposed on Licensor, the Marketing Fund or any other related party, will be the sole responsibility of the Marketing Fund. Within 120 days following each fiscal year, Licensor will prepare a statement of contributions and expenditures of the Marketing Fund, and upon Licensee’s written request, Licensor will provide such information to Licensee.

8.5 Telephone Numbers and Directory Advertising.

8.5.1 Licensee shall, at its sole expense, subscribe for and maintain throughout the Term, one or more listed and/or unlisted telephone numbers, in accordance with Licensor’s Policies. Licensor may require that any permitted listed telephone numbers be listed in such online and paper editions of, and under such headings of, such telephone directory(ies) as Licensor may reasonably designate or approve which service Licensee’s Trade Area and adjacent or nearby areas. The cost of all such listings shall be in addition to Licensee’s Marketing Contribution and local advertising requirements.

8.5.2 Licensor may operate one or more T-1 links, telephone numbers (which may be toll free), or telephone systems, designed to be used in connection with the operation of Businesses; including, to refer potential clients to Licensor’s licensees, including Licensee (“Call Center”) . Licensor reserves the right to modify, cease or outsource the operation of the Call Center. Upon Licensor’s request, all advertising relating to the Licensed Business in the Trade Area will include a toll free telephone number designated by Licensor, if any. Licensee must reimburse Licensor for all telephone and related charges it incurs to operate the Call Center and/or to receive and electronically forward to Licensee telephone calls to Licensee which relate to the Licensed Business. Licensor may also impose a reasonable additional charge, which Licensee must promptly pay, and establish other terms and conditions of use. Such charges will be determined by Licensor in an amount designed to reimburse Licensor for its direct and indirect costs of establishing and operating the Call Center, such as a share of its facility rent, personnel costs, telephone company charges, amortization of equipment costs and technology research and development, and other related costs and expenses. Licensee may insert the toll free number (if one is established) in its directory listings, business cards, and stationery, but may not otherwise advertise this telephone number without Licensor’s prior written consent.

8.6 Promotional Campaigns. From time to time during the Term, Licensor will have the right to establish and conduct promotional campaigns on an international, national or regional basis, which may by way of illustration promote particular products or marketing themes. Licensee agrees to participate in such promotional campaigns upon such terms and conditions as Licensor may establish. Licensee acknowledges and agrees that such participation may require Licensee to purchase point of sale advertising material, posters, flyers, product displays and other promotional material.

ARTICLE 9

INTERNET AND INTERNET SALES

9.1 Internet.

9.1.1 Licensee will not develop, create, generate, own, license, lease, participate in, or use in any manner any computer medium or electronic medium (including any Internet web-page, e-mail address, website, domain name, bulletin board, metatag, newsgroup or other Internet-related medium or activity) which in any way uses or displays the Marks, or any confusingly similar words, symbols or terms without Licensor’s prior written consent, and then only in such manner and in accordance with the Policies. The term “uses or displays” includes any activity by the medium or any person acting in

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furtherance of, or on behalf of the medium, pursuant to which existing or prospective customers, Suppliers, licensees or licensees or others are solicited or directed to the medium through the use of the Marks or by other direct or indirect reference to Licensor.

9.1.2 Licensor has established one or more Internet websites. Licensor shall have discretion over the design, content and functionality of such websites. Licensor may include one or more interior pages that identifies businesses operated under the Marks, including the Licensed Business, by, among other things, geographic area or region, address, telephone number(s), and services offered. Licensor may permit Licensee to customize or post certain information to the interior page, subject to Licensee’s execution of a participation agreement prescribed by Licensor, as in effect from time to time, and Licensee’s compliance with the Policies. Licensee may request that Licensor modify or supplement the Licensee’s interior page and Licensor may grant such request at its sole discretion. All costs associated with any changes, modifications or updates to the information contained on the interior page must be paid by Licensee. Licensor may disable or terminate such website(s) and interior pages without Licensor having any liability to Licensee. Licensor’s website(s) may also include one or more interior pages dedicated to the sale of franchises or investor relations.

9.1.3 Licensee acknowledges and agrees that Licensor (or its Affiliate) is the owner of, and will retain all right, title and interest in and to: (i) the domain name “sitmeanssit.com”; (ii) the URL: “www.sitmeanssit.com”; and all existing and future domain names, URLs, future addresses, social media identities (including pages on social media sites such as Twitter, Facebook, MySpace, and LinkedIn) and subaddresses using the Marks in any manner; (iii) all computer programs and computer code used for or on Licensor’s website(s); (iv) all text, images, sounds, files, video, designs, animations, layout, color schemes, trade dress, concepts, methods, techniques, processes and data used in connection with, displayed on, or collected from or through Licensor’s website(s); and (v) all intellectual property rights in or to any of the foregoing.

9.2 Internet Sales. Licensee acknowledges that Licensor has the exclusive and unrestricted right to manufacture, produce, license, distribute and market products (including “Sit Means Sit” Brand Products and products not bearing the Marks), including dog care products, dog training products, dog toys, food and treats, books, videos, instructional materials, leashes, collars, apparel, and other goods by means of the Internet.

9.3 Internet Referral Sources. Licensee acknowledges that to competitively attract customers, Licensor may enter into agreements with Internet Referral Sources to refer customers to Licensor and its licensees, including Licensee. Licensee must not enter into any arrangement or agreement with an Internet Referral Source without Licensor’s prior written consent.

ARTICLE 10

DISTRIBUTION AND PURCHASE OF

EQUIPMENT, SUPPLIES, AND OTHER PRODUCTS

10.1 Inventory. At all times throughout the Term, Licensee shall purchase and maintain in

inventory such types and quantities of Designated Products and Ancillary Products as are needed to meet reasonably anticipated consumer demand.

10.2 Designated Products. Licensor may, from time to time throughout the Term in its sole

subjective discretion exercised in good faith, require that Licensee purchase, use, offer, promote and/or maintain in stock products, including dog collars, dog care products, dog training products, dog toys, food and treats, leashes, collars, bite suits, apparel, and other goods, training and other equipment, uniforms, supplies, packaging, business cards, forms, computer hardware, software, modems and peripheral

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equipment and other items, which are produced or manufactured in accordance with Licensor’s proprietary specifications and/or formulas, and which Licensor selects as designated products, and specified “Sit Means Sit” Brand Products (“Designated Products”). Licensor will require Licensee to purchase training collars and certain other training items directly from Licensor, its Affiliates, and designees. Licensor has the right to require Licensee to purchase all other Designated Products and “Sit Means Sit” Brand Products only from Licensor, its Affiliates, or designees. Licensor shall not be obligated to reveal Trade Secrets, specifications, designs and/or formulas of Designated Products to Licensee, non-designated suppliers, or any other third parties.

10.3 Ancillary Products. Licensor may designate certain products, accessories, raw

materials, equipment, uniforms, supplies, packaging, forms, computer hardware, software, modems and peripheral equipment and other products, supplies and equipment other than Designated Products which Licensee may or must use and/or offer and sell from the Licensed Business (“Ancillary Products”). Licensee may, but shall not be obligated to, purchase such Ancillary Products from Licensor or its Affiliates, if Licensor or such Affiliates supply same. Licensee may use, offer or sell only such Ancillary Products that Licensor has expressly authorized.

10.3.1 Licensee may purchase authorized Ancillary Products, and, in some instances (as Licensor determines in its sole discretion), Designated Products, from (i) Licensor or its Affiliates, (ii) suppliers designated by Licensor, or (iii) suppliers selected by Licensee and with Licensor’s prior written consent (each a “Supplier” and collectively, the “Suppliers”). Each such Supplier seeking to be approved or designated by Licensor must comply with Licensor’s usual and customary requirements, including those related to insurance, indemnification, and non-disclosure, and shall demonstrate to the reasonable satisfaction of Licensor: (a) its ability to supply an Ancillary Product meeting the Policies, which may include, specifications as to brand name and model, contents, quality, and compliance with Applicable Law; (b) its reliability with respect to delivery and the consistent quality of its products or services; and (c) its ability meet such other requirements as determined by Licensor to be in the best interest of the franchise system.

10.3.2 For Suppliers of Designated Products selected by Licensee, Licensee shall first deliver written notice seeking approval, which notice shall: (i) identify the name and address of the Supplier, (ii) contain such information as may be requested or required by Licensor (which may include financial, operational and economic information regarding its business and product(s)), and (iii) identify the authorized Ancillary Products desired to be purchased through the Supplier. Upon request, Licensor will furnish to Licensee the general, but not manufacturing specifications for such Ancillary Products if specifications are not contained in the Manuals. Licensor may request that the proposed Supplier furnish Licensor, at no cost to Licensor, product samples, specifications and such other information as Licensor may require. Licensor or its representatives shall also be permitted to inspect the facilities of the proposed Supplier and establish economic terms, delivery, service and other requirements consistent with other distribution relationships for other Businesses. As a further condition of its approval, Licensor may require a Supplier to agree in writing: (i) to faithfully comply with Licensor’s specifications for applicable Ancillary Products sold by it, (ii) to sell any Ancillary Product bearing the Marks only to licensees of Licensor and only pursuant to a trademark license agreement in form prescribed by Licensor, (iii) to provide to Licensor duplicate purchase invoices for Licensor’s records and inspection purposes and (iv) to otherwise comply with Licensor’s reasonable requests.

10.3.3 Licensor will notify Licensee of its decision within 60 days after Licensor’s receipt of Licensee’s request for approval and other requested information. Nothing in this Article shall require Licensor to approve any Supplier and Licensee acknowledges that it is generally disadvantageous to the franchise system from a cost and service basis to have more than one Supplier in any given market area and that, among the other factors, Licensor may consider distribution costs and the quality and

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uniformity of products offered regionally or system-wide. Without limiting the foregoing, Licensor may disapprove a proposed Supplier, if in Licensor’s opinion the approval of the proposed Supplier would disrupt or adversely impact Licensor’s international, national or regional distribution arrangements. Licensor may also determine that certain Ancillary Products shall be limited to a designated brand or brands set by Licensor. Licensor may revoke its approval upon the Supplier’s failure to continue to meet any of Licensor’s criteria. Licensee agrees that at such times that Licensor establishes a regional purchasing program which may benefit Licensee by reduced prices, lower labor costs, production of improved products, reliability in supply, improved distribution or raw material cost control, Licensee will participate in the purchasing program in accordance with its terms.

10.3.4 Licensee or the proposed Supplier shall reimburse Licensor for all of Licensor’s reasonable costs in reviewing the Supplier’s application and reasonable costs and expenses, including Travel Expenses, related to inspecting, re-inspecting and auditing the Suppliers’ facilities, equipment, and food products, and all product testing costs paid by Licensor to third parties.

10.4 Purchases from Licensor or its Affiliates.

10.4.1 All goods, services, products, and supplies, including Designated Products and Ancillary Products (“Goods and Services”) purchased from Licensor or its Affiliates shall be purchased in accordance with the purchase order format and policies of Licensor or its Affiliate, as stated in the Manuals or otherwise. Purchases shall be on Licensor’s or its Affiliate’s then-current price, delivery and other terms and conditions which Licensor or its Affiliate may change on at least 15 days prior written notice, provided, that prices shall be the same as those charged to similarly situated licensees (excluding shipping, transportation, warehousing, insurance and related costs and expenses). Licensee further acknowledges that prices Licensor or its Affiliate charges to Licensee may include a profit to Licensor or its Affiliate. Licensor or its Affiliate may discontinue the sale of any Goods and Services at any time if in Licensor’s or its Affiliate’s judgment its continued sale becomes unfeasible, unprofitable, or otherwise undesirable. If any goods or products sold by Licensor or its Affiliate are not in sufficient supply to fulfill all orders, Licensor or its Affiliate may allocate the available supply among itself, its Affiliates and others, including Licensee and other licensees, in any way Licensor or its Affiliate deems appropriate, which may result in Licensee not receiving any allocation of certain goods or products as a result of a shortage. All product orders by Licensee shall be subject to acceptance by Licensor or its Affiliate at Licensor’s or its Affiliate designated offices, and Licensor or its Affiliate reserves the right to accept or reject, in whole or in part, any order placed by Licensee. Licensee shall submit to Licensor or its Affiliate, upon written request, financial statements which contain sufficient information to enable Licensor to determine the credit limits, if any, to be extended to Licensee. Licensor or its Affiliate may establish the credit terms, if any, upon which it will accept Licensee’s orders, and may require Licensee to pay for orders on a cash-in-advance or cash-on-delivery basis.

10.4.2 Licensor (and its Affiliates) reserve the right to establish, amend, modify and terminate in the sole and absolute discretion of Licensor or its Affiliate, as applicable, the terms and conditions of product and service warranties to be provided to customers, concerning the products purchased from Licensor or its Affiliates and the related services to be provided by Licensee, including warranty duration and other warranty terms and conditions, including the circumstances under which Licensee or Licensor or its Affiliates must offer customers replacement, re-training or a purchase price refund with respect to such products and services. Licensee shall perform promptly all of the terms and conditions of all such warranties. Licensee shall have sole responsibility for all such warranties (even though the terms and conditions have been established by Licensor) and for performance of any other warranties provided by Licensee. Licensee shall comply with all Policies on warranty programs and keeping records with respect to Licensee reimbursement claims. Licensee acknowledges and agrees that all warranty and other services hereunder are performed by Licensee as an independent contractor and not

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as an agent of Licensor. Licensee has no authority to make and shall not make any warranty or representation to others on Licensor’s behalf.

10.4.3 No purchase order submitted by Licensee shall contain any terms except as approved in writing by Licensor (or its Affiliate), nor be deemed complete unless all of the information required by the prescribed purchase order form is provided by Licensee. No new or additional term or condition contained in any order placed by Licensee shall be deemed valid, effective or accepted by Licensor unless such term or condition is expressly accepted by Licensor or its Affiliate in writing.

10.4.4 Licensor or its Affiliate shall not be liable to Licensee on account of any delay or failure in the manufacture, delivery or shipment of goods or products caused by Force Majeure or other events or circumstances beyond Licensor’s or its Affiliate’s reasonable control including such events as labor or material shortages, products shortages, conditions of supply and demand, import/export restrictions, or disruptions in supply sources.

10.4.5 Licensor (or its Affiliate) may collect rebates, allowances and credits in the form of cash or services or otherwise from Suppliers based on purchases or sales by Licensee and Licensor shall have the right to retain such sums for its own purposes, return such sums to be used by one or more licensees, including for designated purposes, and use such sums for advertising the System, or one or more of the foregoing purposes in Licensor’s discretion, notwithstanding any designation by the Supplier or otherwise. Any such contribution of such rebates or credits to the Marketing Fund shall not reduce Licensee’s obligation to pay the Marketing Contribution.

10.4.6 Licensor or its Affiliate may act as a Supplier of goods, services, products, and/or supplies purchased by Licensee, and Licensor or its Affiliates may be designated as the sole Supplier of any such Goods or Services. On the expiration or termination of this Agreement, or in the event of any default by Licensee of this Agreement, Licensor or its Affiliates shall not be obliged to fill or ship any orders then pending or, in the case of termination or non-renewal, made any time thereafter by Licensee. Licensor may notify Suppliers of any impending termination or expiration of this Agreement and may, among other things, instruct such Suppliers to deliver only such quantity of Designated Products and Ancillary Products as is reasonably necessary to supply Licensee’s needs prior to expiration or termination of this Agreement.

10.4.7 Upon request, Licensee shall promptly estimate the level of purchases that Licensee expects to make over the two weeks following the date of the request.

10.5 Customer Information; Comment Cards. At Licensor’s request, Licensee shall use reasonable efforts to secure the names, addresses and other information of Licensee’s customers (the “Customer Information”), which Customer Information will be Licensor’s sole property. Licensee may not divulge the Customer Information to any third party. Licensee acknowledges that Licensor owns all Customer Information and information relating to service professionals of, and/or related to, the Licensed Business and all other records created and maintained by Licensee. Licensee shall respond promptly to each customer inquiry or complaint and resolve all reasonable complaints to the customer’s satisfaction. Licensee shall use customer comment cards in the manner specified in the Manuals. Licensor may contact any client of the Licensed Business at any time for any purpose. Also, if Licensor is contacted by a client or other patron of the Licensed Business who wishes to lodge a complaint, Licensor reserves the right to address the person’s complaints in order to preserve goodwill and prevent damage to the brands.

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ARTICLE 11

REPORTS, BOOKS AND RECORDS, INSPECTIONS

11.1 General Reporting. Licensee shall, in the form and manner specified by Licensor (which may include reporting via the Computer System), submit to Licensor statistical control forms and such other financial, operational and statistical information as Licensor may require, including those to: (i) assist Licensee in the operation of the Licensed Business in accordance with the System; (ii) allow Licensor to monitor the Licensee’s Gross Sales, purchases, costs and expenses; (iii) enable Licensor to develop chain-wide statistics which may improve bulk purchasing; (iv) assist Licensor in the development of new Authorized Products and Services; (v) enable Licensor to refine or delete existing Authorized Products and Services; and (vi) generally improve chain-wide understanding of the System (collectively, the “Information”). Without limiting the generality of the foregoing:

11.1.1 On or before the 7th day following each Reporting Period, or at such other interval as Licensor may establish, Licensee shall submit a Gross Sales report signed by Licensee, on a form prescribed by Licensor, reporting all Gross Sales for the preceding Reporting Period, together with such additional financial information as Licensor may from time to time request.

11.1.2 On or before the 30th day following each calendar month during the Term, Licensee shall submit to Licensor financial statements for the preceding month, including a Balance Sheet, Cash Flow Statement and Profit and Loss Statement prepared in the form and manner prescribed by Licensor, which shall be certified by Licensee to be accurate and complete. Licensee shall also provide Licensor with quarterly sales data in the format and manner prescribed by Licensor.

11.1.3 Within 60 days following the end of each calendar year, Licensee shall submit to Licensor: (a) an unaudited annual financial statement (audited, if Licensee obtains an audit at its election), including a Balance Sheet, Cash Flow Statement and Income Statement, and prepared in such form and manner prescribed by Licensor, which shall be certified by Licensee to be accurate and complete; (b) a true and correct copy of the original signed annual 1120, 1120S, 1065, or 1040 tax form, as applicable (or any other forms which take the place of the 1120, 1120S, 1065 or 1040 tax forms); and (c) true and correct copies of signed original sales and use tax forms contemporaneously with their filing with the Governmental Authority. Licensor reserves the right to require further Information concerning the Licensed Business as Licensor may from time to time request.

11.2 Under-Reporting. Licensee shall prepare, and keep for not less than 7 years following

the end of each of its fiscal years, or such longer period required under Applicable Law, adequate books and records showing daily receipts, advertising and other business expenditures, applicable sales tax returns, all pertinent other records, and such other sales records as may be required by Licensor. Licensor may request that these records be provided to Licensor electronically or through mail or overnight delivery service. Licensor, its agents or representatives may, at any reasonable time during normal working hours, audit or review Licensee’s books and records. Licensee shall provide all information promptly upon demand (but not later than 5 days following the date of the request). If any audit or other investigation reveals an under-reporting or under-recording error, then upon demand Licensee shall pay the amount determined to be owed, plus interest at the highest compound rate permitted by Applicable Law, but not to exceed the rate of 18% percent per annum.

11.3 Employment Practices. Licensee acknowledges and agrees that it is solely responsible

for the operation of the Licensed Business, including keeping of Licensee’s accounting system; for any and all labor relations, including wage and hour regulation compliance, hiring, firing, supervising and disciplining Licensee’s employees; for setting work schedules; for compensation of such employees and

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the correct processing thereof; and for obtaining all necessary business licenses and employment insurance.

11.4 Books and Records. Licensee shall maintain an accounting and record keeping system, in accordance with U.S. generally accepted accounting principles and sound business practices (or, at Licensor’s request international financial reporting standards), which shall provide for basic accounting information necessary to prepare financial statements, a general ledger, and reports required by this Agreement and the Manuals. Licensee shall maintain adequate accurate and verifiable books and supporting documentation relating to such accounting information.

11.5 Inspections.

11.5.1 Licensor’s authorized representatives (“Inspectors”) shall have the right, from time to time, to enter all Vehicles (and to require Vehicles to be made available for inspection at a single location), the location(s) where Licensee provides Authorized Products and Services, with or without notice, without unreasonably disrupting Licensee’s business operations, for the purposes of examining same, performing evaluations, conferring with Licensee’s employees, trainers, inspecting and checking inventory and equipment, and determining whether the Licensed Business is being conducted in accordance with this Agreement, the System and the Manuals. If any such inspection discloses any material failure by Licensee to comply with the Policies, Licensee shall promptly reimburse Licensor for all of its costs and expenses (including, without limitation, Travel Expenses) incurred in connection with all such inspections (and any re -inspections) of the Licensed Business. Licensee acknowledges that inspections are not limited as to frequency and may occur quarterly or more frequently as deemed appropriate by Licensor in its sole discretion, and in the case of “secret-shoppers” may include numerous visits over several weeks or other period of time determined by Licensor.

11.5.2 Licensee shall from time to time, upon Licensor’s request and in accordance with Licensor’s instructions, promptly provide Licensor with digital photos and/or video of all aspects of the goods and services provided by Licensee to a customer.

11.5.3 If any such inspection indicates any deficiency or unsatisfactory condition caused by Licensee with respect to any matter required under this Agreement, the Manuals, or the System and Licensor notifies Licensee in writing of such deficiency or unsatisfactory condition, Licensee shall have 72 hours after receipt of such notice, or such other greater time period as Licensor in its sole discretion may provide, to correct or repair such deficiency or unsatisfactory condition, if it can be corrected or repaired within such period of time. If the nature of such deficiency or unsatisfactory condition is such that it cannot be corrected within a 72 hour period, Licensor shall provide Licensee with such additional time as Licensor deems necessary, provided that Licensee immediately commences to cure the same and thereafter diligently pursues it to completion. Notwithstanding the foregoing, if, in Licensor’s sole discretion, the nature of such deficiency or unsatisfactory condition is such that it poses an imminent danger to public health or safety, Licensee shall correct or repair such deficiency or unsatisfactory condition within 24 hours.

ARTICLE 12

MARKS

12.1 Use of Marks. Subject to Section 12.6, the Licensed Business shall be operated under the name “Sit Means Sit”, without prefix or suffix. Licensee shall use and display Licensor’s trade dress, Marks and such signs, advertising and slogans only as Licensor may prescribe or approve. Licensee will: (i) maintain the highest standard of quality in the provision, operation, promotion, marketing and advertising of all Approved Products and Services; (ii) provide high quality services to the public similar,

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and at least equal to, the type, quality, and distinguishing characteristics of the services being offered by Licensor and its Affiliates and licensees; and (iii) display the Marks in accordance with the Policies. Upon expiration or sooner termination of this Agreement, Licensor may execute in Licensee’s name and on Licensee’s behalf, any and all documents necessary or appropriate to end and cause the discontinuance of Licensee’s use of the trade dress, Marks and Licensor is hereby irrevocably appointed and designated as Licensee’s attorney-in-fact to do so. Licensee shall not imprint or authorize any person to imprint any of the Marks on any product without the prior written approval of Licensor. Licensee shall not use the Marks in connection with any assignment or offering of securities or any request for credit without Licensor’s prior written approval. Licensor may withhold or condition any approval related to the Marks.

12.2 Non-Use of Trade Name. If Licensee is a Business Entity, it shall not use the Marks, or Licensor’s trade name, or any words or symbols which are confusingly similar, phonetically or visually, to the Marks, as all or part of Licensee’s name.

12.3 Non-ownership of Marks. Nothing in this Agreement shall give Licensee, and Licensee

shall not assert, any right, title or interest in Licensor’s trade-dress, or to any of the Marks or the goodwill attributable to the Marks. All goodwill accrued by, and due to, Licensee’s use of the Marks anywhere shall be the sole and exclusive property of Licensor.

12.4 Defense of Marks.

12.4.1 If Licensee receives notice, or is otherwise informed, of any claim, suit or demand against Licensee of any alleged infringement, unfair competition, or similar matter on account of its use of the Marks in accordance with the terms of this Agreement, Licensee shall promptly notify Licensor of any such claim, suit or demand. Licensor shall take such action as it may deem necessary and appropriate to protect and defend Licensee against any such claim by any third party, but Licensor shall not be obligated to take any such action, however. Licensee shall not settle or compromise any such claim by a third party without the prior written consent of Licensor. Licensor and its Affiliates have the sole right to defend, compromise or settle any such claim, in its discretion, and at their cost and expense, using attorneys of their own choosing, and Licensee shall cooperate fully with Licensor and its Affiliates in connection with the defense of any such claim. Licensee may participate at its own expense in such defense or settlement, but Licensor’s decisions with regard to defense and settlement shall be final.

12.4.2 In the event that Licensee is required to cease using the any of Marks by court order, or as a result of any settlement of any claim by a third party, or if Licensor changes the Marks in order to mitigate any potential exposure or damages arising under any claim by a third party, then: (i) Licensor shall provide Licensee prompt written notice of such decision and Licensee shall have 30 days after the date of such notice to (or such shorter time as any court order or settlement agreement may require) within which Licensee may terminate this Agreement; (ii) if Licensee shall not so terminate this Agreement, Licensee shall promptly change the Business Name to an alternative name established by Licensor or its Affiliate. Licensor may consult with Licensee prior to establishing the alternative name, but the decision of Licensor with regard thereto shall be final and binding. Licensor shall not otherwise be liable for any losses or any consequential damages, including lost future profits, resulting from or arising out of any claims by a third party relating to Licensee’s use of the Marks.

12.5 Prosecution of Infringers. If Licensee receives notice or learns that any unauthorized

third party is using Licensor’s trade dress or Marks, or something similar, Licensee shall promptly notify Licensor. Licensor shall then determine whether or not it wishes to take any action against such third person. Licensee shall have no right to make any demand against any such alleged infringer or to prosecute any claim of any kind or nature whatsoever against any alleged infringer for or on account of such infringement.

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12.6 Modification of Marks. From time to time, Licensor may add to, delete or modify any or all of the Marks and trade dress. Licensee shall use, or cease using the Marks and/or trade dress at its expense, including any modified or additional trade names, trademarks, service marks, logotypes, commercial symbols and trade dress, in accordance with the Manuals and Policies. Except as Licensor may otherwise direct, Licensee shall implement any change within 60 days after notice by Licensor.

12.7 Acts in Derogation of the Marks. Licensee agrees that Licensor’s trade dress and the

Marks are the exclusive property of Licensor and/or its Affiliates and Licensee now, and will hereafter, assert no claim to any goodwill, reputation or ownership by virtue of Licensee’s licensed and/or franchised use, or otherwise. Licensee is familiar with the standards and high quality of the use of the trade dress and Marks in the operation of Businesses, and Licensee agrees that it will maintain this standard in its use of the Marks and trade dress at all times. All use of the Marks and trade dress by Licensee inures to the benefit of Licensor. Licensee shall not contest or assist anyone in contesting at any time, in any manner, the validity of any Mark or its registration, and shall maintain the integrity of the Marks and prevent their dilution. Licensee shall not do or permit any act or thing to be done in derogation of any of the rights of Licensor or its Affiliates in connection with the same, either during the Term or thereafter, and that it will use the Marks and Licensor’s trade dress only for the uses and in the manner permitted in this Agreement. Without limiting the foregoing, Licensee must not: (i) interfere in any manner with, or attempt to prohibit, the use of Licensor’s trade dress and/or the Marks by any other licensee or licensee of Licensor; or (ii) divert or attempt to divert any business or any customers of the Licensed Business to any other person or Business Entity, by direct or indirect inducement or otherwise, or do or perform, directly or indirectly, any other act injurious or prejudicial to the goodwill associated with the Marks.

12.8 Assumed Name Registration. If Licensee is required to do so by Applicable Law, Licensee shall promptly upon execution of this Agreement file with applicable Governmental Authority, a notice of its intent to conduct its business under the name authorized by Licensor under this Agreement. Promptly upon the expiration or termination of this Agreement for any reason whatsoever, Licensee shall execute and file such documents as may be necessary to revoke or terminate such assumed name registration, or any other registrations or filings, and if Licensee fails to promptly execute and file such documents, Licensee hereby irrevocably appoints Licensor as its attorney-in-fact to do so for and on behalf of Licensee.

ARTICLE 13

COVENANTS REGARDING OTHER BUSINESS INTERESTS

13.1 Non-Competition. Licensee acknowledges that the System is distinctive and has been developed by Licensor and/or its Affiliates at great effort, time, and expense, and that Licensee has regular and continuing access to valuable and confidential information, training, and Trade Secrets regarding the System. Licensee recognizes its obligations to keep confidential such information as set forth in this Agreement. Licensee therefore agrees as follows:

13.1.1 During the Term, no Restricted Person shall in any capacity, either directly or indirectly, through one or more affiliated Business Entities engage in any Competitive Activities at any location, whether within or outside the Trade Area.

13.1.2 To the extent permitted by Applicable Law, upon (i) the expiration or termination of this Agreement, (ii) the occurrence of any Assignment, or (iii) the cession of any Restricted Person’s relationship with Licensee, each person who is a Restricted Person before such event shall not for a period of two years thereafter:

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(a) either directly or indirectly, own, operate, advise, be employed by, or have any financial interest in any business engaged in any Competitive Activities at any location within: (i) the Trade Area; (ii) any other geographic areas wherein Licensee has operated the Licensed Business; or (iii) the designated trade area of other “Sit Means Sit” licensees;

(b) solicit business of any kind or nature from an individual or Business Entity that was a customer of Licensee during the 24 month period immediately preceding such event; or

(c) use the Customer Information for any purpose.

13.2 Trade Secrets.

13.2.1 Restricted Persons may have access to proprietary and confidential information, including the Trade Secrets, Policies, specifications, procedures, concepts and methods and techniques of developing and operating a Business and producing and providing Authorized Products and Services. Licensor may disclose certain of its Trade Secrets to Restricted Persons in the Manuals, bulletins, supplements, confidential correspondence, or other communications, and through Licensor’s training programs and other guidance and management assistance. “Trade Secrets” shall not include information which: (a) has entered the public domain or was known to Licensee prior to Licensor’s disclosure of such information to Licensee, other than by the breach of an obligation of confidentiality owed (by anyone) to Licensor or its Affiliates; (b) becomes known to the Restricted Persons from a source other than Licensor or its Affiliates and other than by the breach of an obligation of confidentiality owed (by anyone) to Licensor or its Affiliates; or (c) was independently developed by Licensee without the use or benefit of any of Licensor’s Trade Secrets. The burden of proving information received from Licensor does not constitute a Trade Secret will be Licensee’s alone.

13.2.2 No Restricted Person shall acquire any interest in the Trade Secrets or Customer Information other than the right to use them in developing and operating the Licensed Business during the Term. A Restricted Person’s duplication or use of the Trade Secrets or Customer Information in any other endeavor or business shall constitute an unfair method of competition. Each Restricted Person shall: (i) not use the Trade Secrets or Customer Information in any business or other endeavor other than in connection with the Licensed Business; (ii) maintain absolute confidentiality of the Trade Secrets and Customer Information during and after the Term; and (iii) make no unauthorized copy of any portion of the Trade Secrets or Customer Information, including the Manuals, bulletins, supplements, confidential correspondence, or other confidential communications, whether written or oral. Licensee shall operate the Licensed Business and implement all reasonable procedures prescribed by Licensor to prevent unauthorized use and disclosure of the Trade Secrets. If Licensee has any reason to believe that any employee has violated the provisions of any confidentiality and noncompetition agreement, Licensee shall promptly notify Licensor and shall cooperate with Licensor to protect Licensor against infringement or other unlawful use, including, the prosecution of any lawsuits if, in the judgment of Licensor, such action is necessary or advisable.

13.2.3 In view of the importance of the Marks and the Trade Secrets and the incalculable and irreparable harm that would result to the parties in the event of a default of the covenants and agreements set forth in this Agreement, the parties agree that each party shall have the right to obtain specific performance, temporary restraining orders and temporary or preliminary injunctive relief from a court of competent jurisdiction to enforce the covenants and agreements in this Agreement, in addition to any other relief to which such party may be entitled at law or in equity. Each party submits to the exclusive jurisdiction of the courts of the State of Nevada and the U.S. federal courts sitting in Las Vegas, Nevada for these purposes. The parties agree that venue for those proceeding shall be the state and federal courts located in Las Vegas, Nevada. Licensee agrees that Licensor may have temporary or

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preliminary injunctive relief without bond, but upon due notice, and Licensee’s sole remedy in the event of the entry of such injunctive relief will be the dissolution of the injunctive relief, if warranted, upon hearing duly had (all claims for damages by reason of the wrongful issuance of any the injunction being expressly waived).

13.2.4 Licensee must obtain covenants similar to those in Sections 13.1 and 13.2 from Restricted Persons and such other personnel as Licensor specifies. Licensor may regulate the form of agreements Licensee uses and may require that Licensor be an express third party beneficiary with the right to enforce such agreements. Promptly upon Licensor’s request, Licensee shall deliver executed copies of such agreements to Licensor.

13.3 Effect of Applicable Law. In the event any portion of the covenants in this Article violates laws affecting Licensee, or is held invalid or unenforceable in a final judgment to which Licensor and Licensee are parties, then the maximum legally allowable restriction permitted by law shall control and bind Licensee. Licensor may at any time unilaterally reduce the scope of any part of the above covenants, and Licensee shall comply with any such reduced covenant upon receipt of written notice. The provisions of this Article shall be in addition to and not in lieu of any other confidentiality obligation of Licensee, or any other person, whether pursuant to another agreement or pursuant to Applicable Law.

13.4 Business Practices. Licensee represents, warrants and covenants to Licensor that:

13.4.1 As of the Effective Date, Licensee and each of its Owners (if Licensee is an Business Entity) shall be and shall remain in full compliance with all Applicable Laws in each jurisdiction in which Licensee or any of its Owners, conducts business that prohibits unfair, fraudulent or corrupt business practices in the performance of its obligations under this Agreement and related activities, including the following prohibitions:

(a) No government official, official of an international organization, political party or official, or candidate is an owner or has any investment interest in the revenues or profit of Licensee;

(b) None of the property or interests of Licensee or any of its Owners is subject to being “blocked” under any Anti-Terrorism Laws. Neither Licensee, nor any of its respective funding sources (including any legal or beneficial owner of any equity in Licensee) or any of its Affiliates is or has ever been a terrorist or suspected terrorist within the meaning of the Anti-Terrorism Laws or identified by name or address on any Terrorist List. Each of Licensee and its Owners are in compliance with Applicable Law, including all such Anti-Terrorism Laws;

(c) Neither Licensee nor any of its Owners conducts any activity, or has failed to conduct any activity, if such action or inaction constitutes a money laundering crime, including any money laundering crime prohibited under the International Money Laundering Abatement and Anti-Terrorist Financing Act, as amended.

(d) Licensee is neither directly nor indirectly owned or controlled by the government of any country that is subject to a United States embargo. Nor does Licensee or its Owners act directly or indirectly on behalf of the government of any country that is subject to a United States embargo.

13.4.2 Licensee has taken all necessary and proper action required by Applicable Law and has the right to execute this Agreement and perform under all of its terms. Licensee shall implement

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and comply with anti -money laundering policies and procedures that incorporate “know-your-customer” verification programs and such other provisions as may be required by Applicable Law.

13.4.3 Licensee shall implement procedures to confirm, and shall confirm, that (a) none of Licensee, its Affiliates, its Owners, any person or Business Entity that is at any time a legal or beneficial Owner of any interest in Licensee or that provides funding to Licensee is identified by name or address on any Terrorist List or is an Affiliate of any person so identified; and (b) none of the property or interests of Licensee is subject to being “blocked” under any Anti-Terrorism Laws.

13.4.4 Licensee shall promptly notify Licensor upon becoming aware of any violation of this Section or of information to the effect that any person or Business Entity whose status is subject to confirmation is identified on any Terrorist List, any list maintained by OFAC or to being “blocked” under any Anti-Terrorism Laws, in which event Licensee shall cooperate with Licensor in an appropriate resolution of such matter.

13.4.5 In accordance with Applicable Law, none of Licensee nor any of its Affiliates, principals, partners, officers, directors, managers, employees, agents or any other persons working on their behalf, shall offer, pay, give, promise to pay or give, or authorize the payment or gift of money or anything of value to any officer or employee of, or any person or Business Entity acting in an official capacity on behalf of, the Governmental Authority, or any political party or party official or while knowing that any portion of that money or thing of value will be offered, given or promised, directly or indirectly, to any official to (a) influence any action or decision of the official in any official capacity; (b) induce the official to do or omit to do any act in violation of any lawful duty; or (c) induce the official to influence any act or decision of such Governmental Authority in order to obtain certain business for or with, or direct business to, any person or Business Entity.

13.5 Survival. The provisions of this Article 13 shall not limit, restrain or otherwise affect any right or cause of action which may accrue to Licensor for any infringement of, violation of, or interference with, this Agreement, or the Marks, System, Trade Secrets, Licensor’s trade dress, or any other proprietary aspects of Licensor’s business.

ARTICLE 14

ASSIGNMENT

14.1 Assignment by Licensor. Licensor may transfer or assign all or any part of the System, the Marks, or all or any part of its rights or obligations under this Agreement to any third party without limitation.

14.2 Assignment by Licensee.

14.2.1 The rights and duties created by this Agreement are personal to Licensee. This Agreement has been entered into by Licensor in reliance upon and in consideration of the singular individual or collective character, reputation, skill attitude, business ability, and financial capacity of Licensee, or if applicable, its Owners who will actively and substantially participate in the development ownership and operation of the Licensed Business. Neither Licensee nor any Owner (other than Licensor, if applicable) shall, without Licensor’s prior written consent, cause or permit any Assignment. If Licensor grants its consent, Licensor may impose any condition upon its consent, including some or all of the following (any of which may be waived by Licensor):

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(a) that Licensee provides a detailed description of the price and all material terms and conditions of the proposed Assignment and the identity of the proposed assignee and such other information as Licensor may reasonably request.

(b) that Licensee’s right to receive payments in connection with the Assignment shall be subordinated to Licensor’s rights to receive any outstanding monetary obligations or other outstanding obligations due from Licensee or transferee under any agreement with Licensor or any Affiliate, whether arising before or after the Assignment;

(c) that Licensee provides Licensor an estoppel listing any and all causes of action, if any, that Licensee may have against Licensor or if none exist, so stating, and a list of all Owners having an interest in this Agreement or in Licensee, the percentage interest of Owner, and a list of all officers and directors, in such form as Licensor may require;

(d) that complies with Section 14.3 and Licensor shall not have exercised the ROFR;

(e) that Licensee is not in default under the terms of this Agreement (or any other related agreement), all agreements with Licensor’s Affiliates, the Manuals or any other obligations owed Licensor;

(f) that all obligations to third parties in connection with the Licensed Business shall have been satisfied or assumed by the transferee;

(g) that Licensee, and its Owners, if Licensee is an Business Entity, shall execute a general release, in a form prescribed by Licensor (the current form of which is attached as “Exhibit B” to the Franchise Disclosure Document), of any and all known and unknown claims against Licensor and its Affiliates and their Owners, officers, directors, agents, and employees;

(h) that the transferee/assignee has demonstrated to Licensor’s satisfaction that it meets all of Licensor’s then-current Policies for new Business operators or for holders of an interest in a franchise or license, including possession of good moral character and reputation, satisfactory credit ratings, acceptable business qualifications, the ability to obtain or acquire the license(s) and permit(s) necessary for the operation of the Business, and the ability to fully comply with the terms of this Agreement;

(i) that the transferee/assignee have agreed, under a written assumption agreement approved by Licensor, that at closing, the transferee/assignee shall, at Licensor’s option, either (a) assume this Agreement; provided however, that such assumption shall not relieve Licensee (as transferor/assignor) of any continuing obligations; or (b) execute a replacement franchise or license agreement on the then-current standard form of franchise or license agreement used by Licensor in the State in which the Licensed Business is being operated, provided, however, that the term of the replacement franchise or license agreement shall be, at Licensor’s option, the remaining term of this Agreement, unless Licensor otherwise agrees; and, at Licensor’s request, the transferor/assignor shall have executed a continuing guaranty in favor of Licensor of the performance and payment by the transferee/assignee of all obligations and debts to Licensor and its Affiliates under the replacement franchise or license agreement;

(j) that the transferee/assignee agrees to refurbish or replace, as applicable, all Vehicles used in the Licensed Business as needed (in Licensor’s discretion) to match Licensor’s then-current design, trade dress, color scheme and Policies;

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(k) that there is not any suit, action, or proceeding pending, or to the knowledge of Licensee any suit, action, or proceeding threatened, against Licensee with respect to the Licensed Business;

(l) that upon submission of Licensee’s request for Licensor’s consent to any proposed Assignment (as estimated in good faith by Licensor, with the actual amount to be calculated and paid upon closing), Licensee pays to Licensor a non-refundable administrative/transfer fee equal to the greater of: (i) the amount of Licensor’s actual out of pocket expenses associated with evaluating and documenting the proposed Assignment, (ii) $2,500 or (iii) 10% of the consideration received by Licensee and its Owners on account of the proposed Assignment.

(m) that Licensee pays Licensor’s then-current training fees and, if applicable, Travel Expenses, if Licensor determines that the transferee/assignee and/or any one or more of its employees must successfully complete the Initial Training Program;

(n) that Licensee and its Owners agree with the assignee/transferee not to compete with transferee / assignee after the Assignment in accordance with restrictions acceptable to Licensor and substantially similar to those provided in this Agreement to the maximum extent permitted by Applicable Law, and Licensor will be named as a third party beneficiary of such agreement; and

(o) that the transferee/assignee, or its anticipated Authorized Trainer(s) shall have satisfactorily completed the Initial Training Program.

14.2.2 Any purported Assignment occurring by operation of law or otherwise without Licensor’s prior written consent shall constitute a material default of this Agreement by Licensee, and shall be null and void. Except in the instance of Licensee advertising to sell the Licensed Business and assign this Agreement in accordance with the terms of this Agreement, Licensee shall not, without Licensor’s prior written consent, offer for sale or transfer at public or private auction or advertise publicly for sale or transfer, the supplies, fixtures, or equipment. Licensee may not make any Assignment to a public Business Entity, or to any Business Entity whose direct or indirect parent’s securities are publicly traded and no shares of Licensee or any Owner of Licensee may be offered for sale through the public offering of securities. To the extent that any prohibition on the pledge, hypothecation, encumbrance or granting of a security interest in this Agreement or the assets of Licensee used in the Licensed Business may be ineffective under Applicable Law, Licensee shall provide not less than 10 days prior written notice containing the name and address of the secured party and the terms of such pledge, hypothecation, encumbrance or security interest in this Agreement or the Assets.

14.2.3 If Licensee is an Business Entity, Licensee shall promptly provide Licensor with written notice of each and every issuance of Equity by Licensee and every transfer, assignment and encumbrance by any Owner of any direct or indirect Equity or voting rights in Licensee, notwithstanding that the same may not constitute an “Assignment”.

14.2.4 Licensor’s consent to an Assignment will not: (a) constitute a waiver of any claims it may have against the transferring party arising out of this Agreement or otherwise, including (i) any payment or other duty owed by Licensee to Licensor under this Agreement before such Assignment; or (ii) Licensee’s duty of indemnification and defense, whether before or after such Assignment, or (iii) the obligation to obtain Licensor’s consent to any subsequent transfer; or (b) be an indication as to the likelihood of success or economic viability of the assignee/transferee.

14.3 Right of First Refusal. If Licensee or any Owner (other than Licensor, if applicable) desire to cause or permit any Assignment, then Licensee and/or such Owner shall notify Licensor in

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writing, provide such information and documentation describing or relating to the proposed Assignment as Licensor may require, and grant Licensor a right of first refusal (the “ROFR”) for 60 days following Licensor’s receipt of Licensee’s written notice of the proposed Assignment and copies of all required documentation (the “ROFR Period”) to purchase the interest which Licensee or such Owner proposes to transfer, on the same terms and conditions offered by the third party; provided that Licensor may substitute cash for any non-cash consideration in an amount determined by Licensor, reasonably and in good faith, as the approximate equivalent value of the non-cash consideration. Notwithstanding the terms and conditions offered by the third party, Licensee shall make representations and warranties to Licensor that are customary for transactions of the type proposed, including (1) its power, authority and legal capacity to sell, transfer and assign the property or interests, (2) valid right, title and interest in the property or interests, (3) the absence of all liens, encumbrances and liabilities on the property or interests, and (4) the absence of any violation, in any material respect, or default under, or acceleration of any material agreement or instrument pursuant to which the property or interests to be transferred are encumbered or bound as the result of the sale. If Licensor elects to exercise the ROFR, Licensor or its nominee shall notify Licensee in writing, and the closing of the transaction shall occur within 60 days after delivery of Licensor’s notice, subject to the satisfaction of all conditions to closing. If Licensor does not exercise the ROFR, any material change in the terms of an offer prior to closing, or the failure to close the transaction within 60 days following the ROFR Period, shall cause it to be deemed a new offer, subject to the same ROFR as in the case of the initial offer. Licensor’s failure to exercise the ROFR shall not constitute consent to the transfer or a waiver of any other provision of this Agreement.

14.4 Business Entity Licensee. If a Licensee is a Business Entity, the following provisions will apply:

14.4.1 Licensee represents, warrants and covenants that: (a) Licensee has the authority to execute, deliver and perform its obligations under this Agreement and all related agreements and is duly organized or formed and validly existing in good standing under the laws of the state of its incorporation or formation; and (b) the information set forth in Addendum “B”, is accurate and complete in all material respects. Licensee shall notify Licensor in writing within 10 days of any change in the information set forth in Exhibit “B”, and shall submit to Licensor a revised Addendum “B”, certified by an officer of Licensee as true, correct and complete. Licensee promptly shall provide such additional information as Licensor may request concerning all persons who may have any direct or indirect financial interest in Licensee. Licensee shall upon demand reimburse Licensor for its direct and indirect costs, including reasonable attorneys’ fees, to review any revised or supplemental Addendum “B”.

14.4.2 All of Licensee’s organizational documents (including articles of partnership, partnership agreements, articles of incorporation, articles of organization, bylaws, shareholders agreements, trust instruments, or their equivalent) will provide that the issuance and transfer of any interest in Licensee is restricted by the terms of this Agreement, and that sole purpose for which Licensee is formed (and the sole activity in which Licensee is or will be engaged) is the development and operation of Businesses. Upon Licensor’s request, Licensee shall submit a resolution of Licensee (or its governing body) confirming that Licensee is in compliance with this provision. All certificates and other documents representing Equity in Licensee must bear a legend in a form prescribed by Licensor referring to this Agreement’s restrictions.

14.4.3 All present and future Owners of Licensee, will execute a written guaranty in a form prescribed by Licensor, personally, irrevocably and unconditionally guaranteeing, jointly and severally, with all other guarantors, the full payment and performance of Licensee’s obligations to Licensor and to Licensor’s Affiliates. Upon each transfer or assignment of an interest in Licensee, or other change in ownership interests in Licensee, and at any other time upon Licensor’s request, said holders shall re-execute a written guaranty in a form prescribed by Licensor.

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14.5 Non-Waiver of Claims. Licensor’s consent to a transfer shall not constitute a waiver of any claims it may have against the transferring party, and it will not be deemed a waiver of Licensor’s right to demand strict compliance with any of the terms of this Agreement, or any other agreement to which Licensor’s and the transferee are parties, by the transferee.

ARTICLE 15

DEFAULT AND TERMINATION

15.1 General. Licensor shall have the right to terminate this Agreement only for “Cause”. “Cause” is defined as a default of this Agreement. Licensor shall exercise its right to terminate this Agreement upon notice to Licensee upon the following circumstances and manners.

15.2 Automatic Termination Without Notice. Subject to Applicable Laws of the jurisdiction in which Trade Area is located to the contrary, Licensee shall be deemed to be in material breach under this Agreement, and all rights granted herein shall automatically terminate without notice to Licensee if: (i) Licensee shall be adjudicated bankrupt or judicially determined to be insolvent (subject to any contrary provisions of any applicable state or federal laws), shall admit to its inability to meet its financial obligations as they become due, or shall make a disposition for the benefit of its creditors; (ii) Licensee shall allow a judgment against him in the amount of more than $5,000 to remain unsatisfied for a period of more than 30 days (unless a supersedas or other appeal bond has been filed); (iii) the Licensed Business or the Licensee’s assets are seized, taken over or foreclosed by a government official in the exercise of its duties, or seized, taken over, or foreclosed by a creditor or lienholder, provided that a final judgment against the Licensee remains unsatisfied for 30 days (unless a supersedes or other appeal bond has been filed); (iv) a levy of execution of attachment has been made upon the license granted by this Agreement or upon any property used in connection with the Licensed Business, and it is not discharged within 5 days of such levy or attachment; (v) Licensee allows or permits any judgment to be entered against Licensor or its Affiliates, arising out of or relating to the operation of the Licensed Business; or (vi) Licensee is convicted of any felony, or any criminal misconduct relevant to the operation of the Licensed Business.

15.3 Option to Terminate Without Notice. Licensee shall be deemed to be default under this Agreement and Licensor may, at its option, terminate this Agreement and all rights granted under this Agreement, without affording Licensee any opportunity to cure the default, effective immediately upon receipt of notice by Licensor upon the occurrence of any of the following events:

15.3.1 Abandonment. Licensee abandons the Licensed Business. For purposes of this Agreement, “abandon” shall mean: (i) Licensee’s failure, at any time during the Term, to operate the Licensed Business for a period of 5 consecutive days, except as provided in the Manuals, (ii) Licensee’s failure to keep the Licensed Business operating for any period after which it is not unreasonable under the facts and circumstances for Licensor to conclude that Licensee does not intend to continue to operate the franchise, and (iii) failure to actively and continuously maintain and answer Licensee’s telephone;

15.3.2 Assignment, Death or Incapacity. Licensee purports to make any Assignment without the prior written consent of Licensor; provided, however, on condition that the Licensed Business continues to be operated in conformity with this Agreement: (i) upon prompt written request and upon the death or legal incapacity of a Licensee who is an individual, Licensor shall allow up to 6 months after such death or legal incapacity for the heirs, personal representatives, or conservators (the “Heirs”) of Licensee either: (i) to assume this Agreement or, at Licensor’s discretion, execute Licensor’s then current form of License Agreement (except that no initial fee or transfer fee shall be charged), if Licensor is subjectively satisfied that the Heirs meet Licensor’s Policies and qualifications, or (ii) if not so satisfied, to allow the Heirs to sell the Licensed Business to a person approved by Licensor, or (ii) upon prompt

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written request and upon the death or legal incapacity of an Owner owning 25% or more of the Equity or voting power of a corporate or limited liability company Licensee, or a general or limited partner owning 25% or more of any of the Partnership Rights of a Licensee which is a Partnership, Licensor shall allow a period of up to 6 months after such death or legal incapacity for the Heirs to seek and obtain Licensor’s consent to the transfer or Assignment of such stock, membership interests or Partnership Rights to the Heirs or to another person acceptable by Licensor. If, within said 6 month period, the Heirs fail either to enter into a new License Agreement or to sell the Licensed Business to a person approved by Licensor pursuant to this Agreement, or fail either to receive Licensor’s consent to the Assignment of such stock, membership interest or Partnership Rights to the Heirs or to another person acceptable by Licensor, as provided in this Agreement, this Agreement shall thereupon automatically terminate;

15.3.3 Repeated Defaults. If Licensee more than 2 written notices of default from Licensor setting forth the material breach complained of within any 12 month period;

15.3.4 Misrepresentation. If Licensee makes any material misrepresentations relating to the acquisition of the Licensed Business;

15.3.5 Violation of Law. If Licensee fails, for a period of 10 days after having received notification of noncompliance from Licensor or any Governmental Authority, to comply with any Applicable Law;

15.3.6 Health or Safety Violations. Licensee’s conduct of the Licensed Business is so contrary to this Agreement, the System and the Manuals as to constitute an imminent danger to the health, safety or welfare, or selling recalled or other unauthorized products after notice of default and continuing to sell such products whether or not Licensee has cured the default after one or more notices;

15.3.7 Unfair Competition. Any violation by Licensee of Section 13.1; Licensee’s intentional disclosure or use in violation of this Agreement of the contents of the Manual, Trade Secrets or confidential or proprietary information provided to Licensee by Licensor, excluding independent acts of employees or others if Licensee has exercised its best efforts to prevent such disclosures or use;

15.3.8 Under Reporting. If an audit or investigation conducted by Licensor hereof discloses that Licensee has knowingly maintained false books or records, or submitted false reports to Licensor, or knowingly understated its Gross Sales or withheld the reporting of same as herein provided;

15.3.9 Criminal Offenses. If Licensee, the Authorized Trainer, or any other trainer is convicted of or pleads guilty or nolo contendre to a felony or any other crime (including any crime or offense relating to the operation of a motor vehicle) or offense that is reasonably likely, in the sole opinion of Licensor, to adversely affect Licensor’s reputation, the System, the Marks, the goodwill associated therewith, or Licensor’s interest therein;

15.3.10 Intellectual Property Misuse. If Licensee materially misuses or makes any unauthorized use of the Marks or otherwise materially impairs the goodwill associated therewith or Licensor’s rights therein, or takes any action which reflects materially and unfavorably upon the operation and reputation of the Licensed Business, or the “Sit Means Sit” franchise generally, or Licensee’s unauthorized use, disclosure, or duplication of the Trade Secrets or Customer Information, excluding independent acts of employees if Licensee exercised its best efforts to prevent such disclosures or use;

15.4 Termination With Notice and Opportunity To Cure. Except for any breach or default by Licensee under Sections 15.2 or 15.3, or as otherwise expressly provided in this Agreement, following written notice from Licensor, Licensee shall have 10 days (5 days in the case of any default in the timely

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payment of sums due to Licensor or its Affiliates), within which to completely remedy any default and provide evidence of such remedy to Licensor. If any such default is not cured within that time period, or such longer time period as Applicable Law may require or as Licensor may specify in the notice of default, than at Licensor’s option, this Agreement and all rights granted by it will thereupon terminate without further notice or opportunity to cure. Licensee will be in default under this Article for any failure to comply with any of the requirements imposed by this Agreement. Such defaults include, but are not limited to, the occurrence of any one or more of the following events:

15.4.1 Licensee’s failure, refusal or neglect to promptly pay any amounts owed to Licensor under any promissory note;

15.4.2 Licensee’s failure, refusal, or neglect to promptly pay any monies owed to Licensor, its subsidiaries or Affiliates, or any Advertising Co-op, when due, or to submit the financial or other information required by Licensor under this Agreement;

15.4.3 Licensee’s failure to maintain the Policies specified by Licensor in the Manual or otherwise;

15.4.4 Licensee’s failure, refusal or neglect to obtain Licensor’s prior written approval or consent as required by this Agreement;

15.4.5 Licensee’s misuse or unauthorized use of Licensor’s Marks or other material impairment of the goodwill associated therewith or Licensor’s rights therein;

15.4.6 Licensee’s commencement of or conducting any business operation, or marketing of any product, under a name or mark which, in Licensor’s reasonable opinion, is confusingly similar to Licensor’s Marks;

15.4.7 Licensee’s failure to cooperate with Licensor’s Inspectors or fails to cooperate with Licensor in connection with corporate inspections of the Licensed Business or its operations;

15.4.8 Licensee’s failure to procure or maintain the insurance required by this Agreement or in the Manuals;

15.4.9 Licensee does not comply with the customer relations requirements stated in Section 7.14, or those requirements stated in the Manuals.

15.5 Reimbursement of Licensor Costs. In the event of default by Licensee, all of Licensor’s costs and expenses arising from such default, including reasonable legal fees and reasonable hourly charges of Licensor’s administrative employees shall be paid to Licensor by Licensee within 5 days after cure.

15.6 Cross-Default. Any default by Licensee under the terms and conditions of this Agreement or any other agreement between Licensor, or its Affiliate, and Licensee (or any Affiliate of Licensee), or any default by Licensee (or any Affiliate of Licensee) of its payment obligations to any Advertising Co-op of which it is a member, shall be deemed to be a default of each and every said agreement. Furthermore, in the event of termination, for any cause, of this Agreement or any other agreement between the parties, Licensor may, at its option, terminate any or all said agreements.

15.7 Notice Required By Law. In the event Applicable Law limits Licensor’s rights of termination or shall require longer notice periods than those set forth above, this Agreement shall be

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amended to conform to the minimum notice periods or restrictions upon termination required by such Applicable Law. Licensor will not, however, be precluded from contesting the validity, enforceability or application of such laws or regulations in any action, hearing or dispute relating to this Agreement or its termination.

15.8 Licensor Default. Licensee may terminate this Agreement due to a material default by Licensor of its obligations under this Agreement, which default is not cured by Licensor within 60 days after Licensor’s receipt of prompt written notice by Licensee to Licensor detailing the alleged default with reasonable specificity; provided, that if the default is such that it cannot be reasonably cured within such 60 day period, Licensor shall not be in default if it commences a cure for such default within 60 days and diligently continues to prosecute the cure to completion. If Licensee terminates this Agreement pursuant to this Section, Licensee shall comply with all of the terms and conditions of Article 16. No court, arbitrator or referee shall have the power or authority to modify, change, amend, or waive this Section.

ARTICLE 16

RIGHTS AND OBLIGATIONS UPON TERMINATION

16.1 General. Upon the expiration or termination of Licensee’s rights granted under this Agreement:

16.1.1 Licensee shall immediately cease to use all Trade Secrets, the Marks, the Customer Information, and any confusingly similar trademark, service mark, trade name, logotype or other commercial symbol or insignia, and cease using all photographs, images, videos, testimonials and Advertisements. Licensee shall immediately return the Manuals, all training materials, CD ROMs, DVDs, records, customer lists, files, advertising and promotional materials, and all other written materials incorporating or containing Trade Secrets. Licensee must provide to Licensor all copies of Customer Information in Licensee’s possession, retaining no copies. Licensee must, at its own cost, make cosmetic changes to the Vehicles and Training Facilities, if applicable, operated in connection with the Licensed Business so that they no longer contain or resemble Licensor’s proprietary designs, including: Licensee shall remove all identifying materials and distinctive cosmetic features and finishes, exterior finishes and colors, signage, logos and decals from such Vehicles.

16.1.2 Licensor may retain all fees paid pursuant to this Agreement and Licensee shall immediately pay any and all amounts owing to Licensor and its Affiliates. Licensee will also remain responsible to pay Licensor the Liquidated Damages specified in Section 16.2.

16.1.3 Any and all obligations of Licensor to Licensee under this Agreement shall immediately cease and terminate.

16.1.4 Any and all rights of Licensee under this Agreement shall immediately cease and terminate, and Licensee shall immediately cease and refrain from representing itself as then being or formerly having been a licensee of Licensor.

16.1.5 Licensee will deliver all goods and materials containing the Marks to Licensor and Licensor shall have the sole and exclusive use of any items containing the Marks. Licensee is not entitled to any compensation from Licensor if Licensor exercises this option.

16.1.6 Licensee shall, at Licensor’s option, cancel or assign to Licensor or its designate all of Licensee’s right, title and interest in any telephone numbers (and associated listings); Internet websites or web pages; e-mail addresses; social media identities; domain name listings and registrations which contain the Marks; or any of them, in whole or in part. Licensee must, upon

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termination or expiration of this Agreement, notify telephone listing agencies, Verisign (Network Solutions), register.com, or other applicable domain name registrar and all listing agencies, of the termination of Licensee’s right to use any domain name, web page and other Internet device associated with Licensor or the Licensed Business, and authorize and instruct their cancellation or transfer to Licensor, as directed by Licensor. Licensee is not entitled to any compensation from Licensor if Licensor exercises its said rights or options. For the avoidance of doubt, nothing in this Section shall be deemed to permit Licensee to use the Marks, or any of them in connection with the Internet, except with the prior consent of Licensor as provided in this Agreement. Licensee shall not use any testimonials, images, video, or photographs on any web site or in any other advertising or promotional materials services performed for customers during the Term, or which contain, depict or display any Authorized Product or Service. In connection with the execution of this License Agreement, Licensee must execute Licensor’s current form Collateral Assignment of Telephone Numbers and Telephone Listings, Internet Addresses, and Social Media Identities, attached to this License Agreement as Addendum “D.”

16.2 Liquidated Damages. The parties agree that, if this Agreement is terminated by Licensor prior to the end of the Term, Licensor’s damages will be difficult or impossible to ascertain. As a result, the parties agree in that event that Licensee must pay Licensor, as liquidated damages and not as a penalty, the amount of $600, multiplied by the lesser of: (a) 24 (the number of months in two full years); or (b) if less than 24 months remain in the Term, the number of months remaining in the Term. Licensee acknowledges and agrees Licensor’s damages and lost opportunities upon termination of the Agreement will be difficult to ascertain, and that the formula in this Section 16.2 is a reasonable estimate of those damages and lost opportunities, and does not constitute a penalty or forfeiture.

ARTICLE 17

INSURANCE

17.1 Insurance. Licensee must obtain and maintain insurance which designates Licensor and

its designated Affiliates as additional named insured (and not as an additional insured), with an insurance company approved by Licensor (not to be unreasonably withheld), in the minimum coverage types and levels, deductible maximums, and policy limits as may reasonably be specified by Licensor from time to time in the Manuals, and which may include workers’ compensation insurance as required by Applicable Law, errors and omissions, automobile, and comprehensive general liability insurance. Licensee must promptly pay all premiums on the policies as or before they become due. Licensee must, prior to commencing operation of the Licensed Business, and from time to time thereafter upon Licensor’s request, file with Licensor, certificates of such insurance. In addition, the policies must contain a provision requiring 30 days prior written notice to Licensor of any proposed cancellation, modification, or termination of insurance.

17.2 Use of Proceeds. In the event of damage to the Licensed Business, or any part thereof, covered by insurance, the proceeds of any such insurance will be used to for the benefit of the Licensed Business and restore the assets used Licensed Business to its original condition as soon as possible, unless restoration is prohibited or Licensor has otherwise consented in writing.

ARTICLE 18

RELATIONSHIP OF PARTIES

18.1 Relationship of Licensee to Licensor. It is expressly agreed that the parties intend by this Agreement to establish between Licensor and Licensee the relationship of franchisor and licensee. Licensee has no authority to create or assume in Licensor’s name or on behalf of Licensor, any obligation, express or implied, or to act or purport to act as agent or representative on behalf of Licensor for any purpose whatsoever. Neither Licensor nor Licensee is the employer, employee, agent, partner or co-

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venturer of or with the other, each being independent. Licensee will not hold himself out as the agent, employee, partner or co-venturer of Licensor. Neither shall have the power to bind or obligate the other except specifically as set forth in this Agreement. Licensor and Licensee agree that the relationship created by this Agreement is one of an independent contractor and not a fiduciary relationship.

18.1.1 All employees hired by or working for Licensee shall be the employees of Licensee and shall not, for any purpose, be deemed employees of Licensor or subject to Licensor control, most particularly with respect to any mandated or other insurance coverage, tax or contributions, or requirements pertaining to withholdings, levied or fixed by any city, state or federal governmental agency. Each of the parties shall file its own tax, regulatory and payroll reports, and be responsible for all employee benefits and workers compensation payments, with respect to its respective employees and operations, saving and indemnifying the other party hereto of and from any liability of any nature whatsoever by virtue thereof.

18.1.2 Licensor will not have the power to hire or fire Licensee’s employees. Licensee expressly agrees, and will never contend otherwise, that Licensor’s authority under this Agreement to certify certain of Licensee’s employees for qualification to perform certain functions for Licensee’s Licensed Business does not directly or indirectly vest in us the power to hire, fire or control any such employee.

18.1.3 Licensee acknowledge and agrees, and will never contend otherwise, that Licensee alone will exercise day-to-day control over all operations, activities and elements of Licensee’s Licensed Business and that under no circumstance shall Licensor do so or be deemed to do so. Licensee further acknowledge and agrees, and will never contend otherwise, that the various requirements, restrictions, prohibitions, specifications and procedures of System which Licensee is required to comply with under this Agreement, whether set forth in Licensor’s Manual or otherwise, do not directly or indirectly constitute, suggest, infer or imply that Licensor controls any aspect or element of the day-to-day operations of Licensee’s Licensed Business, which Licensee alone controls, but only constitute standards Licensee must adhere to when exercising Licensee’s control of the day-to-day operations of the Licensed Business.

18.2 Indemnity by Licensee. Licensee shall protect, defend and indemnify Licensor, and all of its past, present and future Owners, Affiliates, officers, directors, employees, attorneys and designees, and each of them, and hold them harmless from and against any and all costs and expenses, including attorneys’ fees, court costs, losses, liabilities, damages, claims and demands of every kind or nature on account of any actual or alleged loss, injury or damage to any person or Business Entity or to any property arising out of or in connection with (i) any breach of this Agreement by Licensee or any Restricted Person; (ii) Licensee’s operation of the Licensed Business; (iii) Licensee’s operation, marketing, advertising, promotion, offer for sale, sale or provision of any goods or services, including, Authorized Products and Services; (iv) any and all alleged torts, negligent acts, breach of contract, fraud or omissions of Licensee or its agents, representatives, or employees; and (v) the alleged failure of Licensee to comply with Applicable Law.

ARTICLE 19

NOTICES

19.1 General. Except as otherwise expressly provided herein, all written notices and reports permitted or required to be delivered by the parties pursuant hereto shall be deemed so delivered at the time delivered by hand or delivered by reputable overnight courier; one business day after confirmed transmission by facsimile, telegraph or other electronic system (with confirmation copy sent by regular

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U.S. mail); or 3 business days after placement in the United States Mail by Registered or Certified Mail, Return Receipt Requested, postage prepaid, addressed to:

If to Licensor: 2900 E. Patrick Lane, Suite 2A

Las Vegas, Nevada 89120

Fax: (702) 262-6588

If to Licensee:

Any party may change his or its address by giving 10 days prior written notice of such change to all other parties.

ARTICLE 20

MEDIATION; WAIVER OF JURY TRIAL; VENUE

20.1 Mediation. Except to the extent precluded by Applicable Law and Section 20.2, the parties agree that prior to initiating any proceeding as described below, they must first attempt to resolve any dispute pursuant to mediation conducted in accordance with the Commercial Mediation Rules of the American Arbitration Association, unless the parties agree in writing on alternative rules and a mediator within 15 days after either party first gives notice of mediation. The mediation must last for at least one full day and each party must have present a representative with authority to make settlement decisions on its behalf. The mediation must be conducted in Las Vegas, Nevada, unless Licensor is later headquartered in another city or county, in which event the mediation must be conducted in such other city or county, and must be conducted and completed within 45 days following the date either party first gives notice of mediation. If the parties fail to complete the mediation within the 45 day period, either party may initiate litigation, subject to Section 20.2. The fees and expenses of the mediator must be shared equally by the parties. The mediator must be disqualified as a witness, expert or counsel for any party with respect to any suit and any related matter. The entire mediation process must be confidential and the conduct, statements, promises, offers, views and opinions of the mediator and the parties will not be discoverable or admissible in any legal proceeding for any purpose; provided, however, that evidence which is otherwise discoverable or admissible must not be excluded from discovery or admission as a result of its use in the mediation.

20.2 Claims Excluded. Licensor will not be required to first attempt to mediate a controversy, dispute or claim against Licensee if such controversy, dispute or claim concerns an allegation by Licensor that Licensee has violated (or threatens to violate, or poses an imminent risk of violating): (a) any of Licensor’s intellectual property rights in the Marks, the System, or in any of Licensor’s Trade Secrets; (b) any claims pertaining to Licensee’s non-monetary post-termination obligations; or (c) any of the restrictive covenants contained in this Agreement. Nothing in this Agreement bars Licensor or Licensee from seeking preliminary injunctive or declaratory relief against a breach or threatened breach of this Agreement pending mediation of the dispute, if applicable.

20.3 Waiver of Jury Trial; Venue. TO THE EXTENT PERMITTED BY APPLICABLE LAW THE PARTIES: (1) WAIVE THEIR RIGHT TO JURY TRIAL WITH RESPECT TO ALL CLAIMS AND ISSUES ARISING UNDER, IN CONNECTION WITH, TOUCHING UPON OR RELATING TO THIS AGREEMENT, WHETHER SOUNDING IN CONTRACT OR TORT, AND INCLUDING ANY CLAIM FOR FRAUDULENT INDUCEMENT, AND (2) AGREE THAT LAS VEGAS, NEVADA SHALL BE THE EXCLUSIVE VENUE FOR ANY LITIGATION ARISING UNDER THIS AGREEMENT, UNLESS LICENSOR HAS ITS HEADQUARTERS IN A DIFFERENT

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CITY, IN WHICH CASE THE SOLE AND EXCLUSIVE VENUE FOR LITIGATION WILL BE THAT OTHER CITY. THE PARTIES ACKNOWLEDGE THAT THEY HAVE REVIEWED THIS SECTION AND HAVE HAD THE OPPORTUNITY TO SEEK INDEPENDENT LEGAL ADVICE AS TO ITS MEANING AND EFFECT.

_______________ ___________

LICENSEE LICENSOR

INITIALS INITIALS

20.4 WAIVER OF CLASS OR GROUP ACTION. ANY DISAGREEMENT BETWEEN

LICENSEE AND LICENSOR (AND LICENSOR’S AFFILIATES AND OWNERS) WILL BE CONSIDERED UNIQUE AS TO ITS FACTS AND MUST NOT BE BROUGHT AS A CLASS ACTION AND LICENSEE WAIVES ANY RIGHT TO PROCEED AGAINST LICENSOR (AND LICENSOR’S AFFILIATES, STOCKHOLDERS, MEMBERS, MANAGERS, OFFICERS, DIRECTORS, EMPLOYEES, AGENTS, SUCCESSORS AND ASSIGNS) BY WAY OF CLASS ACTION, OR BY WAY OF A MULTI-PLAINTIFF, CONSOLIDATED OR COLLECTIVE ACTION.

_______________ ___________

LICENSEE LICENSOR

INITIALS INITIALS 20.5 WAIVER OF PUNITIVE DAMAGES. LICENSOR AND LICENSEE HEREBY

WAIVE, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY RIGHT TO OR CLAIM FOR ANY PUNITIVE, EXEMPLARY, INCIDENTAL, INDIRECT, SPECIAL OR CONSEQUENTIAL DAMAGES AGAINST THE OTHER ARISING OUT OF ANY CAUSE WHATSOEVER (WHETHER SUCH CAUSE BE BASED IN CONTRACT, NEGLIGENCE, STRICT LIABILITY, OTHER TORT OR OTHERWISE), AND AGREE THAT IN THE EVENT OF A DISPUTE BETWEEN THEM, EACH SHALL BE LIMITED TO THE RECOVERY OF ANY: (A) ACTUAL DAMAGES SUSTAINED BY IT; (B) TRADEMARK LAW TREBLE DAMAGES; AND (C) LIQUIDATED DAMAGES AS STATED IN SECTION 16.2. IF SUCH CLAIMS AND DEMANDS CANNOT BE WAIVED BY LAW, THEN THE PARTIES AGREE THAT ANY RECOVERY WILL NOT EXCEED TWO (2) TIMES ACTUAL DAMAGES.

_______________ ___________

LICENSEE LICENSOR

INITIALS INITIALS

ARTICLE 21

MISCELLANEOUS PROVISIONS

21.1 Licensor’s Right To Cure Defaults. In addition to all other remedies herein granted, if Licensee shall default in the performance of any of its obligations or breach any term or condition of this Agreement or any related agreement, Licensor may, at its election, immediately or at any time thereafter, without waiving any claim for breach hereunder and without notice to Licensee, cure such default for the account and on behalf of Licensee, and the cost to Licensor thereof shall be due and payable on demand and shall be deemed to be additional compensation due to Licensor hereunder and shall be added to the amount of compensation next accruing hereunder, at the election of Licensor.

21.2 Waiver and Delay. No waiver by Licensor of any default or series of defaults in

performance by Licensee, and no failure, refusal or neglect of Licensor to exercise any right, power or option given to it under this or any other agreement between Licensor and Licensee, whether entered into before, after or contemporaneously with the execution of this Agreement (and whether or not related to

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the Licensed Business) or to insist upon strict compliance with or performance of Licensee’s obligations under this Agreement, any other franchise or license agreement between Licensor and Licensee, whether entered into before, after or contemporaneously with the Effective Date (and whether or not related to the Licensed Business), shall constitute a waiver of the provisions of this Agreement or the Policies with respect to any subsequent default, or a waiver by Licensor of its right at any time thereafter to require exact and strict compliance. Licensor will consider written requests by Licensee for Licensor’s consent to a waiver of any obligation imposed by this Agreement. Licensee agrees, however, that Licensor is not required to act uniformly with respect to waivers, requests and consents as each request will be considered on a case-by-case basis, and nothing shall be construed to require Licensor to grant any such request. Any waiver granted by Licensor shall be without prejudice to any other rights Licensor may have, will be subject to continuing review by Licensor, and may be revoked, in Licensor’s discretion, at any time and for any reason, effective upon 10 days prior written notice to Licensee. Licensor makes no warranties or guarantees upon which Licensee may rely, and assumes no liability or obligation to Licensee by providing any waiver, approval, acceptance, consent, assistance, or suggestion to Licensee in connection with this Agreement, or by reason of any neglect, delay, or denial of any request.

21.3 Survival of Obligations. Termination or expiration shall be without prejudice to any

other rights or remedies that Licensor or Licensee, shall have in law or in equity, including the right to recover benefit of the bargain damages. In no event shall a termination or expiration of this Agreement affect Licensee’s obligations to take or abstain from taking any action in accordance with this Agreement. The provisions of this Agreement which by their nature or expressly constitute post-termination (or post-expiration) covenants and agreements shall survive the termination or expiration of this Agreement.

21.4 Successors and Assigns; Benefit. This Agreement shall be binding upon and inure to

the benefit of the successors and assigns of Licensor and Licensee and its or their respective heirs, executors, administrators, successors and assigns, subject to the restrictions on Assignment contained in this Agreement. This Agreement is for the benefit of the parties only, and, except as expressly provided in this Agreement, is not intended to and shall not confer any rights or benefits upon any person who is not a party to this Agreement.

21.5 Joint and Several Liability. If the named Licensee includes more than one person

and/or Business Entity, such person(s) and/or Business Entities shall be deemed to be a general partnership and each shall be jointly and severally liable for all obligations and liabilities of the “Licensee”.

21.6 Governing Law. This Agreement shall be governed by and construed in accordance

with the laws of the State of Nevada, without giving effect to any conflict of laws principles. By agreeing to the application of Nevada law, the parties do not intend to make this Agreement or their relationship subject to any franchise, dealership, distributorship, business opportunity, or similar statute, rule, or regulation of the State of Nevada to which this Agreement or the parties’ relationship would not otherwise be subject. Licensor and Licensee each acknowledge and agree that this choice of applicable state law provides each of the parties with the mutual benefit of uniform interpretation of this Agreement. Licensee expressly waives any rights or protections Licensee has or may have under any statute or law of any other state to the fullest extent permitted by law. This Agreement may be deemed to be amended from time to time as may be necessary to bring any of its provisions into conformity with valid applicable laws or regulations.

21.7 Entire Agreement. This Agreement and the Manuals contain all of the terms and

conditions agreed upon by the parties with reference to the subject matter of this Agreement. No other agreements concerning the subject matter of this Agreement, oral or otherwise, shall be deemed to exist or to bind any of the parties. All prior or contemporaneous agreements, understandings and representations

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relating to the subject matter of this Agreement, are merged and are expressly and superseded by this Agreement, except nothing in this Agreement or any related agreement is intended to disclaim any representations Licensor made in the franchise disclosure document delivered to Licensee. No officer or employee or agent of Licensor has any authority to make any representation or promise not contained in this Agreement or any related agreements, or in the franchise disclosure document delivered to Licensee, and Licensee agrees that it has executed this Agreement without reliance upon any such representation or promise. This Agreement cannot be modified or changed except by written instrument signed by all of the parties.

21.8 Titles For Convenience. Article and Section titles used in this Agreement are for convenience only and shall not be deemed to affect the meaning or construction of any of the terms, provisions, covenants, or conditions of this Agreement.

21.9 Gender and Construction. The terms of the Recitals, Appendixes and all Exhibits to

this Agreement are incorporated into and made a part of this Agreement as if set forth in full. All terms used in any one number or gender shall extend to mean and include any other number and gender as the facts, context, or sense of this Agreement or any Article or Section may require. As used in this Agreement, the words “include,” “includes” or “including” are used in a non-exclusive sense. When a reference is made in this Agreement to an Article, a Section or Exhibit, such reference shall be to an Article or a Section of, or an Exhibit to, this Agreement unless otherwise indicated. Unless otherwise expressly provided in this Agreement to the contrary, any consent, acceptance, approval or authorization of Licensor which Licensee may be required to obtain may be given or withheld by Licensor in its sole discretion, and on any occasion where Licensor is required or permitted to make any judgment, determination or use its discretion, including any decision as to whether any condition or circumstance meets the Policies, standards or satisfaction, Licensor may do so in its sole subjective judgment and discretion. No provision in this Agreement expressly identifying any particular breach of this Agreement as material shall be construed to imply that any other breach which is not so identified is not material. Neither this Agreement nor any uncertainty or ambiguity in this Agreement shall be construed or resolved against the drafter, whether under any rule of construction or otherwise. On the contrary, this Agreement has been reviewed by all parties and shall be construed and interpreted according to the ordinary meaning of the words used so as to fairly accomplish the purposes and intentions of all parties. Licensor and Licensee intend that if any provision of this Agreement is susceptible to two or more constructions, one of which would render the provision enforceable and the other or others of which would render the provision unenforceable, then the provision shall be given the meaning that renders it enforceable.

21.10 Severability. Nothing contained in this Agreement shall be construed as requiring the

commission of any act contrary to Applicable Law. Whenever there is any conflict between any provisions of this Agreement or the Manuals and any Applicable Law contrary to which the parties have no legal right to contract, the latter shall prevail, but in such event the provisions of this Agreement or the Manuals thus affected shall be curtailed and limited only to the extent necessary to bring it within the requirements of Applicable Law. If any part, article, section, sentence or clause of this Agreement or the Manuals shall be held to be indefinite, invalid or otherwise unenforceable, the indefinite, invalid or unenforceable provision shall be deemed deleted, and the remaining part of this Agreement or the Manuals shall continue in full force and effect.

21.11 Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original and all of which together shall be deemed to be one and the same instrument.

21.12 Fees and Expenses. If any party to this Agreement shall bring any action or proceeding

for any relief against the other arising out of this Agreement, the losing party shall pay to the prevailing

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party a reasonable sum for attorney fees and costs incurred in bringing or defending such action or proceeding and/or enforcing any judgment, all of which shall be deemed to have accrued upon the commencement of such action or proceeding and shall be paid whether or not such action or proceeding is prosecuted to final judgment. Any judgment or order entered in such action or proceeding shall contain a specific provision providing for the recovery of attorney fees and costs, separate from the judgment, incurred in enforcing such judgment. The prevailing party shall be determined by the referee or Court based upon an assessment of which party’s major arguments or positions taken in the proceedings could fairly be said to have prevailed over the other party’s major arguments or positions on major disputed issues. This Section is intended to be expressly severable from the other provisions of this Agreement, is intended to survive any judgment and is not to be deemed merged into the judgment.

ARTICLE 22

ACKNOWLEDGMENTS

22.1 General. Licensee, and its Owners, jointly and severally acknowledge that they have

carefully read this Agreement and all other related documents to be executed concurrently or in conjunction with the execution hereof, that they have obtained the advice of counsel in connection with entering into this Agreement, that they understand the nature of this Agreement, and that they intend to comply herewith and be bound hereby. Licensee and its Owners also acknowledge the truthfulness and veracity of the statements and responses given by Licensee and its Owners on the Compliance Questionnaire form, attached to this License Agreement as Addendum “E.” Licensee and each of its Owners represents, warrants and acknowledges to Licensor, with the intention that Licensor will be relying thereon in entering into this Agreement, that:

22.1.1 No representation has been made by Licensor or Licensor’s Affiliates (or any of Licensor’s or their officers, directors, managers, employees, agents or salespersons) and relied on by Licensee as to the future or past income, expenses, sales volume or potential profitability, earnings or income of the Licensed Business, or any other Business, other than any information Licensor may have provided in Item 19 of Licensor’s franchise disclosure document, nor has Licensor or any of the foregoing made any representations, statements or promises to Licensee which conflict with, contravene or vary from the contents of Licensor’s franchise disclosure document.

22.1.2 No representation or statement has been made by Licensor or Licensor’s Affiliates (or any of Licensor’s or their officers, directors, managers, employees, agents or salespersons) and relied on by Licensee regarding Licensor’s anticipated income, earnings and growth or that of the System, or the viability of the business opportunity being offered under this Agreement.

22.1.3 Before executing this Agreement, Licensee has had the opportunity to contact all of Licensor’s existing licensees.

22.1.4 Licensee have been advised and given the opportunity to independently investigate, analyze and construe both the business opportunity being offered under this Agreement, the terms and provisions of this Agreement and the prospects for the Licensed Business, using the services of legal counsel, accountants or other advisers of Licensee’s own choosing. Licensee has either consulted with these advisors or has deliberately declined to do so.

22.1.5 Licensee has received from Licensor a copy of Licensor’s franchise disclosure document, together with a copy of all proposed agreements relating to the sale of the license, at least fourteen calendar days before the execution of this Agreement or at least fourteen calendar days before the payment by Licensee to Licensor of any consideration in connection with the sale or proposed sale of the license granted by this Agreement.

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22.1.6 No representation or statement has been made by Licensor (or any of Licensor’s employees, agents or salespersons) and relied on by Licensee regarding Licensee’s ability to procure any required license, permit, certificate or other governmental authorization that may be necessary or required for Licensee to carry out the activities contemplated by this Agreement.

22.1.7 Licensee has carefully considered the nature and extent of the restrictions upon Licensee set forth in this Agreement (including, without limitation, the covenants not to compete and the restrictions on assignment) and the rights and remedies conferred upon Licensee and Licensor under this Agreement. Such restrictions, rights and remedies: (a) are reasonable, including, but not limited to, their term and geographic scope; (b) are designed to preclude competition which would be unfair to Licensor; (c) are fully required to protect Licensor’s legitimate business interests; and, (d) do not confer benefits upon Licensor that are disproportionate to Licensee’s detriment.

22.1.8 The covenants not to compete set forth in this Agreement are fair and reasonable, and will not impose any undue hardship on Licensee, since Licensee has other considerable skills, experience and education which afford Licensee the opportunity to derive income from other endeavors.

22.2 Due Execution. THIS AGREEMENT SHALL NOT BE BINDING ON COMPANY UNLESS AND UNTIL IT SHALL HAVE BEEN ACCEPTED AND SIGNED BY AN AUTHORIZED OFFICER OF LICENSOR.

IN WITNESS WHEREOF, the parties hereof have executed this Agreement as of the date of execution by Licensor.

“Licensor”


By:

Name:

Its:

Date of signing:

“Licensee”

[ ] an individual

[ ] a ___________ general partnership;

[ ] a __________ limited partnership;

[ ] a ___________ limited liability company;

[ ] a __________ corporation;

By:

Name:

Its:

Date of signing:

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APPENDIX 1

DEFINITIONS

“Additional Training” is defined in Section 6.4.

“Advertisement” shall mean any written, visual or printed communication or communication by means of a recorded telephone message or spoken message on radio, television or similar communication media relating to the Licensed Business, other Businesses, or the System, whether or not it contains any Marks, including any and all related advertising and promotional materials and services. The term includes newspaper, magazine, television, radio, internet advertisements and internet websites listings and other advertisements; direct mail pieces; directory advertising and listings; signs; billboards; press releases and other “public relations” efforts; participation in any national, regional or other advertising program, such as promotions sponsored or paid for by third party suppliers; appearances by Licensee, public figures or by others; fliers; testimonials, coupons and promotional merchandise in the form of T-shirts, caps, buttons and similar items, and any and all other forms of marketing and promotion.

“Advertising Co-op” is defined in Section 8.3.

“Advertising Co-op Region” is defined in Section 8.3.

“Affiliate” when used in connection with Licensor or Licensee, includes each person or Business Entity which directly, or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with Licensor or Licensee, as applicable. Without limiting the foregoing, the term “Affiliate” when used herein in connection with Licensee includes any Business Entity 5% or more of whose Equity or voting control, is held by person(s) or Business Entities who, jointly or severally, hold 5% or more of the Equity or voting control of Licensee. For purposes of this definition, control of a person or Business Entity means the power, direct or indirect, to direct or cause the direction of the management and policies of such person or Business Entity whether by contract or otherwise. Notwithstanding the above definition, if Licensor or its Affiliate has any ownership interest in Licensee, the term “Affiliate” shall not include or refer to Licensor or that Affiliate (the “Licensor Affiliate”), and no obligation or restriction upon an “Affiliate” of Licensee, shall bind Licensor, or Licensor’s Affiliate or their respective parents or subsidiaries, officers, directors, or managers.

“Agreement ” means this License Agreement, together with all exhibits and addenda to this License Agreement.

“Ancillary Products” is defined in Section 10.3.

“Anti-Terrorism Laws” means Executive Order 13224 issued by the President of the United States of America (or any successor Order), the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act (USA PATRIOT Act) of 2001 (or any successor legislation) and all other present and future national, provincial, federal, state and local laws, ordinances, regulations, policies, lists, Orders and any other requirements of any Governmental Authority addressing or in any way relating to terrorist acts and acts of war.

“Applicable Law” means and includes applicable common law and all applicable statutes, laws, rules, regulations, ordinances, policies and procedures established by any Governmental Authority, including all contractors licensing laws, building codes, immigration and labor laws, as in effect on the Effective Date hereof, and as may be amended, supplemented or enacted from time to time.

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“Assignment” shall mean any sale, assignment, transfer, conveyance, gift, pledge, mortgage, or other encumbrance (“transfer”), voluntarily or involuntarily, in whole or in part, by operation of law or otherwise, of any direct or indirect interest in this Agreement or in the Equity or voting rights of Licensee if a Business Entity, and the withdrawal, death or legal incapacity of any Owner of Licensee; the admission of any additional general partner or the transfer by any Owner general partner of any of its Partnership Rights in the Partnership; and any merger, stock redemption, consolidation, reorganization, recapitalization involving Licensee, however effected.

“Authorized Products and Services” means the dog training services now or hereafter authorized by Licensor, expressly excluding (except with Licensor’s prior written consent and on terms and conditions established by Licensor, which consent it may withhold in its sole discretion) police, governmental and private security dog training services (such as drug enforcement, airport enforcement, and grounds security) in accordance with the Policies, as well as dog care products, dog training products, dog toys, food and treats, dog training services, leashes, collars, apparel, and all other products and services produced, organized or distributed, which are now or hereafter approved or designated by Licensor. When used separately, “Products” means the products and “Services” means the services that, in each case, are included within the definition of Authorized Products and Services.

“Business” means a business, under the Marks and in accordance with the System and specializing in the sale of Authorized Products and Services.

“Business Entity” means a Partnership, limited liability company, and any association, corporation or other entity which is not an individual.

“Competitive Activities” means to, own, operate, lend to, advise, be employed by, or have any financial interest in any business that engages in providing dog training services, or training others who provide dog training.

“Computer System” is defined in Section 7.5.

“Continuing Royalty” is defined in Section 5.2.

“Crisis Management Event” means any event that occurs in connection with the operation of the Licensed Business that has caused or may cause harm or injury (physical or otherwise) to customers or employees, such as construction accidents, contagious diseases, criminal acts, natural disasters, terrorist acts, shootings, or any other circumstance which may damage the System, Marks, or reputation of Businesses of Licensor or its Affiliates.

“Customer Information” is defined in Section 10.5.

“Designated Products” is defined in Section 10.2.

“Effective Date” is defined in the introductory paragraph of this Agreement.

“EFT” is defined in Section 5.5.

“Equity” means capital stock, membership interests, Partnership Rights, or other equity ownership interests of a Business Entity.

“Force Majeure” means acts of God (such as tornadoes, earthquakes, hurricanes, floods, fire or other natural catastrophe); strikes, lockouts or other industrial disturbances; war, terrorist acts, riot, or

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other civil disturbance; epidemics; or other similar forces which Licensee could not by the exercise of reasonable diligence have avoided; provided however, that neither an act or failure to act by a Governmental Authority, nor the performance, non-performance or exercise of rights under any agreement with Licensee by any lender, landlord, contractor, or other person shall be an event of Force Majeure hereunder, except to the extent that such act, failure to act, performance, non-performance or exercise of rights results from an act which is otherwise an event of Force Majeure. For the avoidance of doubt, Licensee’s financial inability to perform or Licensee’s insolvency shall not be an event of Force Majeure hereunder.

“Governmental Authority” means and includes all Federal, state, county, municipal and local governmental and quasi-governmental agencies, commissions and authorities.

“Gross Sales” means the total of all revenues received or receivable by Licensee as payment, whether in cash, by debit card or for credit or barter or other means of exchange (and, if for credit or barter, the retail value of services provided, the whether or not payment is received therefor), on account of any and all goods, merchandise, services, and supplies sold by the Licensed Business, or which are promoted or sold by Licensee under any of the Marks, whether or not Licensor offers such services or products in its other locations, including; (a) revenues from sales of any nature or kind whatsoever, derived by Licensee or by any other person or Business Entity (including Licensee’s Affiliate(s)) from the Licensed Business; (b) sales of Authorized Products and Services in contravention of this Agreement from businesses other than the Licensed Business; (c) the proceeds of any business interruption insurance, after the satisfaction of any applicable deductible; and (d) goods or services provided by Licensed Business although filled or performed outside of the Trade Area. Notwithstanding the foregoing, “Gross Sales” shall exclude the following: (i) Sums representing sales taxes collected directly from customers by Licensee in the operation of the Licensed Business, and any sales, value added or other tax, excise or duty charged to customers which is levied or assessed against Licensee by any Federal, state, municipal or local authority, based on sales of specific goods, merchandise, services, and supplies sold at, from, or in connection with the Licensed Business, provided that such taxes are actually transmitted to the appropriate Governmental Authority; and (ii) Sums representing tips, gratuities or service charges paid directly by customers to employees of Licensee or paid to Licensee and promptly and to the extent turned over to such employees by Licensee in lieu of direct tips or gratuities.

“Heirs” is defined in Section 15.3.2.

“Improvement” is defined in Section 7.13.

“Initial Attendees” is defined in Section 6.1.

“Initial Fee” is defined in Section 1.1.1.

“Initial Training Fee” means $2,500 per person.

“Initial Training Program” is defined in Section 6.1.

“Inspectors” is defined in Section 11.5.

“Interim Period” is defined in Section 3.6.

“Internet” means collectively the myriad of computer and telecommunications facilities, including equipment and software, which comprise the interconnected worldwide network of networks that employ the TCP/IP [Transmission Control Protocol/Internet Protocol], or any predecessor or

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successor protocols to such protocol, to communicate information of all kinds by fiber optics, wire, radio, or other methods of transmission.

“Internet Referral Sources” means operators of Internet websites (or similar referral sources) that offer to refer customers to Licensor and its licensee for a fee.

“Intranet” and “Extranet” means an Internet website owned or operated by or for Licensor which is accessible only by Licensor, its Affiliates, “Sit Means Sit” licensees and others authorized by Licensor, which may include third party suppliers.

“Licensed Business” means the business operated pursuant to this Agreement and through the use of Vehicles, under the Marks and in accordance with the System and specializing in the sale and provision of Authorized Products and Services primarily within the Trade Area.

“Licensee” is defined in the introductory paragraph of this Agreement.

“Licensor” is defined in the introductory paragraph of this Agreement.

“Manuals” means Licensor’s operations manual(s), and all related manual(s) now or hereafter created by Licensor for use in the operation of the Licensed Business, as the same may be amended and revised from time to time (except that such amendments will not alter Licensee’s fundamental status and rights under this Agreement), including all bulletins, supplements and ancillary manuals, and reference made to the Manuals in this Agreement, or in any amendments, exhibits, appendixes or schedules hereto, shall be deemed to mean the Manuals kept current by amendments from time to time.

“Marketing Fund” is defined in Section 5.3.

“Marks” is defined in Recital A.

“National Accounts” means any (i) potential or existing commercial customer that has multiple sites, offices, or retail premises located within and outside of the Trade Area, (ii) any pet store, veterinarian, charitable organization which trains seeing-eye or service dogs or similar or related business whose clientele include potential customers for Authorized Products and Services; (iii) government agencies, branches or facilities (including the military); and (iv) any other customer whose presence is not confined to the Trade Area.

“Notice of Election” is defined in Section 3.3.1.

“Owner” means (i) any direct or indirect shareholder, member, general or limited partner, trustee, or other equity owner of a Business Entity; and (ii) and any person that controls any of the voting rights of a Business Entity; except that if Licensor has any ownership or voting interest in Licensee, the term “Owner” shall not include or refer to Licensor or its Affiliates, and no obligation or restriction upon “Licensee”, or its Owners, directors or officers shall bind Licensor or its Affiliates, or their respective Owners, directors or officers.

“Partner” means any partner of a Partnership.

“Partnership” means any general partnership, limited partnership or limited liability partnership.

“Partnership Rights” means voting power, property, profits or losses, or partnership interests of a Partner.

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“Policies” means the standards, specifications, policies, rules, regulations, procedures, protocols, restrictions, recommendations and guidelines as Licensor may establish and revise from time to time, whether contained in the Manuals or as Licensor may otherwise direct in writing.

“Proprietary Software” is defined in Section 7.5.2.

“Reporting Period” means a calendar month, or such other time period as Licensor may designate from time to time in writing.

“Restricted Person” means Licensee, and each of its Owners and Affiliates, the Authorized Trainer, each person that has attended the Initial Training Program, and the respective officers, directors, managers, and Affiliates of each of them, and the spouse and family members who live in the same household of each of the foregoing who are individuals.

“ROFR” is defined in Section 14.3.

“ROFR Period” is defined in Section 14.3.

“‘Sit Means Sit’ Brand Products” means any product now existing or developed in the future that bears, or is sold or packaged under any of the Marks.

“Successor Agreement Right” is defined in Section 3.2.

“Successor License Agreement” is defined in Section 3.2.

“Successor Term” is defined in Section 3.2.

“Suppliers” is defined in Section 10.3.

“System” is defined in Recital B.

“Term” is defined in Section 3.1.

“Terrorist Lists” means all lists of known or suspected terrorists or terrorist organizations published by any U.S. Government Authority, including U.S. Treasury Department’s Office of Foreign Asset Control (“OFAC”), that administers and enforces economic and trade sanctions, including against targeted non-U.S. countries, terrorism sponsoring organizations and international narcotics traffickers.

“Trade Area” means the geographic area set forth in Addendum “A”.

“Trade Secrets” means proprietary and confidential information, including: Policies, the Manuals, specifications; suppliers; customer lists, names, addresses and other Customer Information; procedures; concepts; systems; know-how; plans; strategies; methods and techniques of operating a Business.

“Training Facility” is defined in Section 4.3.

“Travel Expenses” means costs and expenses incurred by or assessed in connection with travel, including airfare, hotel/lodging, local transportation, meals, and, with regard to Licensor’s employees’, salespersons’, agents’ and/or representatives’ expenses, a per diem charge determined by Licensor in advance, with respect to other incidental expenses incurred, including laundry and/or telephone expenses.

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“Unassigned Area” is defined in Section 2.4.1.

“URL” means uniform resource locator.

“Vehicle” or “Vehicles” is defined in Section 4.2.2.

“Wages” means all salaries and hourly wages, and all related direct and indirect payroll expenses of employees, including employment-related taxes, overtime compensation, vacation benefits, pension and profit sharing plan contributions, medical insurance premiums, medical benefits, and the like, and all direct and indirect fees, costs and expenses payable to independent contractors, agents, representatives and outside consultants.

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ADDENDUM “A” TO LICENSE AGREEMENT

TRADE AREA

Check Applicable Box:

[ ] The area outlined on the attached map and described as follows:

[ ] The area described as follows:

* if the Trade Area is defined by streets, highways, freeways or other roadways, or rivers, streams, or tributaries, then the boundary of the Trade Area shall extend to the center line of each such street, highway, freeway or other roadway, or river, steam, or tributary.

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ADDENDUM “B” TO LICENSE AGREEMENT

LICENSEE INFORMATION

Licensee is a (check as applicable):

[ ] corporation [ ] sole proprietor

[ ] limited liability company [ ] limited partnership

[ ] Other (specify): __________ [ ] general partnership

The name and address of each Owner of Licensee is:

NAME ADDRESS

NUMBER OF

SHARES OR

PERCENTAGE

INTEREST

There is set forth below the name and address of each director, member, or general partner, as applicable, of Licensee:

NAME ADDRESS

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There is set forth below the names, and addresses and titles of Licensee’s principal officers or partners who will be devoting their full time to the Business:

NAME ADDRESS

The address where Licensee’s financial records, and Business Entity records (e.g. Articles of Incorporation, Bylaws, Operating Agreement, Partnership Agreement, etc.) are maintained is:

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ADDENDUM “C” TO LICENSE AGREEMENT

ELECTRONIC FUNDS TRANSFER AUTHORIZATION

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ADDENDUM “D” TO LICENSE AGREEMENT

COLLATERAL ASSIGNMENT OF TELEPHONE NUMBERS AND TELEPHONE LISTINGS,

INTERNET ADDRESSES AND SOCIAL MEDIA IDENTITIES

THIS ASSIGNMENT is entered into this ____ day of ______________, 20__, in accordance with the terms of the Sit Means Sit Franchise, Inc. (“SMS”) License Agreement (“License Agreement”) between___________________________________ (“Licensee”) and SMS, executed concurrently with this Assignment, under which SMS granted Licensee the right to own and operate a Licensed Business (“License Business”) as set forth in the Agreement. FOR VALUE RECEIVED, Licensee hereby assigns to SMS (1) those certain telephone numbers and regular, classified or other telephone directory listings (collectively, the “Telephone Numbers and Listings”); and (2) those certain Internet website addresses (“URLs”); (3) user names, screen names, or identities on social media sites (including, by way of example and not limitation, Twitter, Facebook, MySpace, LinkedIn, and similar social networking services) (“Social Media Identities”) associated with SMS’s trade and service marks and used from time to time in connection with the operation of the Licensed Business. The Social Media Identities include all Social Media Identities used by Licensee at the time of Termination relating to the Licensed Business, including but not limited to the following: _____________________________________________________________________________________ _____________________________________________________________________________________ _____________________________________________________________________________________ This Assignment is for collateral purposes only and, except as specified herein, SMS shall have no liability or obligation of any kind whatsoever arising from or in connection with this Assignment, unless SMS shall notify the telephone company and/or the listing agencies with which Licensee has placed telephone directory listings (all such entities are collectively referred to herein as “Telephone Company”), Licensee’s Internet service provider (“ISP”), or Social Media provider(s) to effectuate the assignment pursuant to the terms hereof. Upon termination or expiration of the License Agreement (without extension), SMS shall have the right and is hereby empowered to effectuate the assignment of the Telephone Numbers and Listings, URLs, and Social Media Identities, and, in such event, Licensee shall have no further right, title or interest in the Telephone Numbers and Listings, URLs, or Social Media Identities, and shall remain liable to the Telephone Company, ISP, or Social Media provider(s) for all past due fees owing to the Telephone Company and the ISP on or before the effective date of the assignment hereunder. Licensee agrees and acknowledges that as between SMS and Licensee, upon termination or expiration of the License Agreement, SMS will have the sole right to and interest in the Telephone Numbers and Listings, URLs, and the Social Media Identities and Licensee irrevocably appoints SMS as Licensee’s true and lawful attorney-in-fact, which appointment is coupled with an interest, to direct the Telephone Company, the ISP, and the Social Media provider(s) to assign same to SMS, and execute such documents and take such actions as may be necessary to effectuate the assignment. Upon such event, Licensee will immediately notify the Telephone Company, the ISP, and the Social Media provider(s) to assign the Telephone Numbers and Listings, the URLs, and the Social Media Identities to SMS. If Licensee fails to promptly direct the Telephone Company, the ISP, and the Social Media provider(s) to assign the Telephone Numbers and Listings, the URLs, and/or the Social Media Identities to SMS, SMS will have the right to direct the Telephone Company, the ISP, and the Social Media provider(s) to effectuate the

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assignment contemplated hereunder to SMS. The parties agree that the Telephone Company, the ISP, and the Social Media provider(s) may accept SMS’s written direction, the License Agreement or this Assignment as conclusive proof of SMS’s exclusive rights in and to the Telephone Numbers and Listings, the URLs, and/or the Social Media Identities upon such termination or expiration and that such assignment will be made automatically and effective immediately upon the Telephone Company, the ISP, or the Social Media provider(s) receipt of such notice from SMS or Licensee. The parties further agree that if the Telephone Company, the ISP, and the Social Media provider(s) requires that the parties execute the Telephone Company, the ISP, and the Social Media provider(s) assignment forms or other documentation at the time of termination or expiration of the License Agreement, SMS’s execution of such forms or documentation on behalf of Licensee shall effectuate Licensee’s consent and agreement to the assignment. The parties agree that at any time after the date hereof they will perform such acts and execute and deliver such documents as may be necessary to assist in or accomplish the assignment described herein upon termination or expiration of the License Agreement. SMS: LICENSEE: SIT MEANS SIT FRANCHISE, INC. By: By:

Name: Name: Its: Its: Dated this day of 20__ Dated this day of 20__

State of ) ) ss. County of ) This instrument was acknowledged before me on , by Notary Public

My Commission Expires:

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ADDENDUM “E” TO LICENSE AGREEMENT

COMPLIANCE QUESTIONNAIRE As you know, Sit Means Sit Franchise, Inc. and you are preparing to enter into a License Agreement for the operation of a Sit Means Sit® Business. In this questionnaire, Sit Means Sit Franchise, Inc. will be referred to as “we” or “us.” The purpose of this questionnaire is to determine whether any statements or promises were made to you that we did not authorize and that may inaccurate. Please review each of the following questions carefully and provide honest and complete responses to each question. If the answer

you give calls for a written explanation and there is not enough room in the space provided to give a

complete written explanation, please attach additional pages as necessary.

1. Have you received, studied and reviewed carefully the Franchise Disclosure Document (“FDD”) and License Agreement? Check one: (__) Yes (__) No

2. Do you understand all of the information contained in the License Agreement and each exhibit and

schedule attached to it? Check one: (__) Yes (__) No If your answer is “No,” what parts of the License Agreement do you not understand? 3. Do you understand all of the information contained in the FDD and each addendum attached to it?

Check one: (__) Yes (__) No If your answer is “No,” what parts of the FDD do you not understand? 4. Have you discussed with an attorney, accountant, or other professional advisor the benefits and

risks of establishing and operating a business as a Sit Means Sit® licensee, or made the decision not to consult with one? Check one: (__) Yes (__) No

5. Has any employee or other person speaking on our behalf made any statement or promise that is

contrary to, or different from, the information contained in the FDD? Check one: (__) Yes (__) No.

If your answer is “Yes,” please describe the statement or promise:

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6. Was any oral, written or visual claim or representation made to you that stated, suggested, predicted or projected your sales, income or profit levels or that of any other actual or hypothetical license business? Check one: (__) Yes (__) No.

If your answer is “Yes,” please describe the oral, written or visual claim or representation made to

you: 7. Do you understand that the success or failure of your business will depend in large part upon your

skills and experience, your business acumen, the hours you will work, your location, the local market for Sit Means Sit® products and services, interest rates, the economy, inflation, the prevailing wage rate, competition, and other economic and business factors? Further, do you understand that the economic and business factors that exist at the time you open your business may change? Check one: (__) Yes (__) No.

If your answer is “No,” please describe your understanding of what the success or failure of your

business will depend: 8. Have any of our employees or any other persons speaking on our behalf made any statement,

promise or agreement concerning the likelihood of success that you should or might expect to achieve from operating a Sit Means Sit® Licensed Business? Check one: (__) Yes (__) No.

If your answer is “Yes,” please describe the statement, promise, or agreement: 9. Have any of our employees or any other persons speaking on our behalf made any statement,

agreement or promise to you concerning the advertising, marketing, training, support service or assistance that we will furnish to you that is contrary to, or different from, the information contained in the FDD?

Check one: (__) Yes (__) No. If your answer is “Yes,” please describe the statement, promise, or agreement:

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10. Have any of our employees or any other persons speaking on our behalf made any statement, agreement or promise to you concerning the costs you may incur in operating a Licensed Business that is contrary to, or different from, the information contained in the FDD?

Check one: (__) Yes (__) No. If your answer is “Yes,” please describe the statement, promise, or agreement: 11. Do you understand that there may be national, regional, state, or local laws or regulations applying

to the operation of a Sit Means Sit® Licensed Business (either specifically or generally), and that, as a licensee, you are fully responsible as an independent business owner for learning about and complying with these laws?

Check one: (__) Yes (__) No. If your answer is “No,” please describe your understanding regarding legal compliance: 12. Have we or any of our employees or any other persons speaking on our behalf made any oral,

written, visual or other promises, agreements, commitments, representation, understandings, “side agreements” or otherwise that expand upon or are inconsistent with FDD or the License Agreement, or any attached written addendum signed by you and an officer of ours?

Check one: (__) Yes (__) No. If your answer is “Yes,” please describe the statement, promise, or agreement: 13. Have we or any of our employees or any other persons speaking on our behalf made any statements

to you regarding the financial condition of our parent company or any of our affiliated companies? Check one: (__) Yes (__) No.

If your answer is “Yes,” have you relied on the statement(s) regarding the financial condition of any of our affiliated companies in deciding whether to purchase a license from us? Check one: (__) Yes (__) No.

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If your answer to either of the above questions is “Yes,” please describe the statements you received or heard regarding the financial condition of our parent or any of our affiliated companies.

14. Do you understand that we are relying on your answers to this questionnaire to ensure that the

franchise sale was made in compliance of state and federal laws? Check one: (__) Yes (__) No

By signing below, you are acknowledging that you understand that your answers are important and that we will rely on them, and that you have responded truthfully to the above questions. NOTE: IF THE RECIPIENT IS A CORPORATION, PARTNERSHIP, OR OTHER ENTITY,

EACH OF ITS PRINCIPALS MUST EXECUTE THIS ACKNOWLEDGMENT (Make Additional

Copies if Necessary).

By: Name: State of ) ) ss. County of ) This instrument was acknowledged before me on , by Notary Public


By: Name: State of ) ) ss. County of ) This instrument was acknowledged before me on , by Notary Public


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Exhibit B

General Release

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GENERAL RELEASE

THIS GENERAL RELEASE (“Release Agreement”) is effective as of the ____ day of _______________, 20___ (“Effective Date”) by and among Sit Means Sit Franchise, Inc., a Nevada corporation (“Licensor”), _____________________ (“Licensee”), _____________________ (“Affiliate[s]”) and ____________________ (“Owner” and together with Licensee and Affiliate[s], jointly and severally, “Releasor”).

RECITALS

A. Licensor and Licensee are parties to [that][those] certain License Agreement[s], dated ___________________________ (the “Transaction Document[s]”);

B. Licensee desires to [assign the Transaction Document[s]] [enter into a successor,

renewal License Agreement with Licensor]; and

C. Licensor is considering either a change or an expansion of the relationship between the parties and/or their affiliates. Licensor is unwilling to make the anticipated change or expansion in the relationship of the parties unless it is certain that it is proceeding with a “clean slate” and that there are no outstanding grievances or Claims against it. Releasor, therefore, gives this Release Agreement as consideration for receiving the agreement of Licensor to an anticipated change or expansion of the relationship between the parties. Releasor acknowledges that this Release Agreement is intended to wipe the slate clean.

AGREEMENT

NOW, THEREFORE, in consideration of the premises set forth above, and for other good and valuable consideration the receipt and sufficiency of which is hereby acknowledged, and intending to be legally bound hereby, Releasor and Licensor hereby agree as follows:

1. Definitions. As used in this Release Agreement, the following capitalized terms have the meanings ascribed to them.

1.1 “Claims” means all actual and alleged claims, demands, Losses, charges, covenants, responsibilities, warranties, obligations, oral and written agreements, debts, violations, suits, counterclaims, cross claims, third party claims, accounts, liabilities, costs, expenses (including attorneys’ fees and court costs), rights to terminate and rescind, rights of action and causes of action of any kind or nature, which in any way relate to or arise from or in connection with the Transaction Documents.

1.2 “Constituents” means past, present and future affiliates, parents, subsidiaries, divisions, partners, owners, shareholders, members, trustees, receivers, executors, representatives, administrators, and the respective officers, directors, agents, managers, principals, members, employees, insurers, successors, assigns, representatives and attorneys of each of them.

1.3 “Excluded Matters” means [(i)] Licensor’s continuing contractual obligations which arise or continue under and pursuant to the Transaction Document[s] on and after the date of this Release Agreement [; and (ii) this Release Agreement is not intended to release or waive the provisions of any applicable franchise registration or disclosure law applicable to the grant of that franchise or

license.]

1.4 “Licensor Released Parties” means Licensor and each of its Constituents.

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1.5 “Losses” means all damages, liabilities, accounts, suits, awards, judgments, payments, diminutions in value and other losses, costs and expenses, however suffered or characterized, including interest, costs and expenses of investigating and prosecuting any Claim, reference proceeding, lawsuit, arbitration or any appeal; all associated actual attorneys’ fees, whether or not the Claim, reference proceeding, lawsuit or arbitration is ultimately defeated and, all amounts paid to compromise or settle of any Claim, reference proceeding, lawsuit or arbitration.

2. General Release. Releasor for itself and its Constituents, hereby releases and forever discharges the Licensor Released Parties from any and all Claims, whether known or unknown, based upon anything that has occurred or existed, or failed to occur or exist, from the beginning of time to the Effective Date, except for the Excluded Matters and the obligations under this Release Agreement.

3. Waiver of California Civil Code Section 1542.

3.1 Releasor, for itself and its Constituents, acknowledges that it is familiar with Section 1542 of the California Civil Code, which reads as follows:

A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS OR HER FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM OR HER MUST HAVE MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH THE DEBTOR.

3.2 With respect to those Claims being released pursuant to Section 2, Releasor, for itself and its Constituents, acknowledges that it is releasing unknown claims and waives all rights it has or may have under California Civil Code Section 1542 or any other statute or common law principle of similar effect. For purposes of this Section 3, Releasor shall be considered to be a creditor of the Licensor Released Parties, and each of them.

3.3 Releasor acknowledges that this general release extends to claims which Releasor does not know or suspect to exist in favor of Releasor at the time of executing this Release Agreement, which if known by Releasor may have materially affected its decision to enter into this Release Agreement. It is understood by Releasor that the facts in respect of which this Release Agreement is given may hereafter turn out to be other than or different from the facts in that connection known or believed to be true. Releasor therefore, expressly assumes the risk of the facts turning out to be so different and agrees that this Release Agreement shall be in all respects effective and not subject to termination or rescission by any such difference in facts.

4. Representations and Warranties. Releasor represents and warrants to Licensor that, in entering into this Release Agreement, it (i) is doing so freely and voluntarily upon the advice of counsel and business advisor of its own choosing (or declined to do so, free from coercion, duress or fraud); (ii) has read and fully understands the terms and scope of this Release Agreement; (iii) realizes that it is final and conclusive, and intends to be final and conclusive, as to the matters set forth in this Release Agreement; and (iv) has not assigned, transferred, or conveyed to any third party all or any part of or partial or contingent interest in any of the Claims which are called for to be released by this Release Agreement, that it is aware of no third party who contends or claims otherwise, and that it shall not purport to assign, transfer, or convey any such claim in the future.

5. Covenants Not to Sue. Releasor irrevocably covenants to refrain and cause each of its Constituents to refrain from asserting any Claim, or commencing, initiating or causing to be commenced,

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any proceeding of any kind against any Licensor Released Party, based upon any matter purported to be released pursuant to this Release Agreement.

6. Indemnity. Without in any way limiting any of the rights and remedies otherwise available to any Licensor Released Party, Releasor shall defend, indemnify and hold harmless each Licensor Released Party from and against all Claims whether or not involving third party Claims, arising directly or indirectly from or in connection with (i) the assertion by or on behalf of Releasor or its Constituents of any Claim or other matter purported to be released pursuant to this Release Agreement, (ii) the assertion by any third party of any Claim against any Licensor Released Party which Claim arises from, or in connection with, any Claim or other matter purported to be released pursuant to this Release Agreement; and (iii) any breach of representations, warranties or covenants by Releasor.

7. Miscellaneous.

7.1 This Release Agreement cannot be modified, altered or otherwise amended except by an agreement in writing signed by all of the parties hereto.

7.2 This Release Agreement, together with the agreements referenced in this Release Agreement, constitute the entire understanding between and among the parties with respect to the subject matter of this Release Agreement. This Release Agreement supersedes any prior negotiations and agreements, oral or written, with respect to its subject matter. No representations, warranties, agreements or covenants have been made with respect to this Release Agreement, and in executing this Release Agreement, none of the parties is relying upon any representation, warranty, agreement or covenant not set forth in this Release Agreement.

7.3 This Release Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original, but all of which together shall constitute one and the same instrument.

7.4 This Release Agreement shall be binding upon and inure to the benefit of the parties to this Release Agreement and their respective successors and permitted assigns.

7.5 All terms used in any one number or gender shall extend to mean and include any other number and gender as the facts, context, or sense of this Release Agreement may require. Neither this Release Agreement nor any uncertainty or ambiguity in this Release Agreement shall be construed or resolved against the drafter, whether under any rule of construction or otherwise. On the contrary, this Release Agreement has been reviewed by all parties and shall be construed and interpreted according to the ordinary meaning of the words used so as to fairly accomplish the purposes and intentions of the parties. If any provision of this Release Agreement is susceptible to two or more constructions, one of which would render the provision enforceable and the other or others of which would render the provision unenforceable, then the provision shall be given the meaning that renders it enforceable.

7.6 Any provision of this Release Agreement which is prohibited, unenforceable or not authorized in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition, unenforceability or non-authorization without invalidating the remaining provisions hereof or affecting the validity, enforceability or legality of such provision in any other jurisdiction.

7.7 Each of the parties acknowledges that it had the right and opportunity to seek independent legal counsel of its own choosing in connection with the execution of this Release Agreement, and each of the parties represents that it has either done so or that it has voluntarily declined to do so, free from coercion, duress or fraud.

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7.8 This Release Agreement shall be governed by and construed in accordance with the internal laws of the State of Nevada, without reference to conflict of law principles.

8. Dispute Resolution. Each controversy, dispute or claim between the parties arising out of or relating to this Release Agreement or the breach, termination, enforcement, interpretation or validity of this Release Agreement, will be resolved in accordance with Article 20 of the License Agreement.

___________ ___________

RELEASOR LICENSOR

INITIALS INITIALS

IN WITNESS WHEREOF, the parties hereto have executed this Release Agreement as of the

date set forth above.

“Licensor”: SIT MEANS SIT FRANCHISE, INC.

By:

Name:

Title:

“Releasor”: “Licensee”

By:

Name:

Title:

“Releasor”: “Affiliate”

By:

Name:

Title:

“Owner”:

, an individual

[Others:]

, an individual

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Exhibit C

Guaranty

In Process

CONTINUING GUARANTY

FOR VALUE RECEIVED, and in consideration of Sit Means Sit Franchise, Inc., a Nevada corporation (“Licensor”), granting a license to ____________________, a(n) ____________________ (“Licensee”), the undersigned, __________ and __________ ([jointly and severally,] “Guarantor”) agree as follows:

1. Guaranty of Obligations.

1.1 Guarantor unconditionally, absolutely and irrevocably guarantees the full and prompt payment and performance when due, of all obligations of Licensee to Licensor and its affiliates, however created, arising or evidenced, whether direct or indirect, absolute or contingent, or now or in the future existing or due or to become due, including, without limitation, under or in connection with that certain License Agreement dated _____________, 20___ (the “License Agreement”) and each of the documents, instruments and agreements executed and delivered in connection with the License Agreement or this continuing guaranty, as each may be modified, amended, supplemented or replaced from time to time (all such obligations are referred to collectively as the “Obligations”), and all documents evidencing or securing any of the Obligations. This continuing guaranty (this “Continuing

Guaranty”) is a guaranty of payment and performance when due and not of collection.

1.2 In the event of any default by Licensee in making payment of, or default by Licensee in performance of, any of the Obligations, Guarantor agrees on demand by Licensor to pay and perform all of the Obligations as are then or thereafter become due and owing or are to be performed under the terms of the Obligations. Guarantor further agrees to pay all expenses (including reasonable attorneys’ fees and expenses) paid or incurred by Licensor in endeavoring to collect the Obligations, or any part thereof, and in enforcing this Continuing Guaranty.

2. Continuing Nature Of Guaranty And Obligations. This Continuing Guaranty shall be continuing and shall not be discharged, impaired or affected by: (1) the insolvency of Licensee or the payment in full of all of the Obligations at any time or from time to time; (2) the power or authority or lack thereof of Licensee to incur the Obligations; (3) the validity or invalidity of any of the Obligations; (4) the existence or non-existence of Licensee as a legal entity; (5) any statute of limitations affecting the liability of Guarantor or the ability of Licensor to enforce this Continuing Guaranty, the Obligations or any provision of the Obligations; or (6) any right of offset, counterclaim or defense of Guarantor, including, without limitation, those which have been waived by Guarantor pursuant to Paragraph 4 of this Continuing Guaranty.

3. Permitted Actions Of Licensor. Licensor may from time to time, in its sole discretion and without notice to Guarantor, take any or all of the following actions: (1) retain or obtain the primary or secondary obligation of any obligor or obligors, in addition to Guarantor, with respect to any of the Obligations; (2) extend or renew for one or more periods (whether or not longer than the original period), alter, amend or exchange any of the Obligations; (3) waive, ignore or forbear from taking action or otherwise exercising any of its default rights or remedies with respect to any default by Licensee under the Obligations; (4) release, waive or compromise any obligation of Guarantor under this Continuing Guaranty or any obligation of any nature of any other obligor primarily or secondarily obligated with respect to any of the Obligations; (5) demand payment or performance of any of the Obligations from Guarantor at any time or from time to time, whether or not Licensor shall have exercised any of its rights or remedies with respect to any property securing any of the Obligations or any obligation under this Continuing Guaranty; or (6) proceed against any other obligor primarily or secondarily liable for payment or performance of any of the Obligations.

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4. Specific Waivers.

4.1 Without limiting the generality of any other provision of this Continuing Guaranty, Guarantor expressly waives: (i) notice of the acceptance by Licensor of this Continuing Guaranty; (ii) notice of the existence, creation, payment, nonpayment, performance or nonperformance of all or any of the Obligations; (iii) presentment, demand, notice of dishonor, protest, notice of protest and all other notices whatsoever with respect to the payment or performance of the Obligations or the amount thereof or any payment or performance by Guarantor under this Agreement; (iv) all diligence in collection or protection of or realization upon the Obligations or any thereof, any obligation under this Agreement or any security for or guaranty of any of the foregoing; (v) any right to direct or affect the manner or timing of Licensor’s enforcement of its rights or remedies; (vi) any and all defenses which would otherwise arise upon the occurrence of any event or contingency described in Paragraph 1 hereof or upon the taking of any action by Licensor permitted under this Agreement; and (viii) all other principles or provisions of law, if any, that conflict with the terms of this Continuing Guaranty, including, without limitation, the effect of any circumstances that may or might constitute a legal or equitable discharge of a guarantor or surety.

4.2 Guarantor waives all rights and defenses arising out of an election of remedies by Licensor. Without limiting the generality of the foregoing, Guarantor acknowledges that it has had the opportunity to consult with counsel (or has had an opportunity to consult with counsel and has not availed itself of such opportunity), as to the scope, purpose and effect of this Continuing Guaranty, and based thereon, and without limiting the foregoing waivers, Guarantor agrees to waive all suretyship rights and defenses available to Guarantor under state law.

4.3 Guarantor further waives all rights to revoke this Continuing Guaranty at any time, and all rights to revoke any agreement executed by Guarantor at any time to secure the payment and performance of Guarantor’s obligations under this Continuing Guaranty.

5. Subordination; Subrogation. Guarantor subordinates any and all indebtedness of Licensee to Guarantor to the full and prompt payment and performance of all of the Obligations. Licensor shall be entitled to receive payment of all Obligations prior to Guarantor’s receipt of payment of any amount of any indebtedness of Licensee to Guarantor. Guarantor will not exercise any rights which it may acquire by way of subrogation under this Continuing Guaranty, by any payment hereunder or otherwise, until all of the Obligations have been paid in full, in cash, and Licensor shall have no further obligations to Licensee under the Obligations or otherwise.

6. Non-Competition, Trade Secrets, Effect of Applicable Law. Sections 13.1 (Non-Competition), 13.2 (Trade Secrets), and 13.3 (Effect of Applicable Law) of the License Agreement, are incorporated into this Continuing Guaranty by reference, and Guarantor agrees to comply with and perform each of such covenants as though fully set forth in this Continuing Guaranty as a direct and primary obligation of Guarantor.

7. Assignment Of Licensor’s Rights. Licensor may, from time to time, without notice to Guarantor, assign or transfer any or all of the Obligations or any interest therein and, notwithstanding any assignment(s) or transfer(s), the Obligations shall be and remain Obligations for the purpose of this Continuing Guaranty. Each and every immediate and successive assignee or transferee of any of the Obligations or of any interest therein shall, to the extent of such party’s interest in the Obligations, be entitled to the benefits of this Continuing Guaranty to the same extent as if such assignee or transferee were Licensor.

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8. Indulgences Not Waivers. No delay in the exercise of any right or remedy shall operate as a waiver of the such right or remedy, and no single or partial exercise by Licensor of any right or remedy shall preclude other or further exercise of such right or remedy or the exercise of any other right or remedy; nor shall any modification or waiver of any of the provisions of this Continuing Guaranty be binding upon Licensor, except as expressly set forth in a writing signed by Licensor. No action of Licensor permitted under this Continuing Guaranty shall in any way affect or impair the rights of Licensor or the obligations of Guarantor under this Continuing Guaranty.

9. Financial Condition Of Licensee. Guarantor represents and warrants that it is fully aware of the financial condition of Licensee, and Guarantor delivers this Continuing Guaranty based solely upon its own independent investigation of Licensee’s financial condition. Guarantor waives any duty on the part of Licensor to disclose to Guarantor any facts it may now or hereafter know about Licensee, regardless of whether Licensor has reason to believe that any such facts materially increase the risk beyond that which Guarantor intends to assume or has reason to believe that such facts are unknown to Guarantor. Guarantor knowingly accepts the full range of risk encompassed within a contract of “Continuing Guaranty” which includes, without limitation, the possibility that Licensee will contract for additional obligations and indebtedness for which Guarantor may be liable hereunder.

10. Representation and Warranty. Guarantor represents and warrants to Licensor that this Continuing Guaranty has been duly executed and delivered by Guarantor and constitutes a legal, valid and binding obligation of Guarantor, enforceable against Guarantor in accordance with its terms.

11. Binding Upon Successors; Death Of Guarantor; Joint And Several.

11.1 This Continuing Guaranty shall inure to the benefit of Licensor and its successors and assigns.

11.2 All references herein to Licensee shall be deemed to include its successors and permitted assigns, and all references herein to Guarantor shall be deemed to include Guarantor and Guarantor’s successors and permitted assigns and, upon the death of a Guarantor, the duly appointed representative, executor or administrator of the Guarantor’s estate. This Continuing Guaranty shall not terminate or be revoked upon the death of a Guarantor, notwithstanding any knowledge by Licensor of a Guarantor’s death.

11.3 If there shall be more than one Guarantor (or more than one person or entity comprises Guarantor) under this Agreement, all of the Guarantor’s obligations and the other obligations, representations, warranties, covenants and other agreements of any Guarantor under this Agreement shall be joint and several obligations and liabilities of each Guarantor.

11.4 In addition and notwithstanding anything to the contrary contained in this Continuing Guaranty or in any other document, instrument or agreement between or among any of Licensor, Licensee, Guarantor or any third party, the obligations of Guarantor with respect to the Obligations shall be joint and several with each and every other person or entity that now or hereafter executes a guaranty of any of the Obligations separate from this Continuing Guaranty.

12. Governing Law. This Continuing Guaranty has been delivered and shall be governed by and construed in accordance with the internal laws (as opposed to the conflicts of law provisions) of the State of Nevada. Wherever possible each provision of this Continuing Guaranty shall be interpreted as to be effective and valid under applicable law, but if any provision of this Continuing Guaranty shall be prohibited by or invalid under such law, such provision shall be ineffective only to the extent of such

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prohibition or invalidity, without invalidating the remainder of such provision or the remaining provisions of this Continuing Guaranty.

13. ADVICE OF COUNSEL. GUARANTOR ACKNOWLEDGES THAT GUARANTOR HAS EITHER OBTAINED THE ADVICE OF COUNSEL OR HAS HAD THE OPPORTUNITY TO OBTAIN SUCH ADVICE IN CONNECTION WITH THE TERMS AND PROVISIONS OF THIS CONTINUING GUARANTY.

14. Entire Agreement. This Continuing Guaranty, License Agreement, and supplemental agreements referred to in the License Agreement contain the complete understanding of the parties hereto with respect to the subject matter herein. Guarantor acknowledges that Guarantor is not relying upon any statements or representations of Licensor not contained in this Continuing Guaranty and that such statements or representations, if any, are of no force or effect and are fully superseded by this Continuing Guaranty. This Continuing Guaranty may only be modified by a writing executed by Guarantor and Licensor. Nothing in this Continuing Guaranty is intended to disclaim the representations made in the Franchise Disclosure Document given to Guarantor.

IN WITNESS WHEREOF, Guarantor has executed this Continuing Guaranty this ____ day of ________________, 20__.

GUARANTOR:

By: Name:


My Commission Expires: By: Name: State of ) ) ss. County of ) This instrument was acknowledged before me on , by Notary Public


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Exhibit D

Promissory Note

In Process

PROMISSORY NOTE

Date:

(Principal Amount of Note)

City:

State:

FOR VALUE RECEIVED, the undersigned, ________________________________________, a _______________________ (Corporation, Partnership, Proprietorship), organized under the laws of the State of _______________________________, with its principal place of business at ____________________________ (hereinafter “LICENSEE”), promises to pay to the order of Sit Means Sit Franchise, Inc., a Nevada corporation, with its principal place of business at 2900 E. Patrick Lane, Suite 2A, Las Vegas, Nevada 89120 (hereinafter “LICENSOR”), in lawful money of the United States of America, the principal sum of __________________________________ Dollars ($________), without defalcation.

The unpaid principal sum shall bear interest at the rate of __________ percent (______ %) per annum.

The principal and interest shall be payable at 2900 E. Patrick Lane, Suite 2A, Las Vegas, Nevada 89120 or elsewhere as directed by LICENSOR in ____________ (______) installments of __________________________________ Dollars ($_________). The first installment payment shall be due on _________________, _______ and monthly thereafter. The remaining balance of this NOTE shall accelerate and be immediately due and payable upon termination of the License Agreement.

Failure to make any payment when due (including interest) shall constitute a default and LICENSOR may, at its option, declare all unpaid indebtedness evidenced by this NOTE accelerated and immediately due and payable. Failure at anytime to exercise said option shall not constitute a waiver of the right to exercise it later. LICENSEE hereby waives demand, presentment for payment, notice of nonpayment, protest, notice of protest and diligence to bring suit. LICENSEE agrees that the proper venue of any action to enforce this NOTE is Las Vegas, Nevada, which action shall be governed by the laws of the State of Nevada. LICENSEE agrees to pay all costs of collection when incurred by LICENSOR, including reasonable attorney fees.

IN WITNESS WHEREOF, and intending to be legally bound, LICENSEE has executed this NOTE by its duly authorized representative on the day and year first above written.

ATTEST: LICENSEE:

By:

(Secretary) Title:

In Process

Exhibit E

Form of Employee Confidentiality and Non-Competition Agreement

In Process


CONFIDENTIALITY AND NON-COMPETITION AGREEMENT

(for persons holding positions with licensees)

In consideration of his or her position as ______________________ of ___________________ (“Licensee”), and One Dollar, the receipt of which is acknowledged, the undersigned (“Receiver”) hereby acknowledges and agrees that:

1. General. Sit Means Sit Franchise, Inc. (“Licensor”) has developed a distinctive system relating to businesses providing dog training services and the sale of dog care products, dog training products, dog toys, food and treats, leashes, collars, apparel, and other goods and services, which are established and operated by others under License Agreements with Licensor.

2. Confidential Information.

(a) General Definition. Receiver will receive valuable proprietary and confidential information, disclosure of which would be detrimental to Licensor and Licensee, which may include, without limitation, trade secrets, policies, specifications, procedures, concepts and methods and techniques of developing and operating a “Sit Means Sit” business (collectively, the “Confidential

Information”). Confidential Information may include information in written, oral or machine readable form, and shall be deemed confidential hereunder regardless of the presence or absence of any stamp or other designation of confidentiality accompanying such information. This list of Confidential Information is illustrative only, and does not include all matters considered confidential by Licensor and Licensee.

(b) Exclusions. Confidential Information does not include information that:

(i) is in, or becomes in, the public domain without violation of any agreement by the Receiver or any other person, or

(ii) was known to Receiver prior to disclosure thereof to Receiver, other than by the breach of an obligation of confidentiality owed by anyone to Licensor or its affiliates, or

(iii) is disclosed to the Receiver by a third party under no obligation of confidentiality to Licensor or Licensee and without violation of any agreement by Receiver or any other person, including the third party, or

(iv) was independently developed by Receiver without the use or benefit of any of Licensor’s trade secrets.

3. Term. This Agreement shall remain in full force and effect and shall survive the termination of Receiver’s employment (or other position or capacity) with Licensee.

4. Disclosure; Copies. Receiver shall not: (a) disclose such Confidential Information to any person, company or entity, other than as required by Receiver’s duties in his or her position with Licensee; or (b) copy, photograph or make other facsimiles or drawings of the Confidential Information.

5. Use. Receiver will not sell, utilize, implement, appropriate or otherwise use the Confidential Information for any purpose whatsoever, or permit the use of the Confidential Information by others for any purpose whatsoever, without the express written permission of Licensor.

In Process

2

6. Forced Disclosure. Notwithstanding any other provisions in this Agreement, Receiver may disclose Confidential Information to the extent required by any applicable law, regulation, or court or governmental order; provided that Receiver gives Licensor and Licensee reasonable advance written notice of any request or demand for such disclosure and the opportunity to contest such law, regulation or order.

7. Return of Information. Receiver acknowledges and agrees that all Confidential Information furnished hereunder shall be and remain the property of Licensor. Upon demand, any and all Confidential Information and copies thereof must be returned to Licensor, or to Licensee at Licensor’s direction.

8. Non-Competition. While in his or her position with Licensee, and for a period of 12 months after Receiver ceases to be in that position, Receiver will not:

(a) own, operate, lend to, advise, be employed by, or have any financial interest in any business that engages in providing dog training services, or training others who provide dog training, at any location within the designated trade area of any “Sit Means Sit” licensees; or

(b) solicit business of any kind or nature from an individual or business entity that was a customer of Licensee or other “Sit Means Sit” licensee during the 12 month period immediately preceding such event.

9. Enforcement. Receiver acknowledges and agrees that disclosure or misappropriation of Confidential Information in violation of this Agreement may cause Licensor and/or Licensee irreparable harm, the effect of which may be difficult to ascertain, and agrees therefore that Licensor and/or Licensee shall be entitled to injunction and/or specific performance in addition to all other remedies otherwise available at law or equity. If it becomes necessary to enforce the terms of this Agreement, Receiver shall be obligated to pay any and all costs reasonably incurred by Licensor and/or Licensee in pursuing such enforcement, including attorneys’ fees and court costs.

10. Waiver. The failure of Licensor or Licensee in any one or more instances to insist upon strict performance of any of the terms or provisions of this Agreement, or to exercise any option herein conferred, shall not be construed as a waiver or relinquishment, to any extent, of the right to assert or rely upon any such terms, provisions or options on any future occasion.

11. Severability. Any provision of this Agreement which is rendered unenforceable by a court of competent jurisdiction shall be ineffective only to the extent of such prohibition or invalidity and shall not invalidate or otherwise render ineffective any or all of the remaining provisions of this Agreement.

12. Choice of Law. This Agreement shall be construed under the laws of the State in which Licensee’s “Sit Means Sit” business is located. The only way this Agreement can be changed is in a writing signed by both Licensee and Receiver.

13. Successors. This Agreement shall be binding upon and inure to the benefit of Licensor, Licensee, Receiver, and their respective successors and assigns.

In Process

3

14. Entire Agreement. This Agreement constitutes the entire agreement by Receiver in regard to the confidentiality of matters disclosed pursuant to this Agreement, and supersedes any prior oral or written representations in regard to said matters.

“RECEIVER”

By:

Name:

Position:

Address:

ACKNOWLEDGED BY LICENSEE:

By:

Name:

Title:



In Process

Exhibit F-1

Current Licensee Information

In Process

Country State Trade Area Name Address E-Mail Phone

USA AR Northwest Yttri, Sctt

10925 Hearthstone

Lane Bentonville, AR

72712 [email protected] 479-437-9204

USA AZ Phoenix

Drugmand,

Toni

15510 N 38th Street

Phoenix, AZ 85032 [email protected] 602-992-8743

USA AZ Southeastern

Owens Jr.,

Samuel &

Mary

7638 E Sierra Sunset

Dr

Sierra Vista, AZ 85635 [email protected] 757-232-1231

USA AZ Tucson

Owens Jr.,

Samuel &

Mary

7638 E Sierra Sunset

Dr

Sierra Vista, AZ 85635 [email protected] 757-232-1231

USA CA Los Angeles

Aguilar,

Luciano

3251 W 139th St

Hawthorne, CA

90250 [email protected] 310-538-1553

USA CA SE San Jose

Duong, Thu

& Ngo, Tu-

Hai

Thu Duong

713 Blackfoot Ct

San Jose, CA 95123 [email protected] 408-634-9247

USA CA San Gabriel

Evers,

Kenyon

Evers, Kenyon

PO Box 9788

San Bernardino, CA

92427 [email protected] 909-630-2460

USA CA Huntington Beach

Hunt

(Formerly

Hunt),

Cynthia

Cindy Hunt

8451 Jenny Dr Apt

131

Huntington Beach,

CA 92646 [email protected] 719-636-3647

USA CA San Diego

McMillan,

Tim

McMillan, Tim

15078 Avenida

Venusto # 201

San Diego, CA 92128 [email protected]

858-621-DOGS

(3647)

USA CA Silicon Valley Uyeno, Brian

14591 Big Basin Way

Saratoga, CA 95070 [email protected] 408-316-7989

USA CO Colorado Springs

Hunt (Hunt),

Cynthia

14674 Hwy 83

Larkspur, CO 80118 [email protected] 719-636-3647

USA CO Fort Collins

Hunt (Hunt),

Cynthia

14674 Hwy 83

Larkspur, CO 80118 [email protected] 970-703-3649

USA CO Denver

Bracciante,

Anthony

8308 Church Ranch

Westminster, CO

80021 [email protected] 303-422-3647

USA CO Aurora-Parker Kindall, Luke

11567 N. Donely Dr.

Parker, CO 80138 [email protected] 888-632-3647

USA CO South Denver Langdon, Jon

6813 Garland St.

Arvada, CO 80004 [email protected] 720-362-3647

USA CO Pueblo Pollard, Jori

7764 South lane

Pueblo, CO 81004 [email protected] 719-240-5043

USA CO Longmont-Firestone

Brady,

Sandra

205 Ken Pratt Blvd

Ste 120, PMB 301

Longmont, CO 80501 [email protected] 720-263-7297

USA CT Fairfield

Burnsworth,

Allen

7 Hopewell Dr

New Fairfield, CT

06812 [email protected] 203-293-7833

In Process


USA FL Palm Beach

Burnell,

Robert

6919 Dearborn Place

Boyton Beach, FL

33437 [email protected] 561-543-5583

USA FL St Petersburg Elwart, Elena

9056 134th Way

Seminole, FL 33776 [email protected] 727-537-9721

USA FL Orlando (North East) Smith, Matt

PO Box 5115

Winter Park, FL

32793 [email protected] 407-900-7297

USA FL

Orlando (North

West) Smith, Matt

PO Box 5115

Winter Park, FL

32793 [email protected] 407-900-7297

USA FL Orlando (South East) Smith, Matt

PO Box 5115

Winter Park, FL

32793 [email protected] 407-900-7297

USA FL

Orlando (South

West) Smith, Matt

PO Box 5115

Winter Park, FL

32793 [email protected] 407-900-7297

USA GA Atlanta

Shepherd,

Darin

7580 Granite Dr.

Douglasville, GA

30134 [email protected] 770-214-9247

USA GA North Metro

Tutterow,

Alex

34 Pearl Chambers Dr

Dawsonville, GA

30534 [email protected] 678-648-9858

USA HI Entire State

Sanchez,

Scott

104 Ulupia Pl

Paia, HI 96779 [email protected] 808-283-3647

USA ID Boise Closson, Jim

4110 W. Franklin Rd

Meridian, ID 83642 [email protected] 208-888-7978

USA IL Schaumburg

Ferguson,

Michael

928 Hartford Court

Schaumburg, IL

60193 [email protected] 847-212-3210

USA IL Crystal Lake

Hedrich,

Ryan

912 West River

Terrace

Johnsburg, Il 60051 [email protected] 815-557-7537

USA IL Chicago Kehoe, Alexa

5639 N Wayne Ave

Unit G

Chicago, Il 60660 US [email protected] 312-618-9663

USA IL South Chicago

Omerza,

Kerry

3706 Cleveland Ave

Brookfield, IL 60513 [email protected] 708-218-0094

USA IL Brookfield

Tsaras,

Ashley

1628 Victoria Park Cir

Aurora, IL 60504 [email protected] 708-214-9116

USA KY Lexington Gerrow, PR

2365 Lexington Rd

Versailles, KY 40383 [email protected] 859-509-5433

USA MA Entire State

Skoletsky,

David

60 Glover Drive

Stoughton, MA

02072 [email protected] 508-444-8878

USA MD Frederick

Greenway,

Kari & Pigott,

Gary

9921 Pine Tree Rd

Woodsboro, MD

21798 [email protected] 301-677-0066

USA MD Rockville-Potomac

Greenway,

Kari & Pigott,

Gary

9921 Pine Tree Rd

Woodsboro, MD

21798 [email protected] 301-677-0066

In Process


USA MD Annapolis

Nease,

Michael

2875 Hambleton

Road

Riva, MD 21140 [email protected] 410-798-9950

USA MD Charles County

Nogosek,

Lance

9285 Cherry Lane

La Plata, MD 20646 [email protected] 301-653-0735

USA MI South East Allan, Mark

4532 St. Anthony Rd.

Unit 3

Temperance, MI

48182 [email protected] 734-347-8228

USA MI Metro Detroit # 1

Garabedian,

Amy

144 Webb

Troy, MI 48098 [email protected] 248-688-9450

USA MI Metro Detroit # 2

Garabedian,

Amy

144 Webb

Troy, MI 48098 [email protected] 248-688-9450

USA MI Central

Skalski

(Croley),

Connie

PO Box 21

Columbiaville, MI

48421 [email protected] 810-793-4336

USA MN Minneapolis

Paddock,

Ryan

220 Adams Street

Anoka, MN 55303 [email protected] 763-913-8546

USA MO St Louis

Lampert,

Anthony

1901 Tower Bridge

Terrace

St Louis, MO 63146 [email protected] 314-403-0057

USA NC Raleigh Self, Colby

8904 Bowtie Court

Wake Forest, NC

27587 [email protected] 919-714-9748

USA NC Southeast Charlotte

Sutton, Jacob

Erb, Shawn

PO Box 80764

Canton, OH 44708 [email protected] 704-856-9247

USA NJ Ocean County

Campanile,

Robert

142 Morey Place Rd

Waretown, NJ 08758 [email protected] 609-242-1126

USA NJ South Jersey

Zimmerman,

Kristin

231 Crown Prince Dr

Marlton, NJ 08053 [email protected] 856-596-8084

USA NV Southern Highlands

Carmona,

Maureen

3916 Laurel Brook Dr

Las Vegas, NV 89147 [email protected] 702-858-3647

USA NV Reno/Carson City

Dickerson,

Terri

2618 Gordon Ave

Minden, NV 89423 [email protected] 775-721-3317

USA NV North East Las Vegas Heck, David

5573 Stirrup Street


USA NV Aliante

Manow,

Kenneth

Kenneth P Manow

41620 Manor Park Dr

# 9

Novi, MI 48375 [email protected] 586-255-0611

USA NV Henderson

Pablico,

Robert &

Nicole

1193 Highbury Grove

St

Henderson, NV

89002 [email protected] 702-518-4767

USA NV Summerlin

Stocks,

D'Awna

1509 Astronomy

Circle


USA NY North Salem

Dellavecchio,

John &

Elizabeth

22 Yerkes Rd North

Salem, NY 10560 [email protected] 914-458-2013

In Process


USA NY Syracuse

Wilbert,

David

7730 Frontage Road

Cicero, NY 13039 [email protected] 315-437-3647

USA OH

Columbus-North

West Cook, Terry

3110 W Fair Ave

Lancaster, OH 43130 [email protected] 740-438-0893

USA OH Columbus-South East Cook, Terry

3110 W Fair Ave

Lancaster, OH 43130 [email protected] 740-438-0893

USA OH Northwest

Cuevas,

Orlando

2407 Jamestown Dr

Northwood, OH

43619 [email protected] 419-666-3647

USA OH Cleveland-Akron Pollock, Paul

1371 Lakeland Ave

Akron, OH 44320 [email protected] 330-310-3647

USA OH Mahoning Valley

Simko,

Melissa

1330 Seaborn Street

#6 Mineral Ridge, OH

44440 [email protected] 330-759-7487

USA OR Portland

Woodman,

Robert

5822 Rockwood Ct

Lake Oswego, OR

97035 [email protected] 503-395-4364

USA PA Pittsburgh Pierce, Lisa

3910 Saw Mill Run

Blvd Pittsburgh, PA

15227 [email protected] 412-345-1748

USA TX Frisco

Forsberg,

Janet

3517 Quail Crest St

Grapevine, TX 76051 [email protected] 855-748-3647

USA TX Fort Worth Kindall, Luke

Luke Kindall

11567 N. Donely Dr.

Parker, CO 80138 [email protected] 888-632-3647

USA TX Houston # 1

Parvizian,

Hamid

Hamid Parvizian

11020 Katy Freeway

Suite 213

Houston, Tx 77043 [email protected] 281-912-3647

USA TX Houston # 2

Parvizian,

Hamid

Hamid Parvizian

11020 Katy Freeway

Suite 213

Houston, Tx 77043 [email protected] 281-912-3647

USA TX Austin # 1

Pfeifer, Troy

& Shelly

Pfeifer, Troy - Austin,

TX

8127 Mesa Dr B206-

367

Austin, TX 78759 [email protected] 512-942-7833

USA TX Austin # 2

Pfeifer, Troy

& Shelly

Pfeifer, Troy - Austin,

TX

8127 Mesa Dr B206-

367

Austin, TX 78759 [email protected] 512-942-7833

USA TX San Antonio

Pfeifer, Troy

& Shelly

Pfeifer, Troy - SA

1141 N 1604 E #105-

114

San Antonio, TX

78232 [email protected] 210-414-2788

USA TX Central Texas

Wheeler,

Mike

1027 W Us Hwy 190

Belton, Tx 76513 [email protected] 608-512-6652

USA TX Corpus Christi

Wirick,

Wesley

609 Rogers St

Temple, TX 76504 [email protected] 361-236-5748

In Process


USA UT Salt Lake City Cain, Jon

9136 Crystal Vista Ln

West Jordan, UT

84088 [email protected] 801-232-6941

USA VA Faifax

Madsen,

Sonny

3397 Chelsea Dr

Woodbridge, VA

22192 [email protected] 703-342-6164

USA WI Franklin & Oak Creek

Loomis,

Jason

13308 N. Granville

Rd.

Mequon, WI 53097 [email protected] 262-361-3647

USA WI North Milwaukee

Loomis,

Jason

13308 N. Granville

Rd.

Mequon, WI 53097 [email protected] 262-361-3647

USA WI Madison

Wheeler,

Mike

W5958 Edgewood Ct

Westfield, WI 53964 [email protected]

608-512-6652

USA WY Cheyenne Keetley, Tom

4782 Greyball Ave

Cheyenne, WY 82009 [email protected] 307-287-6918

USA WY Central Wyoming

Neufeld,

Garrett

229 N Pennsylvania

Ave

Casper, WY 82609 [email protected] 307-251-7784

Current MLAs:

State Trade Area Name Address E-Mail Phone

CA Temecula

McGuire,

Ryan

29093 Salario Dr,

Menifee, CA 92584 [email protected] 951-246-8223

MO Kansas City

Mancuso,

Tom

1308 Johnston Dr,

Raymore, MO 64083 [email protected] 816-878-4878

In Process

Exhibit F-2

Former Licensee Information

In Process


USA CA Orange County Brinkman, Kirk

Johnson, Jarrett

Johnson, Jarrett

Brinkman, Kirk

3441 Thackwood Dr


USA CA Pasedena

Frese,

Jennifer

Frese, Jennifer

202 S. Raymond Ave.

#105

Pasadena, CA 91105

USA [email protected] 626-375-6085

USA GA

Fayette-Newnan-

Peachtree City

Colon,

Fernando

4272 Antler Ct

Douglasville, GA

30135 [email protected] 678-770-7167

USA IL Chicago

Hager,

Darrel

3833 N. Kilbourn Ave.

Chicago, IL 60641 [email protected] 312-618-9663

USA NV Summerlin

Croley,

Rachel

PO box 21

Columbiaville, MI

48421 [email protected] 810-210-8586

USA NY

South Eastern

Queens

Martel,

Matthew

45 Kew Gardens Rd

Kew Gardens, NY

11415 [email protected] 561-400-2787

MLAs that left the System:


USA CA Riverside

Hunter,

Lenzy

7846 Grape st

Highland, CA 92346 [email protected] 877-438-5959

If you buy this franchise, your contact information may be disclosed to other buyers when you leave the franchise system.

In Process

Exhibit F-3

Licensees That Have Signed Agreements But Are Not Yet Open


USA WI Waukesha Meitner,

Matthew

423 S 94th Street

Milwaukee, WI 53214 [email protected] 262-361-3641

In Process

Exhibit G

Financial Statements

In Process

In Process

Exhibit H

State Administrators

And

Agents for Service of Process

In Process

STATE REGULATORY AGENCIES AND ADMINISTRATORS

1. California:

Commissioner of Business Oversight Department of Business Oversight 320 W. 4th Street, Suite 750 Los Angeles, California 90013-2344 Telephone: (866) 275-2677

2. Hawaii:

Department of Commerce & Consumer Affairs P.O. Box 40 Honolulu, Hawaii 96810 Telephone: (808) 586-2722

3. Illinois:

Illinois Attorney General 500 South Second Street Springfield, Illinois 62706 Telephone: (217) 782-4465

4. Indiana:

Securities Commissioner Securities Division 302 West Washington Street, Room E111 Indianapolis, Indiana 46204 Telephone: (317) 232-6681

5. Maryland:

Maryland Office of the Attorney General Securities Division 200 St. Paul Place Baltimore, Maryland 21202 Telephone: (410) 576-6360

6. Michigan:

Consumer Protection Division Antitrust and Franchise Unit 600 Law Building Lansing, Michigan 48913 Telephone: (517) 373-7117

In Process

7. Minnesota: Minnesota Department of Commerce 85 7th Place East, Suite 500 101-2198St. Paul, Minnesota 55 Telephone: (612) 296-6325

8. New York:

Bureau of Investor Protection and Securities New York State Department of Law 120 Broadway 23rd Floor New York, New York 10271 Telephone: (212) 416-8211

9. North Dakota: North Dakota Securities Department 600 East Boulevard Avenue State Capitol, 5th Floor, Dept. 414 Bismarck, North Dakota 58505-0510 Telephone: (701) 224-4712

10. Rhode Island:

Division of Securities 1511 Pontiac Avenue John O. Pastore Complex – Building 69-1 Cranston, RI 02920 Telephone: (401) 462-9527

11. South Dakota:

Department of Labor and Regulation Division of Securities 445 E Capitol Avenue Pierre SD 57501 Telephone: (605) 773-4823

12. Virginia:

State Corporation Commission Division of Securities and Retail Franchising 1300 E. Main Street, 9th Floor Richmond, Virginia 23219 Telephone: (804) 371-9051

In Process

13. Washington: Department of Financial Institutions Securities Division P.O. Box 9033 Olympia, Washington 98507-9033 Telephone: (360) 902-8760

14. Wisconsin:

Department of Financial Institutions Division of Securities, 4th Floor 345 W. Washington Avenue Madison, Wisconsin 53703 Telephone: (608) 266-3431

In Process


AGENTS FOR SERVICE OF PROCESS

1. California:

Commissioner of Business Oversight Department of Business Oversight 320 W. 4th Street, Suite 750 Los Angeles, California 90013-2344

2. Hawaii:

Hawaii Commissioner of Securities Business Registration Division Securities Compliance Branch 335 Merchant Street, Room 203 Honolulu, Hawaii 96813

3. Illinois: Illinois Attorney General 500 South Second Street Springfield, Illinois 62706 Telephone: (217) 782-4465

4. Indiana:

Indiana Secretary of State 201 State House 200 West Washington Street Indianapolis, Indiana 46204 Telephone: (317) 232-6531

5. Maryland: Securities Commissioner Securities Division 200 St. Paul Place Baltimore, Maryland 21202-2020

6. Michigan:

Michigan Department of Commerce Corporation and Securities Bureau P.O. Box 3022 6546 Mercantile Way Lansing, Michigan 48823

In Process

7. Minnesota:

Commissioner of Securities 85 7th Place East, Suite 500 St. Paul, Minnesota 55101-2198

8. New York:

Secretary of State State of New York 41 State Street Albany, New York 11231

9. North Dakota: Securities Commissioner Capital Building, 9th Floor Bismarck, North Dakota 58505

10. Rhode Island:

Director of the Department of Business Regulation 1511 Pontiac Avenue John O. Pastore Complex – Building 69-1 Cranston, RI 02920

11. South Dakota:

Department of Labor and Regulation Division of Securities 445 E Capitol Avenue Pierre SD 57501

12. Virginia:

Clerk of the State Corporation Commission 1300 E. Main Street, 1st Floor Richmond, Virginia 23219

13. Washington:

Director of the Department of Financial Institutions P.O. Box 9033 Olympia, Washington 98507-9033

In Process

14. Wisconsin:

Commissioner of Securities 101 East Wilson Street, 4th Floor Madison, Wisconsin 53702

In Process

Exhibit I

Table of Contents of Manual

In Process

In Process

1

Exhibit J

State-Specific Addendum

In Process

2


MULTI-STATE ADDENDUM

The following modifications are made to the Sit Means Sit Franchise, Inc. (“Franchisor,” “us,” “we,” or “our”) Franchise Disclosure Document (“FDD”) given to Franchisee (“Franchisee,” “you,” or “your”) and may supersede, to the extent then required by valid applicable state law, certain portions of the License Agreement between you and us dated ___________, 201__.

Depending on the law in your state, the provisions of this State-Specific Addendum (“State

Addendum”) may apply to modify the Franchise Disclosure Document that was given to you, as well as the License Agreement, and any applicable Addenda, Exhibits, Appendices, or mutually-agreed modifications thereto. For purposes of the State Addendum, the “Franchisor’s Choice of Law State” is Nevada and “Supplemental Agreements” mean: the General Release (Exhibit B to the Disclosure Document); the Guaranty (Exhibit C); the Promissory Note (Exhibit D); the Form of Employee Confidentiality and Non-Competition Agreement (Exhibit E), and, if applicable, the Termination Agreement for Conversion Licensees (Exhibit F-1) and Conversion Addendum (Exhibit F-2). In the event of any inconsistency between the provisions of the License Agreement, FDD, or Supplemental Agreements and this Addendum, the terms of this State Addendum shall control.

CALIFORNIA

The California Franchise Investment Law requires a copy of all proposed agreements relating to the sale of the franchise be delivered together with the Franchise Disclosure Document.

Neither Franchisor nor any other person listed in Item 2 of the Franchise Disclosure Document is subject to any currently effective order of any national securities association or national securities exchange, as defined in the Securities Exchange Act of 1934, 15 U.S.C.A. 78a et seq., suspending or expelling such persons from membership in such association or exchange.

California Business and Professions Code Sections 20000 through 20043 provide rights to you concerning termination or non-renewal of a franchise. If the License Agreement or Supplemental Documents contain a provision that is inconsistent with the California Franchise Investment Law, the California Franchise Investment Law will control.

The License Agreement and Supplemental Agreements may provide for termination upon bankruptcy. Any such provision may not be enforceable under federal bankruptcy law (11 U.S.C.A. SEC. 101 et seq.).

YOU MUST SIGN A GENERAL RELEASE IF YOU RENEW OR TRANSFER YOUR FRANCHISE. CALIFORNIA CORPORATIONS CODE SECTION 31512 VOIDS A WAIVER OF YOUR RIGHTS UNDER THE FRANCHISE INVESTMENT LAW (CALIFORNIA CORPORATIONS CODE SECTIONS 31000 THROUGH 31505). BUSINESS AND PROFESSIONS CODE SECTION 20010 VOIDS A WAIVER OF YOUR RIGHTS UNDER THE FRANCHISE RELATIONS ACT (BUSINESS AND PROFESSIONS CODE SECTIONS 20000 THROUGH 20043).

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.

Neither Franchisor, nor any person in Item 2 of the disclosure document, is subject to any currently effective order of any national securities association or national securities exchange, as defined

In Process

3

in the Securities Exchange Act of 1934, 15 U.S.C.A. 78(a) et seq., suspending or expelling these persons from membership in this association or exchange.

The License Agreement contains, and if applicable, the Supplemental Agreements may contain, a covenant not to compete provision which extends beyond the termination of the franchise. Such provisions may not be enforceable under California law.

Under California civil code section 1671, certain liquidated damages clauses are unenforceable. Any such provisions contained in the License Agreement or Supplemental Agreements may not be enforceable.

The License Agreement contains, and if applicable, the Supplemental Agreements may contain, provisions requiring binding arbitration. The arbitration will occur at Franchisor’s Choice of Law State. 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 License Agreement or Supplemental Agreements restricting venue to a form outside the State Of California.

You must sign a general release of claims if you renew or transfer your franchise. California Corporations Code Section 31512 voids a waiver of your rights under the Franchise Investment Law (California Corporations Code Sections 31000 Through 31516). Business and Professions Code Section 20010 Voids a waiver of your rights under the Franchise Relations Act (Business and Professions Code Sections 20000 through 20043).

The General Release contained in the Supplemental Agreements is hereby modified as follows:

With respect to those claims being released pursuant to this Release, Franchisee, for itself and themselves, and on behalf of each of the constituents identified in this Release, acknowledge that it is releasing unknown claims and waives all rights it has or may have under California Civil Code Section 1542 or any other statute or common law principle of similar effect. Franchisee acknowledges that this general release extends to claims which Franchisee does not know or suspect to exist in favor of Franchisee at the time of executing this Release Agreement, which if known by Franchisee may have materially affected its or their decision to enter into this Release. It is understood by Franchisee that the facts in respect of which this Release is given may hereafter turn out to be other than or different from the facts in that connection known or believed to be true. Franchisee, therefore, expressly assumes the risk of the facts turning out to be so different and agrees that this Release shall be in all respects effective and not subject to termination or rescission by any such difference in facts.

Franchisee, for itself and themselves, and on behalf of its Constituents, acknowledge that it is familiar with Section 1542 of the California Civil Code, which reads as follows:

A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS OR HER FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM MUST HAVE MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH THE DEBTOR.

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The license agreement requires mediation. The mediation will occur at Las Vegas, Nevada. The fees and expenses of the mediator will be shared equally by the parties.

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.

CONNECTICUT

The following statement is added to the cover page of the Franchise Disclosure Document:

The State of Connecticut does not approve, recommend, endorse or sponsor any business

opportunity. The information contained in this disclosure has not been verified by the state. If

you have any questions about this investment, see an attorney before you sign a contract or

agreement.

The following statement is added to Item 3 of the Franchise Disclosure Document:

There are no pending or completed actions against us relating to Securities Laws; Business Opportunity Laws; Actions Brought by Present or Former Purchaser-Investors Involving Franchise; or Business Opportunity Relationships that are required to be disclosed in this Disclosure Document.

The FDD and License Agreement are hereby modified to state that, if we require you to purchase products, equipment or supplies from us but fail to provide those products, equipment or supplies or fails to render the services necessary to begin substantial operation of the business within 45 days of the required opening date stated in your contract, you may notify us in writing and demand that the contract be canceled.

HAWAII

The following is added to the Cover Page:

THIS FRANCHISE WILL BE/HAS 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 YOU OR SUBFRANCHISOR AT LEAST SEVEN DAYS PRIOR TO THE

EXECUTION BY YOU OR SUBFRANCHISOR OF ANY BINDING FRANCHISE

OR OTHER AGREEMENT, OR AT LEAST SEVEN DAYS PRIOR TO THE

PAYMENT OF ANY CONSIDERATION BY YOU, WHICHEVER OCCURS

FIRST, A COPY OF THE FRANCHISE DISCLOSURE DOCUMENT,

TOGETHER WITH A COPY OF ALL PROPOSED AGREEMENTS RELATING

TO THE SALE OF THE FRANCHISE.

THIS FRANCHISE DISCLOSURE DOCUMENT CONTAINS A SUMMARY

ONLY OF CERTAIN MATERIAL PROVISIONS OF THE LICENSE

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AGREEMENT. THE CONTRACT OR AGREEMENT SHOULD BE REFERRED

TO FOR A STATEMENT OF ALL RIGHTS, CONDITIONS, RESTRICTIONS

AND OBLIGATIONS OF BOTH US AND YOU.

Registered agent in the state authorized to receive service of process:

Commissioner of Securities 335 Merchant Street Honolulu, Hawaii96813

ILLINOIS

Sections 4 and 41 and Rule Section 22.608 of the Illinois Franchise Disclosure Act states that court litigation must take place before Illinois federal or state courts and all dispute resolution arising from the terms of this Agreement or the relationship of the parties and conducted through arbitration or litigation shall be subject to Illinois law. The Franchise Disclosure Document and License Agreement are amended accordingly.

The governing law or choice of law clause described in the Franchise Disclosure Document and contained in the License Agreement is not enforceable under Illinois law. This governing law clause shall not be construed to negate the application of the Illinois Franchise Disclosure Act in all situations to which it is applicable.

Section 41 of the Illinois Franchise Disclosure Act states that “any condition, stipulation or provision purporting to bind any person acquiring any franchise to waive compliance with any provision of this Act or any other law of this State is void.” The License Agreement is amended accordingly. To the extent that the License Agreement would otherwise violate Illinois law, such the Agreement is amended by providing that all litigation by or between you and us, arising directly or indirectly from the franchise relationship, will be commenced and maintained in the state courts of Illinois or, at our election, the United States District Court for Illinois, with the specific venue in either court system determined by appropriate jurisdiction and venue requirements, and Illinois law will pertain to any claims arising under the Illinois Franchise Disclosure Act.

Item 17.v, Choice of Forum, of the Franchise Disclosure Document is revised to include the following: “provided, however, that the foregoing shall not be considered a waiver of any right granted upon you by Section 4 of the Illinois Franchise Disclosure Act.”

Item 17.w, Choice of Law, of the Franchise Disclosure Document is revised to include the following: “provided, however, that the foregoing shall not be considered a waiver of any right granted upon you by Section 4 of the Illinois Franchise Disclosure Act”.

The termination and non-renewal provisions in the License Agreement and the Franchise Disclosure Document may not be enforceable under Sections 19 and 20 of the Illinois Franchise Disclosure Act.

Under Section 705/27 of the Illinois Franchise Disclosure Act, no action for liability under the Illinois Franchise Disclosure Act can be maintained unless brought before the expiration of 3 years after the act or transaction constituting the violation upon which it is based, the expiration of 1 year after you become aware of facts or circumstances reasonably indicating that you may have a claim for relief in respect to conduct governed by the Act, or 90 days after delivery to you of a written notice disclosing the violation, whichever shall first expire. To the extent that the License Agreement is inconsistent with the Illinois Franchise Disclosure Act, Illinois law will control and supersede any inconsistent provision(s).

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INDIANA

Item 17 of the Franchise Disclosure Document is amended to add the following:

Under Indiana Code Section 23-2-2.7-1(4), we will not accept any rebates from any person with whom you do business or associate in relation to transactions between you and the other person, other than for compensation for services rendered by us, unless the rebate is properly accounted for and submitted to you.

Item 17 of the Franchise Disclosure Document is amended to add the following:

Indiana Code 23-2-2.7-1(7) makes it unlawful for us to unilaterally terminate your License Agreement unless there is a material violation of the License Agreement and termination is not in bad faith.

Indiana Code 23-2-2.7-1(5) prohibits us to require you to agree to a prospective general release of claims subject to the Indiana Deceptive Franchise Practices Act.

The “Summary” column in ITEM 17.r. of the Franchise Disclosure Document is deleted and the following is inserted in its place:

No competing business for two (2) years within the Protected Territory.

The “Summary” column in ITEM 17.t. of the Franchise Disclosure Document is deleted and the following is inserted in its place:

Notwithstanding anything to the contrary in this provision, you do not waive any right under the Indiana Statutes with regard to prior representations made by us.

The “Summary” column in ITEM 17.v. of the Franchise Disclosure Document is deleted and the following is inserted in its place:

Litigation regarding License Agreement in Indiana; other litigation in the Franchisor’s Choice of Law State. This language has been included in this Franchise Disclosure Document as a condition to registration. The Franchisor and the Franchisee do not agree with the above language and believe that each of the provisions of the License Agreement, including all venue provisions, are fully enforceable. The Franchisor and the Franchisee intend to fully enforce all of the provisions of the License Agreement and all other documents signed by them, including but not limited to, all venue, choice-of-law, arbitration provisions and other dispute avoidance and resolution provisions and to rely on federal pre-emption under the Federal Arbitration Act.

The “Summary” column in ITEM 17.w. of the Franchise Disclosure Document is deleted and the following is inserted in its place:

Indiana law applies to disputes covered by Indiana franchise laws; otherwise Franchisor’s Choice of Law State law applies.

Despite anything to the contrary in the License Agreement, the following provisions will supersede and apply to all franchises offered and sold in the State of Indiana:

1. The laws of the State of Indiana supersede any provisions of the Franchise Disclosure Document, the License Agreement, or the law of Franchisor’s Choice of Law State, if such provisions are in conflict with Indiana law.

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2. The prohibition by Indiana Code 23-2-2.7-1(7) against unilateral termination of the franchise without good cause or in bad faith, good cause being defined under law as including any material breach of the License Agreement, will supersede the provisions of the Agreement relating to termination for cause, to the extent those provisions may be inconsistent with such prohibition.

3. Any provision in the License Agreement that would require you to prospectively assent to a release, assignment, novation, waiver or estoppel which purports to relieve any person from liability imposed by the Indiana Deceptive Franchise Practices Law is void to the extent that such provision violates such law.

4. The covenant not to compete that applies after the expiration or termination of the License Agreement for any reason modified to the extent necessary to comply with Indiana Code 23-2-2.7-1 (9).

5. The following provision will be added to the License Agreement:

No Limitation on Litigation. Despite the foregoing provisions of this Agreement, any provision in the Agreement which limits in any manner whatsoever litigation brought for breach of the Agreement will be void to the extent that any such contractual provision violates the Indiana Deceptive Franchise Practices Law.

MARYLAND

Item 17 of the Franchise Disclosure Document and sections of the License Agreement requiring that you sign a general release, estoppel or waiver as a condition of renewal and or assignment, will not apply to liability under the Maryland Franchise Registration and Disclosure Law.

Representations in the License Agreement and Supplemental Agreements 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.

Item 17 of the Franchise Disclosure Document and sections of the License Agreement and Supplemental Agreements are amended to state that you may bring a lawsuit in Maryland for claims arising under the Maryland Franchise Registration & Disclosure Law. Any claims arising under the Maryland Franchise Registration and Disclosure Law must be brought within three years after the grant of the franchise.

The License Agreement provides for termination upon bankruptcy. This provision may not be enforceable under Federal Bankruptcy Law (11 U.S.C.A Sec. 101 et seq.).

All representations requiring prospective franchisees to assent to a release, estoppel or waiver of liability 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. The Compliance Questionnaire are amended accordingly.

MICHIGAN

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.

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Each of the following provisions is void and unenforceable if contained in any documents relating to a franchise:

(a) A prohibition on your right to join an association of franchisees.

(b) A requirement that you assent to a release, assignment, novation, waiver, or estoppel which deprives you of rights and protections provided in this act. This shall not preclude you, after entering into a License Agreement, from settling any and all claims.

(c) A provision that permits us to terminate a franchise prior to the expiration of its term except for good cause. Good cause shall include your failure to comply with any lawful provision of the License 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 us to refuse to renew your Franchise without fairly compensating you by repurchase or other means for the fair market value at the time of expiration of your inventory, supplies, equipment, fixtures, and furnishings. Personalized materials which have no value to us 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) you are 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 you do not receive at least 6 months advance notice of our intent not to renew the franchise.

(e) A provision that permits us 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 the State of Michigan. This shall not preclude you from entering into an agreement, at the time of arbitration, to conduct arbitration at a location outside this state.

(g) A provision which permits us to refuse to permit a transfer of ownership of a franchise, except for good cause. This subdivision does not prevent us from exercising a right of first refusal to purchase the franchise. Good cause shall include, but is not limited to:

(i) The failure of the proposed transferee to meet our then-current reasonable qualifications or standards.

(ii) The fact that the proposed transferee is a competitor of us or our subfranchisor.

(iii) The unwillingness of the proposed transferee to agree in writing to comply with all lawful obligations.

(iv) Your or proposed transferee’s failure to pay any sums owing to us or to cure any default in the License Agreement existing at the time of the proposed transfer.

(h) A provision that requires you to resell to us items that are not uniquely identified with us. This subdivision does not prohibit a provision that grants to us a right of first refusal to purchase the assets of 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 us the right to acquire the assets of a franchise for the market or appraised value of such assets if you have breached the lawful provisions of the License Agreement and have failed to cure the breach in the manner provided in subdivision (c).

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(i) A provision which permits us to directly or indirectly convey, assign, or otherwise transfer our obligations to fulfill contractual obligations to you unless provision has been made for providing the required contractual services.

THE FACT THAT THERE IS A NOTICE OF THIS OFFERING ON FILE WITH THE

ATTORNEY GENERAL DOES NOT CONSTITUTE APPROVAL, RECOMMENDATION, OR

ENDORSEMENT BY THE ATTORNEY GENERAL.

Any questions regarding this notice should be directed to:

State of Michigan Department of Attorney General Consumer Protection Division

Attn: Franchise 670 Law Building

Lansing, Michigan 48913 Telephone Number: (517) 373-7117

MINNESOTA

Despite anything to the contrary in the Agreement, the following provisions will supersede and apply to all franchises offered and sold in the State of Minnesota:

1. Any provision in the Agreement which would require you to assent to a release, assignment, novation or waiver that would relieve any person from liability imposed by Minnesota Statutes, Sections 80C.01 to 80C.22 will be void to the extent that such contractual provision violates such law.

2. Minnesota Statute Section 80C.21 and Minnesota Rule 2860.4400J prohibit the franchisor from requiring litigation to be conducted outside of Minnesota. In addition, nothing in the Franchise Disclosure Document or Agreement can abrogate or reduce any of your rights as provided for in Minnesota Statutes, Chapter 80C, or your rights to any procedure, forum, or remedies provided for by the laws of Minnesota.

3. Minn. Rule Part 2860.4400J. prohibits a franchisee from waiving his rights to a jury trial or waiving his rights to any procedure, forum, or remedies provided for by the laws of the jurisdiction, or consenting to liquidated damages, termination penalties or judgment notes. Any provision in the Agreement which would require you to waive your rights to any procedure, forum or remedies provided for by the laws of the State of Minnesota is deleted from any Agreement relating to franchises offered and sold in the State of Minnesota; provided, however, that this paragraph will not affect the obligation in the Agreement relating to arbitration.

4. With respect to franchises governed by Minnesota law, we will comply with Minnesota Statute Section 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; and that consent to the transfer of the franchise will not be unreasonably withheld.

5. Item 13 of the FDD is hereby amended to state that we will protect your rights under this Agreement to use the Marks, or indemnify you from any loss, costs, or expenses arising out of any third-party claim, suit or demand regarding your use of the Marks, if your use of the Marks is in compliance with the provisions of the License Agreement and our System standards.

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6. Minnesota Rule 2860.4400(D) prohibits a franchisor from requiring a franchisee to assent to a general release. As a result, the Franchise Disclosure Document and the License Agreement, which require you to sign a general release prior to renewing or transferring your franchise, are hereby deleted from the Franchise and Area Development Agreement, to the extent required by Minnesota law.

7. The following language will appear as a new paragraph of the License Agreement:

No Abrogation. Pursuant to Minnesota Statutes, Section 80C.21, nothing in the dispute resolution section of this Agreement will in any way abrogate or reduce any of your rights as provided for in Minnesota Statutes, Chapter 80.C.

8. Minnesota Statute Section 80C.17 states that no action for a violation of Minnesota Statutes, Sections 80C.01 to 80C.22 may be commenced more than three years after the cause of action accrues. To the extent that the License Agreement conflicts with Minnesota law, Minnesota law will prevail.

NEW YORK

The following is added to the Risk Factors on the cover page:

THE FRANCHISOR MAY, IF IT CHOOSES, NEGOTIATE WITH YOU ABOUT ITEMS

COVERED IN THE PROSPECTUS. HOWEVER, THE FRANCHISOR 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.

Item 3 of the Franchise Disclosure Document is modified to read as follows:

Neither Sit Means Sit Franchise, Inc., its predecessor, a person identified in Item 2, or an affiliate offering franchises under Sit Means Sit Franchise, Inc.’s principal trademark has an administrative, criminal or civil action pending against that person alleging: a felony, a violation of a franchise, antitrust, or securities law, fraud, embezzelement, fraudulent conversion, misappropriation of property; unfair or deceptive practices or comparable civil or misdemeanor allegations. Neither Sit Means Sit Franchise, Inc., its predecessor, a person identified in Item 2, or an affiliate offering franchises under ’s principal trademark 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 or pleaded nolo contendere to a misdemeanor charge or has been the subject of a civil action alleging a violation of a franchise, antifraud or securities law; fraud, embezzlement fraudulent conversion or misappropriation of property, or unfair or deceptive practices or comparable allegations.

Neither Sit Means Sit Franchise, Inc., its predecessor, a person identified in Item 2, or an affiliate offering franchises under Sit Means Sit Franchise, Inc.’s principal trademark has a pending against that person a pending action, 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.

Neither Sit Means Sit Franchise, Inc., its predecessor, a person identified in Item 2, or an affiliate offering franchises under Sit Means Sit Franchise, Inc.’s principal trademark 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

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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 injunction or restrictive order relating to any 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.

Item 4 of the Franchise Disclosure Document is modified to read as follows:

Neither Sit Means Sit Franchise, Inc., its affiliate, its predecessor, officers or general partner during the 10-year period immediately before the date of the offering circular:

(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 during or within 1 year after the officer or general partner of the franchisor held this position in the company or partnership.

The following sentence is added to the end of the first paragraph of Item 5 of the Franchise Disclosure Document:

We may use the proceeds from your payment of the initial franchise fee to defray our costs and expenses for providing training and assistance to you; for commission payments to brokers involved in the sale of a franchise to you; for general working capital purposes; and for other expenses.

The first paragraph of Item 17 of the Franchise Disclosure Document is modified to read as follows:

THESE TABLES LIST CERTAIN IMPORTANT PROVISIONS OF THE FRANCHISE AND RELATED AGREEMENTS PERTAINING TO RENEWAL, TERMINATION, TRANSFER AND DISPUTE RESOLUTION. YOU SHOULD READ THESE PROVISIONS IN THE AGREEMENTS ATTACHED TO THIS DISCLOSURE DOCUMENT.

Item 17(w) of the Franchise Disclosure Document is revised to add the statement that you (the franchisee) may terminate the agreement on any grounds available by law.

Item 17(j) of the Franchise Disclosure Document is revised to add the following statement: “However, no assignment will be made except to an assignee who, in good faith and judgment of the franchisor, is willing and financially able to assume the franchisor’s obligations under the franchise agreement.”

Item 17(w) of the Franchise Disclosure Document is revised to read as follows:

The foregoing choice of law should not be considered a waiver of any right conferred upon either the franchisor or upon the franchisee by article 33 of the General Business law of the State of New York.

The following shall be added at the end of Section 18.9 of the Franchise Agreement:

Provided however, that all rights enjoyed by the Franchisee and any causes of action arising in the Franchisee’s 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 provision of GBL 687.4 and 687.5 be satisfied.

Section 15.3 is added to the Franchise Agreement as follows:

Notwithstanding Section 15.1, Franchisee shall not be required to indemnify Franchisor for any liabilities which arose as a result of Franchisor’s breach of this Agreement or other civil wrongs committed by Franchisor.

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The following shall be added to Section 18.10 of the Franchise Agreement:

However, the foregoing choice of law shall not be considered a waiver of any right conferred upon Franchisee by the provisions of Article 33 of the New York State General Business Law.

FRANCHISOR REPRESENTS THAT IT HAS NOT KNOWINGLY OMITTED FROM THE FRANCHISE DISCLOSURE DOCUMENT ANY MATERIAL FACT, NOR DOES THE FRANCHISE DISCLOSURE DOCUMENT CONTAIN ANY UNTRUE STATEMENT OF A MATERIAL FACT.

NORTH DAKOTA

Sections of the Franchise Disclosure Document, the License Agreement, and the Supplemental Agreements requiring that you sign a general release, estoppel or waiver as a condition of renewal and/or assignment may not be enforceable as they relate to releases of the North Dakota Franchise Investment Law.

Sections of the Franchise Disclosure Document, the License Agreement, and the Supplemental Agreements requiring resolution of disputes to be outside North Dakota may not be enforceable under Section 51-19-09 of the North Dakota Franchise Investment Law, and are amended accordingly to the extent required by law.

Sections of the Franchise Disclosure Document, the License Agreement, and the Supplemental Agreements relating to choice of law may not be enforceable under Section 51-19-09 of the North Dakota Franchise Investment Law, and are amended accordingly to the extent required by law.

Any sections of the Franchise Disclosure Document, the License Agreement, and the Supplemental Agreements requiring you to consent to liquidated damages and/or termination penalties may not be enforceable under Section 51-19-09 of the North Dakota Franchise Investment Law, and are amended accordingly to the extent required by law.

Any sections of the Franchise Disclosure Document, the License Agreement, and the and the Supplemental Agreements requiring you to consent to a waiver of trial by jury may not be enforceable under Section 51-19-09 of the North Dakota Franchise Investment Law, and are amended accordingly to the extent required by law.

Any sections of the Franchise Disclosure Document, the License Agreement, and the Supplemental Agreements requiring you to consent to a waiver of exemplary and punitive damages may not be enforceable under Section 51-19-09 of the North Dakota Franchise Investment Law, and are amended accordingly to the extent required by law.

FOR THE STATE OF OHIO:

The following language will be added to the Franchise Agreement:

You, the purchaser, may cancel this transaction at any time prior to midnight of the fifth business day after the date you sign this agreement. See the attached notice of cancellation for an explanation of this right.

_____________ FRANCHISEE: INITIAL HERE _____________________________________________________________________________________

NOTICE OF CANCELLATION _______________ (enter date of transaction)

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You may cancel this transaction, without penalty or obligation, within five business days from the above date. If you cancel, any payments made by you under the agreement, and any negotiable instrument executed by you will be returned within ten business days following the seller's receipt of your cancellation notice, and any security interest arising out of the transaction will be cancelled. If you cancel, you must make available to the seller at your business address all goods delivered to you under this agreement; or you may if you wish, comply with the instructions of the seller regarding the return shipment of the goods at the seller's expense and risk. If you do make the goods available to the seller and the seller does not pick them up within twenty days of the date of your notice of cancellation, you may retain or dispose of them without further obligation. If you fail to make the goods available to the seller, or if you agree to return them to the seller and fail to do so, then you remain liable for the performance of all obligations under this agreement. To cancel this transaction, mail or deliver a signed and dated copy of this cancellation notice or any other written notice, or send a telegram, to Alfredo Rivera at 2900 E. Patrick Lane, Suite 2A, Las Vegas, Nevada 89120, (702) 877-4581, or send him an email at [email protected], not later than midnight of the fifth business day after the day you sign the Agreement. I hereby cancel this transaction.

Franchisee: By: Print Name: Its: Date:

RHODE ISLAND

§ 19-28.1-14 of the Rhode Island Franchise Investment Act provides that “A provision in a License 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.”The Franchise Disclosure Document, the License Agreement, and the Supplemental Agreements are amended accordingly to the extent required by law.

The above language has been included in this Franchise Disclosure Document as a condition to registration. The Franchisor and the Franchisee do not agree with the above language and believe that each of the provisions of the License Agreement and the Supplemental Agreements, including all choice of law provisions, are fully enforceable. The Franchisor and the Franchisee intend to fully enforce all of the provisions of the License Agreement, the Supplemental Agreements, and all other documents signed by them, including but not limited to, all venue, choice-of-law, arbitration provisions and other dispute avoidance and resolution provisions and to rely on federal pre-emption under the Federal Arbitration Act.

VIRGINIA

Item 17(h). The following 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 use undue influence to induce a Franchisee to surrender any right given to him under the franchise.

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If any provision of the License Agreement or Supplemental Agreements involve the use of undue influence by the Franchisor to induce a franchisee to surrender any rights given to Franchisee under the franchise, that provision may not be enforceable.”

WASHINGTON

The state of Washington has a statute, RCW 19.100.180 which may supersede the License Agreement and Supplemental Agreements 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 License Agreement in your relationship with the franchisor including the areas of termination and renewal of your franchise. The Franchise Disclosure Document, the License Agreement and the Supplemental Agreements are amended accordingly.

In any arbitration involving a franchise purchased in Washington, the arbitration site shall be either in Washington or in a place as mutually agreed upon at the time of the arbitration, or as determined by the arbitrator. The Franchise Disclosure Document, the License Agreement and the Supplemental Agreements are amended accordingly.

In the event of a conflict of laws, the provisions of the Washington Franchise Investment Protection Act, Chapter 19.100 RCW shall prevail. The Franchise Disclosure Document, the License Agreement and the Supplemental Agreements are amended accordingly.

Due to our financial condition (which is disclosed in the financial statements attached to this Franchise Disclosure Document as "Exhibit G"), the Washington Department of Financial Institutions has required that, for all franchise sales in the State of Washington, we defer your initial franchise fees, deposit, and training fee until we have fulfilled our initial training and support obligations to you (described in Item 11 of this Franchise Disclosure Document). At that time, upon your verification that we have fulfilled those obligations, your initial fees will become fully due and payable to us. The Franchise Agreement and Item 5 of the Franchise Disclosure Document are amended by this Addendum to reflect our agreement to defer these initial fees until we have fulfilled our initial pre-opening obligations and you are open for business.

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. The Franchise Disclosure Document, the License Agreement and the Supplemental Agreements are amended accordingly.

Transfer fees are collectable to the extent that they reflect the franchisor’s reasonable estimated or actual costs in effecting a transfer. The Franchise Disclosure Document, the License Agreement and the Supplemental Agreements are amended accordingly.

WISCONSIN

The Wisconsin Fair Dealership Law, Chapter 135 of the Wisconsin Statutes supersedes any provision of the License Agreement if such provision is in conflict with that law. The Franchise

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Disclosure Document, the License Agreement and the Supplemental Agreements are amended accordingly.

ACKNOWLEDGMENT: It is agreed that the applicable foregoing State Addendum, if any, supersedes any inconsistent portion of the Franchise Agreement and the Supplemental Agreements dated the _____ day of ___________________, 201__, and of the Franchise Disclosure Document, but only to the extent that the provisions of this State Addendum are then-valid requirements of an applicable and enforceable state law, based on the independent jurisdictional requirements of such state law, and for only so long as such state law remains in effect. The parties further acknowledge and agree that this State Addendum is applicable only to those persons specifically subject to the protections of the state laws referenced in this State Addendum., and that nothing in this State Addendum, the Franchise Disclosure Document, Franchise Agreement, or Supplemental Agreements will be interpreted or construed as providing an independent basis for Franchisee’s assertion that any particular state law or provision applies to the Franchise Disclosure Document, Franchise Agreement, or Supplemental Agreements that would not otherwise independently apply due to the jurisdictional requirements of such state law or provision. DATED this _______ day of _____________________, 201__. FRANCHISOR: FRANCHISEE:

SIT MEANS SIT FRANCHISE, INC. ____________________________________ By: By: Title: Title:

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Exhibit K

Receipt

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RECEIPT This disclosure document summarizes certain provisions of the franchise agreement and other information in plain language. Read this disclosure document and all agreements carefully. If Sit Means Sit Franchise, Inc. 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. Under Iowa, New York, or Rhode Island law, if applicable, Sit Means Sit Franchise, Inc. must provide this disclosure document to you at your 1st personal meeting, or 10 business days before the execution of the franchise or other agreement or the payment of any consideration that relates to the franchise relationship. Michigan requires Sit Means Sit Franchise, Inc. to give you this disclosure document at least 10 business days before the execution of any binding franchise or other agreement or the payment of any consideration, whichever occurs first. If Sit Means Sit Franchise, Inc. 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 law 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 H. The name, principal business address and telephone number of each franchise seller offering the franchise (franchisor, check all that apply): � Fred Hassen � Scott Sanchez � Alfredo Rivera � Cynthia Hunt, 2900 E. Patrick Lane, Suite 2A, Las Vegas, Nevada 89120, (702) 877-4581. We insert the name and address of other franchise seller below (we attach additional pages if necessary): _____________________________________________________________________________________ See Exhibit H for our registered agents authorized to receive service of process. I have received a disclosure document with an issuance date of May 21, 2014 (the issuance date of this FDD is not the effective date, for registration state effective dates see State Effective page at the beginning of this Disclosure Document) that included the following Exhibits: Exhibits

A. LICENSE AGREEMENT F. LICENSEE INFORMATION B. FORM OF GENERAL RELEASE G. FINANCIAL STATEMENTS C. GUARANTY H. STATE ADMINISTRATORS AND AGENTS

FOR SERVICE OF PROCESS D. SECURED PROMISSORY NOTE I. MANUAL TABLE OF CONTENTS E. EMPLOYEE CONFIDENTIALITY / NON-COMPETETITION AGREEMJ. STATE SPECIFIC ADDENDUM K. RECEIPTS

__________________ ____________________________ _______________________________ Date Signature Printed Name __________________ ____________________________ _______________________________ Date Signature Printed Name

Please sign both copies of the receipt and date your signature. Please retain one copy for your records, and return the other copy to Gina Amandola at 2900 E. Patrick Lane, Suite 2A, Las Vegas, Nevada 89120, or at [email protected].

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RECEIPT This disclosure document summarizes certain provisions of the franchise agreement and other information in plain language. Read this disclosure document and all agreements carefully. If Sit Means Sit Franchise, Inc. 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. Under Iowa, New York, or Rhode Island law, if applicable, Sit Means Sit Franchise, Inc. must provide this disclosure document to you at your 1st personal meeting, or 10 business days before the execution of the franchise or other agreement or the payment of any consideration that relates to the franchise relationship. Michigan requires Sit Means Sit Franchise, Inc. to give you this disclosure document at least 10 business days before the execution of any binding franchise or other agreement or the payment of any consideration, whichever occurs first. If Sit Means Sit Franchise, Inc. 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 law 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 H. The name, principal business address and telephone number of each franchise seller offering the franchise (franchisor, check all that apply): � Fred Hassen � Scott Sanchez � Alfredo Rivera or � Cynthia Hunt, 2900 E. Patrick Lane, Suite 2A, Las Vegas, Nevada 89120, (702) 877-4581. We insert the name and address of other franchise seller below (we attach additional pages if necessary): ____________________________________________________________________________________ See Exhibit H for our registered agents authorized to receive service of process. I have received a disclosure document with an issuance date of May 21, 2014 (the issuance date of this FDD is not the effective date, for registration state effective dates see State Effective page at the beginning of this Disclosure Document) that included the following Exhibits: Exhibits

A. LICENSE AGREEMENT F. LICENSEE INFORMATION B. FORM OF GENERAL RELEASE G. FINANCIAL STATEMENTS C. GUARANTY H. STATE ADMINISTRATORS AND AGENTS

FOR SERVICE OF PROCESS D. SECURED PROMISSORY NOTE I. MANUAL TABLE OF CONTENTS E. EMPLOYEE CONFIDENTIALITY / NON-COMPETETITION AGREEMJ. STATE SPECIFIC ADDENDUM K. RECEIPTS

__________________ ____________________________ _______________________________ Date Signature Printed Name __________________ ____________________________ _______________________________ Date Signature Printed Name Please sign both copies of the receipt and date your signature. Please retain one copy for your records, and return the other copy to Gina Amandola at 2900 E. Patrick Lane, Suite 2A, Las Vegas, Nevada 89120, or at [email protected].

In Process

In Process - Franchise Disclosure Documents

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