Franchise Agreement

The original documents were scanned as an image. The original file can be downloaded at the link above.


Sample Franchise Agreement

Franchise Agreement Number: Location:________

Relax The Back Corporation Franchise Agreement

Date of this Agreement: ____________________

Franchisor: Relax The Back Corporation, a Delaware corporation

Franchisee: ___________________________________________

Expiration Date: __________________________

In a number of places in this Franchise Agreement, you're asked to initial certain items to show that they've been fully discussed with you, and read, understood and agreed to by you. Initialing those areas doesn't lessen the importance of other areas or mean they're not fully enforceable. Please initial below and at all other points indicated.

Your Initials: __________/

1.          INTRODUCTION, DEFINITIONS. COMPANY PHILOSOPHY AND PRELIMINARY

AGREEMENTS.

1.1 Introduction. We've developed methods of operating retail "brick and mortar" stores which offer a wide variety of back related and other products and services as authorized by us, from time-to-time, to be offered through Relax The Back® Stores. We refer to these businesses as "Relax The Back® Stores." We also have created a catalog and website which we use to market back-related products under the Relax The Back brand. We've made a strategic decision to use franchising to create a brand identity and maximize market penetration for the Relax The Back® brand, and to achieve and maintain a competitive edge in relevant marketplaces.

Your Relax The Back® franchise is a licensing arrangement, awarded for a specific, limited period of time, and your rights to use the Relax The Back® brand, the Marks and the System are subject to your remaining in full and constant compliance with this Agreement and the Manuals. Since we, and not you, own the Relax The Back® brand, the Marks and the System, you must use each of them only as permitted by us.

We selectively award franchises for qualified persons only to own and operate, Traditional Relax The Back® Stores using the Relax The Back System and the Marks. You've applied for a franchise to own and operate a Traditional Relax The Back® Store and your application has been approved by us in reliance on the information you gave us in connection with your application.

You agree that your consistent and uniform presentation of the Relax The Back® brand, and compliance with this Agreement and the System in every detail, will be critical to our and your possible success and that of each Relax The Back® Franchisee, and to achieving a leading position for the Relax The Back® brand, positive top-of-mind awareness among consumers, superior market penetration and a competitive edge for all Relax The Back® Franchisees, as well as positively distinguishing each Relax The Back® outlet from the competition. These are basic business realities, since non-compliance would

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adversely affect all Relax The Back® operators and place them in a disadvantageous position with respect to competitors, as well as hurting our image with the public. You also understand, and anticipate, that the System will be changed by us to meet competitive challenges, take advantage of commercial opportunities and for other reasons, in our Business Judgment; provided, however, that the terms of this Franchise Agreement can only be amended as provided in Section 19.9, below. Therefore, you're committed, and agree, to comply with each of your obligations under this Agreement, and follow the System in each and every detail as it's changed by us over time. Without those commitments and promises by you, this franchise would not be awarded to you.

1.2 Definitions. When we use various words or phrases in this Agreement, here's what they mean:

"Affiliate" - Any person or entity which controls, is controlled by or is under common control with another person or entity, any "immediate family member" of any person and any entity controlled by any of the foregoing.

"Agreement" - This Franchise Agreement.

"Business Judgment" - When we make a determination in our Business Judgment, it means that our decisions/actions are to be made in a commercially reasonable manner. Decisions/actions will be deemed commercially reasonable if we make them in what we believe is the interests of the Relax The Back® System, even if alternative decisions and/or actions might also be commercially reasonable and/or a particular decision/action may have negative consequences for a particular franchisee or group of franchisees. In any case, you, we and all other Relax The Back® Franchisees have a collective interest in working within a franchise system with the flexibility to adjust to business conditions, including but not limited to the competitive environment, new regulatory developments and emerging business opportunities. Therefore, you and we agree that the ultimate decision-making responsibility for the Relax The Back® system must be vested in us. No franchisee or other party (including any third party acting as an arbitrator or trier of fact) is entitled to substitute its judgment for ours, so long as we act in compliance with all legal requirements in a commercially reasonable manner and in the interests of the Relax The Back® System.

"Designated Equipment" - Equipment that meets our requirements and which you must obtain and use in the operation of your Relax The Back® Store.

"Face-to-Face Meeting" - A meeting in which all of the disputants are physically present at the same time and place, and does not include teleconferencing or any other electronic form of communication.

"Franchise" - The right to operate a single Traditional Relax The Back® Store at the Premises under the terms of this Agreement.

"Franchisee Association Board" or "FAB" - The advisory group selected in accordance with Section 7.7 of this Agreement, which shall provide Input as provided in this Agreement and as we may request from time to time.

"Franchisee Association" - The association (if any) then representing a majority of Relax The Back Franchisees in Good Standing.

"Franchised Business" - A Relax The Back® Store business which provides to customers a wide variety of back-related and other products and services as authorized by us while using the Marks and System, as expressly permitted by us from time to time and in accordance with the terms of this Agreement.

"Franchisor" - Relax The Back Corporation, a Delaware corporation.

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"Franchisor-Related Persons/Entities" - Relax The Back Corporation, the Marketing Fund, the Marketing Committee, the Merchandising Committee, FAB and each and all of the following, whether past, current and/or future: each and all company(ies) and/or person(s) acting through, in concert, affiliated and/or associated in any way with, us and/or any of the foregoing, any persons/entities controlling, controlled by and/or under common control with us and/or any of the foregoing, each and all of the partners, shareholders, officers, directors, agents, attorneys, accountants, and/or employees of us and/or any of the foregoing, as well as each and all of the predecessors, successors and/or assigns of us and/or any of the foregoing.

"General Release" - A general release, in form prescribed by us, of any and all claims, liabilities and/or obligations, of any nature whatsoever, including (but not limited to) those arising between the date of this Agreement and the date of any such release, however arising, known or unknown, whether against us and/or any or all of the Franchisor-Related Persons/Entities, and whether by you, any owner of you (if you are or become a business entity) and/or any affiliate of any of the foregoing. A copy of our general releasing language as currently used by us (which is subject to change) is attached as Exhibit 1.2 (A) and is approved by you.

"Good Standing" - You are not in "Good Standing" if this Franchise Agreement is subject to being terminated by us.

"Immediate Family" - With respect to any person, "immediate family" includes that person's spouse and/or domestic partner and each of their respective parents, grandparents, siblings, children, grandchildren, aunts, uncles, cousins, nieces and/or nephews (including step and/or adoptive family members) years or older. For the purposes of this definition, if the franchisee is a business entity, "any person" includes a person with a 10% or greater interest in the franchisee entity, or who is an officer, director or holds a similar position with such entity.

"Input" - When we refer to input (or use a similar word or phrase) from the FAB or any other franchisee group, it means advice and suggestions. We will retain the ultimate decision-making authority and responsibility for all matters for which Input is sought. Input will not be binding on us. Approval or consent by the FAB, the Franchisee Association, or any other franchisee group will not be required as a pre-condition to any decision and/or action we may take except in those specific instances stated in this Agreement.

"Manuals" - Written, video, audio and/or software media (including materials distributed electronically), regardless of title, which are produced by us or an agent of ours and which contain specifications, standards, policies and procedures prescribed by us and to be followed by you in the operation of your Relax The Back* Store and your performance under this Agreement, including (but not limited to) all goods and services to be sold and/or provided at or from your Relax The Back® Store and/or in association with the Marks.

"Marketing Committee" - The advisory group comprised of members selected in accordance with Section 7.8 of this Agreement, which may be requested by us to provide Input from time to time regarding marketing-related issues.

"Marks" - The trademarks, service marks and other commercial symbols now and/or in the future owned by (or licensed to) us and which we designate to be used to identify the services and/or products offered by traditional Relax The Back® Stores, including (but not limited to) the mark "Relax The Back®", the Trade Dress and certain associated logos.

"Merchandising Committee" - The advisory group comprised of members selected in accordance with Section 7.8 of this Agreement, which may be requested by us to provide Input from time to time regarding merchandising-related issues.

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"PUA" or "Per Unit Average" - The average Gross VolumeAdjusted Gross Sales for all Relax The Back® Stores during the most recent six (6) month period from the measuring date.

"Premises" - The location at which you will operate a single Relax The Back® Store.

"Products" and "Services" - Products and services designated by us for use, sale or otherwise provided and/or used at or from your Relax The Back® Store and/or in association with the Marks.

"Relax The Back® Store" - The Traditional Relax The Back* Store you're franchised to operate pursuant to this Agreement.

"Repurchase" - Repurchase includes (but is not limited to) any acquisition by us (and/or any of the Franchisor-Related Persons/Entities), whether by exercise of right-of-first-refusal or otherwise, of any of your rights in and/or to any of the following: (1) this Agreement; (2) the Franchise; (3) the ownership of the Franchisee; (4) your Relax The Back® Store; or (5) any assets associated with any of the foregoing.

"Similar Business" - Any enterprise (including not-for-profit operations) that offers or is otherwise involved or deals with any goods and/or services which are now or in the future authorized by us to be offered at or from Relax The Back® Stores, including any business awarding franchises or licenses to others to operate or be involved with any such business.

"Store Vicinity" - The geographical area established by us within which a proposed site must be located as provided in Exhibit 2.2. The Store Vicinity is identified so that we can properly administer our franchise operations and is only for the purposes of ensuring that you seek and locate a site for our approval within a specified geographical area. It is not meant to be, nor is it, a franchise 'territory' of any sort.

"System" - The distinctive format and method of doing business developed, used and/or modified by us, in our Business Judgment, for the operation of a Relax The Back® Store, and subject to change by us at any time and in our Business Judgment.

"Territory" - The geographical area described in Exhibit 2.2.

"Trade Dress" - The Relax The Back® Store design and image authorized by us and subject to change by us at any time and in our Business Judgment.

"Traditional Relax The Back® Store" - A "Traditional Relax The Back® Store" means a standard "brick and mortar" retail facility located in a free-standing building or a shopping center accessible to the general public, offering a wide variety of back related and other products and services as authorized by us, from time-to-time, and using the Marks and Relax The Back® System.

"Us," "We," "Our" or "Franchisor" - Relax The Back Corporation, a Delaware corporation.

"You." "Your" or "Franchisee" - The individual(s) signing this Agreement as Franchisee. (If there's more than one Franchisee, each is jointly and severally obligated under this Agreement and all other agreements with us relating to your Traditional Relax The Back Store (If Franchisee is a corporate entity, then each owner thereof shall be required to sign the then current form of Owners Guaranty, the present form of which is attached to this Franchise Agreement as Exhibit 1.2 (B) and incorporated herein.)

1.3 Full Performance. You will perform your obligations under this Agreement faithfully and honestly. You will continuously exert commercially reasonable efforts to promote and enhance your Relax The Back® Store, and maximize its business volume for the full term of this Agreement. You will

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not engage in any other business or activity that may conflict with your obligations under this Agreement | or reduce the Gross VolumeAdjusted Gross Sales of your Relax The Back® Store. The Franchise awarded to you by this Agreement is to operate the Relax The Back® Store and to use the Marks and the System only for purposes of conducting a business in accordance with the provisions of this Agreement, the Manuals or as otherwise communicated to you from time to time. You will not (without our prior written consent) operate a Relax The Back® Store or any Similar Business at any location, or servicing customers, outside the Territory, without our prior written approval. You must not without our prior written consent: (a) use the System or the Marks at any other location or for any purpose other than to conduct your Relax The Back® Store; or (b) engage in the operation of any wholesale business; or (c) conduct any activities from the Premises other than the operation of your Relax The Back® Store.

1.4 Importance of Uniformity. You acknowledge that every detail of your Relax The Back® Store is important—not only to you, but to us and to all Relax The Back® Franchisees and associates—in order to: (a) develop and maintain high and uniform operating standards based on the concepts of consistency, reliability and professionalism; (b) increase the demand for the programs, products and services sold by Relax The Back® Stores; and (c) establish and maintain a reputation for operating uniform and high quality businesses exemplifying high client servicing standards, ethical business practices and integrity. You also acknowledge that a fundamental requirement of this Agreement is the operation of your Relax The Back® Store in accordance with Relax The Back® System Standards. Your operation of your Relax The Back® Store in accordance with the Relax The Back® System Standards is essential to preserve the goodwill of the Marks and of all Relax The Back® Stores. Therefore, during the term of this Agreement, you must at all times develop, maintain and operate your Relax The Back® Store in accordance with each and every Relax The Back Unit System Standard, as periodically modified and supplemented by us from time to time, in our Business Judgment. Without this commitment by you, we would be unwilling to award you this franchise.

2.          AWARD OF FRANCHISE.

2.1 Award of Franchise: Term. Your Basic Commitment, i) We're pleased to award you a franchise to operate a single Traditional Relax The Back® Store at a location to be approved by us, and to use the Marks and the Relax The Back® System in the operation of that Traditional Relax The Back® Store. The term of the franchise ends on the date ten (10) years from the date that your Agency is first open to the public as a Relax The Back Store, unless earlier terminated according to the provisions of this Agreement. However, if this franchise is awarded to you as a transfer from another franchisee or in connection with the renewal of an existing and/or prior franchise (a successor franchise), then the term of the franchise begins on the Effective Date of this Agreement and ends on the Expiration Date, both of which dates are noted on the first page of this Agreement. If this Agreement is awarded in connection with a successor franchise, there shall be no further renewals or successor franchises after the term of this Agreement, notwithstanding anything to the contrary in this Agreement, any previous and/or other agreement.

We retain all rights relating to, and you have no rights to use, the Marks and the Relax The Back® System in connection with the Internet, World Wide Web and/or other electronic media. However, we may from time to time permit you to do so subject to our prior written approval. Any such use permitted by us may be restricted by us in our Business Judgment, and we may require you to accept orders only from customers located in the Territory.

You will faithfully, honestly and diligently perform your obligations under this Agreement, and will use commercially reasonable efforts to maximize the business of your Relax The Back® Store and the goodwill of the Marks. You won't conduct the business of the Relax The Back® Store or use the Marks from any location other than the Premises or for any purpose other than as approved by us in writing. You'll use and sell only products and services, and only deal with suppliers, approved by us. You agree to be personally accountable for the performance of your obligations under this and all other agreements.

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2.2 Territory.

Subject to our rights as set forth in this Section 2.2 and throughout this Agreement, we will not during the term of this Agreement enter into a Franchise Agreement licensing a Traditional Relax The Back Store, or open a Franchisor-owned Traditional Relax The Back® Store, to be located inside the area (the "Territory") described on Exhibit M2.2.n The Franchise is awarded for a single location only.

Your Territory and other rights are exactly (and only) as expressly set forth in this Agreement. We expressly reserve all other rights, including among them the rights to:

i)           own and/or operate ourselves, and/or authorize others to own and/or operate:

a)    any kind of business in the Territory, except for a Traditional Relax The Back® Store; and

b)   any kind of business outside of the Territory, whether or not using the Relax The Back® Marks and System; including without limitation, Traditional Relax The Back® stores;

ii)          sell, and/or authorize others to sell, Relax The Back® brand (or any other brand) products

and services (whether or not competitive) to customers located anywhere (including within the Territory)by catalog and internet only, except as provided in subsections iii) through vi), below.;

iii) develop or become associated with other concepts (including dual branding and/or other franchise systems), whether or not using the Relax The Back® System and/or the Marks, and/or award franchises under such other concepts for locations anywhere; provided that if any such concept development opportunity involves the location of a physical unit inside the Territory for the distribution of competitive, back-related products/services, we will provide you with a right of first refusal for such an operation, subject to the process described in subsection vi, below;

iv) acquire, be acquired by, merge, affiliate with or engage in any transaction with other businesses (whether competitive or not), with units located anywhere. Such transactions may include (but are not limited to) arrangements involving competing outlets and brand conversions (to or from the Relax The Back® Marks and System). Such transactions are expressly permitted under this Agreement, and you agree to participate at your expense in any such conversion as may be required by us. We will permit you a reasonable period of time as determined by us in our Business Judgment in which to complete such a conversion, but in no event will such period be less than twelve (12) months from your receipt of written conversion instructions from us;

v)          "special distribution opportunities", including but not limited to Relax The Back® outlets

associated with larger retail facilities such as general merchandise stores (e.g. Wal-Mart) or similar facilities, and limited square footage outlets like an "express" unit and/or kiosk units housed within other retail facilities, such as a department store; provided that if any such distribution opportunity involves the location of a physical unit for the distribution of products/services under the Backsaver and/or Relax The Back® Marks inside the Territory, we will provide you with a right of first refusal for such an operation, subject to the process described in subsection vi, below.

vi)         A right of first refusal regarding a concept development opportunity as described in

subsection iii, above, or a special distribution opportunity, as described in subsection v, above, (individually or collectively, the "Territory Opportunity"), will be processed as follows: We will provide you written notice of a Territory Opportunity expected to be physically located in your Territory. You shall have sixty (60) days in which to advise us in writing that you wish to participate in the Territory Opportunity. If you do not notify us within such period, then we may pursue such Territory Opportunity and/or grant any other person/entity the right to participate in such Territory Opportunity without any

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liability to you. If you timely notify us in writing that you do wish to participate in the Territory Opportunity, then we may condition your participation on compliance with such terms and conditions as we consider appropriate to the particular Territory Opportunity in our Business Judgment. Such conditions may include, but are not limited to: your execution of such agreements and related documents as are then generally used by us in connection with the award of the applicable Territory Opportunity; payment of all initial fees and any other applicable fees; meeting any eligibility requirements as are then generally applied by us to candidates for a Territory Opportunity; and the execution by you (and any affiliate and owner of yours) of a General Release, as defined in Article 1.2, above. When you provide us with such General Release, we will give to you a release of any and all claims of ours against you and/or any affiliate/ owner of yours which arise out of or relate to this Franchise Agreement (and no other agreement or franchise) and which exist as of the date of the release and are known by us; except that any such claims will be preserved by us if we disclose them to you in writing. If you do not meet the conditions applicable to the award of the Territory Opportunity and/or any opening requirements that may be included in any Territory Opportunity agreements, then we may pursue such Territory Opportunity and/or grant any other person/entity the right to participate in it, without any liability to you.

You understand that a u Traditional Relax The Back® Store" is defined in Section 1.2, above, and subject to the limitations described in Section 2.2 ii. You do not have any and we retain all rights to non-traditional Relax The Back® Stores or other distribution opportunities, including Relax The Back® internet sites and/or Relax The Back® direct mail operations.

You further understand and agree that we and other companies affiliated with us are currently using Relax The Back® and Backsaver™, brands for Internet and mail order offers and sales. Additionally, companies affiliated with us also are using other distribution methods to offer and sell products identical (and/or substantially similar) to those offered and sold (and/or to be offered and sold) by you (except for product exclusive to Relax The Back Stores) to existing and/or potential customers located anywhere, including in the Territory, and expect to continue to do so in the future.

You agree not to offer and/or provide through the Internet, World Wide Web and/or similar venues any Relax The Back®, Backsaver™, or any other competitive products/services as may be designated by us, without our written permission, which we can grant, condition or deny in our Business Judgment. If we sell products and services through a Relax The Back® e-commerce site or a Relax The Back® direct mail catalogue to customers inside your Territory, we'll share with you a portion of any proceeds from such sales. The portion shared will be either a percent of profit or gross sales. For the purposes of this provision, "profit" is calculated by us by subtracting from gross sales related costs of sales, as well as general and administrative expenses. We will use Business Judgment in making such calculations and our determination will be final and controlling. As of the effective date of this Agreement, the portion shared with franchisees is 50% of any profit, but is subject to change by us in our Business Judgment unless otherwise specifically agreed upon in writing signed by us. We will obtain and consider FAB Input prior to making any changes in the portion of such product/service sales shared with you and/or the method of calculation.

Upon request from us, you will provide liaison, support and other services to such customers in exchange for reasonable compensation to be established by us in our Business Judgment after consideration of FAB Input. The amount of any such compensation will be applied as a credit against royalties or, at our option, any other money owed or to be owed by you to us or any Franchisor-Related Person/Entity. We will provide you with a report on at least a quarterly basis of any such sales and corresponding credits due you. For the purposes of this provision, the customer's billing address will determine whether a sale is made inside of a Franchisee's Territory, not the address to which a product may be delivered. Any credits outstanding as of the date of any transfer, termination or expiration of this Agreement will be deemed to have expired, unless you have another Franchise Agreement with us or are granted a successor franchise against which any credits may be applied. We do not guarantee, and you are not assured, that any sales will be made by us or credits realized by you in connection with any Relax The Back e-commerce site or direct mail catalogue.

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Our current policy is to allow you to accept orders from any customer located anywhere, but we can change this policy at any time in our Business Judgment. You will comply with any reasonable restrictions we specify as to the customers to whom you may offer or sell outside of the Territory to the extent that such restrictions apply to offers and sales from customers located in another Relax The Back Store's territory. You will not direct market to customers outside of your Territory, except as authorized by us in writing. Any Relax The Back® product catalogue made available to you by us for direct marketing purposes will be distributed by you in compliance with this provision.

If this Agreement is subject to termination by us and the applicable default has not been cured, or if you have failed to meet the performance standards set forth in Section 16.2, we may, in our Business Judgment, reduce, eliminate or otherwise modify your territorial rights.

Exhibit 2.2 will state the location of your Store and your Territory. If the location for your traditional Relax The Back® Store has not been identified by the date of this Agreement Exhibit 2.2 will stato such factand subject to your compliance with Section 3.1, below, you and we agree to amend Exhibit 2.2 within fifteen days (15) days of our notice to you of our acceptance of a proposed site and of your Territory, and the Territory will bo specified by us and identified on a documont to bo initialod by you and us within fifteen (15) days from our notice to you of our acceptanco of the location for your traditional Rolax Tho Back®-Store. If you disagree with such Territory and provide us with written notice within fifteen (15) days of our notice to you of the boundaries of the Territory, we may (a) cancel all of our obligations under this Agreement, return your Initial Franchise Fee, and receive from you (and each affiliate of yours) a General Release, and we will, on receipt of such General Release, release you from your obligations under this Agreement, except that your post-termination obligations, including indemnity, non-competition and confidentiality, and the provisions of Articles 19 and 21, will survive such cancellation, or (b) submit the question of the appropriate Territory to mediation and binding arbitration as provided in this Agreement [provided that in no case may the arbitrator or any court award a Territory with a radius from your traditional Relax The Back® Store of more than three (3) miles. -Any site proposed by you for our consideration shall be located within the Store Vicinity identified on Exhibit 2.2. The Store Vicinity is not, nor should it be construed as, your Territory.

I have read Sec. 2.1 & 2.2, understand them, and agree with them.

Your Initials: _________/_________

3. DEVELOPMENT AND OPENING OF YOUR TRADITIONAL RELAX THE BACK® STORE.

3.1 Site Selection. If the site for your Relax The Back® Store has not been identified and purchased (or leased) by you and accepted by us by the time you and we sign this Agreement, then within twelve (12) months from the date of this Agreement you must obtain possession of a site suitable for the operation of your Relax The Back® Store and acceptable to us. You won't make any commitments with respect to any location or operate a Relax The Back® Store and/or use any of the Marks from or at any location until and unless we've accepted the location. We won't unreasonably withhold our acceptance of a site that meets our standards but we can't provide any assurance that appropriate sites will be available, the terms on which possession may be obtained or otherwise, all such matters being your sole responsibility. If you're unable to obtain possession of such a site within such periods, we may terminate our obligations and your rights under this Agreement, provided we refund to you the lesser of (a) one-half (1/2) of the initial franchise fee paid to us or (b) the initial franchise fee less all expenses (including legal fees, broker and other commissions, training costs, etc.) incurred in connection with

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•                                                                •

such franchising and termination; and you will execute documents acceptable to us, providing for (1) continuation of your indemnification, confidentiality and non-competition obligations and the dispute avoidance and resolution provisions of this Agreement, including those of Articles 19 and 21, and (2) a General Release. We will, on receipt of such General Release, release you from your obligations under this Agreement, except that your post-termination obligations, including indemnity, non-competition and confidentiality, and the provisions of Articles 19 and 21, will survive such cancellation.

In connection with any proposed location, we will supply you with a site evaluation form, which you must promptly complete and return to us prior to our review and possible acceptance of any proposed location. Acceptance by us of any location is in no way a recommendation, approval or endorsement of such location nor a representation or warranty as to its legal or business availability, suitability, appropriateness, success potential or otherwise and we cannot guarantee success for any location.

While we may assist you in your efforts to select, obtain and develop a site, the selection, obtaining and developing of a site, and all other matters related in any way to your site, are your sole responsibility and neither we nor any of Franchisor-Related Persons/Entities nor any other person or company affiliated or associated with us in any way will have any liability or responsibility with respect to any matters related in any way to the site for your Relax The Back® Store, including (but not limited to) site location, identification, evaluation, selection, lease/purchase negotiation, financing, review of documents, construction, build out, plans, compliance with local requirements, suitability for any use or otherwise, all such responsibilities being solely yours. The business realities are such that neither we nor anyone else can assure you that a particular location will be successful and you agree that you'll make no claims against us and/or any of the Franchisor-related Persons/Entities with regard to any matters related in any way to your site.

We will make available to you standard and/or site specific plans and specifications to be utilized by you in the construction or otherwise of your Relax The Back Store. You'll obtain, at your sole expense, all further qualified architectural and engineering services to prepare surveys, site and foundation plans and adapt any plans and specifications to your location and all applicable laws, regulations and ordinances. Any changes from plans and/or modifications (other than those provided by us) must be submitted to us for our consent, which we may grant, condition or withhold in our Business Judgment. Within 30 days after you open for business, you will provide us with copies of (a) plans showing your Relax The Back® Store as actually built and (b) a full cost accounting of all expenses incurred in connection with construction (and otherwise related to the development and opening) of your Relax The Back® Store.

We make no representations, guarantees or otherwise as to the costs of development and build-out (or otherwise) of your Relax The Back® Store, the date on which your Relax The Back® Store will be open for business or otherwise.

3.2 Lease of Premises. Any lease or sublease (and all addenda and other site-related documents) for your Relax The Back® Store must be satisfactory to us in our Business Judgment. You shall submit any lease and all site-related documents to us for our review prior to their execution by you. You agree to use commercially reasonable efforts to arrange for the inclusion of the following provisions through Lease Addendum, Collateral Assignment of Lease or other appropriate site-related documents.

(a) Providing us with the right to receive an assignment of your leasehold interest and take possession of your Relax The Back® Store without any liability for any obligations other than those solely related to our period of occupancy, without the lessor's or sublessor's consent or additional consideration and specifying that the lessor/sublessor will accept us as a substitute tenant on notice from us that we are exercising our rights. Relax The Back Such right shall be exercisable by us only in the event of the termination or expiration of your rights under this Agreement. You agree to do all acts necessary or appropriate to accomplish such assignment and will, when you sign this Agreement, sign the Lease

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Addendum Agreement and Collateral Assignment of Lease attached as Exhibit 3.2. In the event of a termination of your rights to the premises in connection with any bankruptcy, the lessor/sublessor will, on our request, enter into a new lease with us on essentially the same terms as the terminated lease;

(b)         Evidencing your right to operate your Relax The Back® Store in accordance this Agreement and the Manuals, and providing that the premises will be used only for the operation of a Relax The Back® Store pursuant to a Franchise Agreement with us in Good Standing; provided, however, that if we do not take an assignment of the lease on termination or expiration of the Franchise Agreement, the premises may be sublet for purposes other than a Relax The Back Store;

(c)         Prohibiting you from subleasing, assigning or otherwise all or any part of your rights, extending the term or renewing or modifying the lease/sublease without our prior written consent, which we can grant, condition or withhold in our Business Judgment;

(d)         Requiring the lessor/sublessor to concurrently provide us with a copy of any written notices (whether of default or otherwise) under the lease/sublease and giving us the right (but with no obligation) to cure any default under the lease/sublease. If you fail to effect such cure, then within thirty (30) days after the expiration of the period in which you can cure the default, we may (at our option) receive an assignment of your leasehold interest but without any liability for any obligations other than those solely related to our period of occupancy;

(e)         Providing that the lessor/sublessor consents to the use of the Marks, Trade Dress and other aspects of the System as we may change them from time-to-time and giving us the right to enter the premises during normal business hours for purposes of inspection, to take steps to protect the Marks and Trade Dress and/or prevent/cure any default;

(f)          Providing that any materia! default by you under the lease/sublease may, at our option, constitute a default under this Agreement); and

(g)         Providing that no sale, assignment or transfer of your leasehold interest will be approved or otherwise consented to, or any change, addition, or other modification to the lease/sublease or other instruments will be made, without first obtaining our prior written consent, which we may grant, condition or withhold in our Business Judgment.

You won't execute a lease or sublease, or any modification or amendment, without our prior written consent, which we may grant, condition or withhold in our Business Judgment. You'll deliver a copy of the signed lease or sublease to us within five (5) days after it's signed.

If such provisions are not included in the lease or other instruments, (and/or a Collateral Assignment of Lease is not executed by you and the lessor/sublessor), we may, without liability and at our sole option at any time require that if possible you immediately cause such provisions to be inserted.

3.3        Relax The Back® Store Design Standards. We'll furnish you with standards, specifications and other requirements (the "Relax The Back® Store Design Standards") for design, decoration, layout, equipment, furniture, fixtures, signs and other items for your Relax The Back® Store, with which you'll comply.

3.4        Development Schedule for Your Relax The Back® Store. You must select and employ a licensed contractor reasonably consented to by us and you'll commence construction and/or development as soon as possible and will expeditiously attend to its completion, purchase and pay for all supplies; purchase, pay for and attend to the installation of all fixtures and equipment, train all employees, obtain all required insurance, permits and licenses and do everything necessary for your Relax The Back® Store to open for business within twelve (12) months from the date of this Agreement. We do not warrant or guaranty to you in any way that any contractor (even one referred to you by us) is suitable, competent,

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reliable or otherwise able to perform adequately the tasks for which they are hired and you're the only person/company with any responsibility for the selection and work of any contractor selected and/or employed by you.

3.5        Equipment. Furniture. Fixtures and Signs. You'll use in the development and operation of your Relax The Back® Store only those (and each of those) brands, types and/or models of equipment, furniture, fixtures and signs as are consented to by us and using only suppliers designated or approved by us, which may include and/or be limited to ourselves and/or our affiliates.

3.6        Relax The Back® Store Opening. You won't open your Relax The Back® Store for business until: (1) we notify you that all of your pre-opening obligations have been fulfilled; (2) pre-opening training of all of your personnel has been completed; (3) all amounts then due us (and/or any affiliate) have been paid; and (4) we've been furnished with copies of all insurance policies as required under Section 10.6 of this Agreement, leases/subleases, certificate of occupancy and other documents as required by this Agreement. You'll open your Relax The Back® Store for business within five (5) days after we give notice to you stating that your Relax The Back® Store is ready for opening.

3.7        Grand Opening Program • Marketing. You'll spend at least Seven Thousand Dollars ($7,000) on a grand opening marketing program during the first sixty (60) days of operations, for which you will only use marketing, advertising and public relations programs, media and materials consented to by us. We'll furnish advice and guidance to you with respect to such program, which you will follow.

3.8        Relocation of Relax The Back® Store Premises. If your lease or sublease for your Relax The Back Store expires or terminates without your fault, if your Relax The Back® Store is damaged, condemned or otherwise rendered unusable, or if, in your and our judgment, there is a change in the character of the location of your Relax The Back® Store sufficiently detrimental to its business potential to warrant its relocation, you will provide us with a relocation business plan (including time frames, budget and related re-grand opening marketing expenditures) and will relocate your Relax The Back® Store to a location and premises acceptable to us in our Business Judgment. Permission for any such relocation shall not be unreasonably withheld, but any such relocation will be at your sole expense and you (and each affiliate of yours) will sign a General Release when we grant such consent; provided that if, in such instance, we require you to sign a General Release, we will grant you a release of all known and unknown claims with respect to payments of royalties and/or marketing contributions then past due under this Agreement.

4.          COMPUTER HARDWARE AND SOFTWARE SYSTEMS.

You must purchase, use, maintain and update computer and other systems (including point-of-sale, back-office and other systems) and software programs which meet our specifications as they evolve over time. You must maintain your systems on-line to provide full access for computer systems used by us. You must update and otherwise change your computer hardware and software systems as we require from time-to-time, at your expense. However, we will not require a substantial update of your computer hardware more than once every five years, unless such an earlier update recommended by us is considered and approved by the FAB. For purposes of this provision, "substantial" shall mean a hardware update typically costing in excess of $10,000. Any hardware update required by us in connection with a franchise transfer and/or a grant to you of a successor franchise will not be subject to the limitations described in this paragraph.

You will continuously comply with each of our then-current terms of use and privacy policies (and all other requirements) regarding all computer and other systems, including (but not limited to) Internet use. You'll pay ail amounts charged by any supplier or licensor of the systems and programs used by you, including charges for use, maintenance, support and/or updates.

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Neither we nor any of the Franchisor-Related Persons/Entities will have any liability and/or obligation (and neither you, nor any affiliate of yours, will make any claims) with respect to, any failures, errors or otherwise, of or by (and/or any loss, damage, liability, expense or otherwise caused by or related to) any computer systems, software, hardware or otherwise, whether or not provided and/or specified by us, any of the Franchisor-Related Persons/Entities and/or any supplier.

5.          TRAINING AND GUIDANCE.

5.1         Training. The initial Franchise Fee covers an initial training program for you and your initial Relax The Back® Store manager, at a time and place, and for such period, as we designate in our Business Judgment. You and your initial Relax The Back® Store manager must each attend and complete our training program to our satisfaction (in our Business Judgment) before beginning operation of your Relax The Back Store. Subsequent managers also must attend and complete our training program to our satisfaction before managing your store operations. In addition, we can require successful completion of training by ail of your supervisory personnel at such times and places as we designate. We may charge a reasonable fee for training of subsequent managers and/or other supervisory personnel, unless otherwise expressly agreed by us in writing.

If we, in our Business Judgment, determine that you have not successfully completed (or are not making satisfactory progress in) your initial training, we can cancel all of your rights (and all of our obligations) under this Agreement and/or any other agreements with you and refund to you the lesser of (a) one-half (1/2) of the initial franchise fee paid to us or (b) the initial franchise fee less all expenses (including legal fees, broker and other commissions, training costs, etc.) incurred in connection with such franchising and termination, return the Initial Fronchise Fee (less $10,000 to cover our training costs and expenses, among other things) to you, youYou will return all manuals and you (and each affiliate of yours) will execute documentation providing for a General Release, and your indemnity, non-competition, confidentiality obligations, and the dispute avoidance and resolution provisions of this Agreement, including those of Articles 19 and 21, will be preserved. We will, on receipt of such General Release, release you from your obligations under this Agreement, except that your post-termination obligations, including indemnity, non-competition and confidentiality, and the provisions of Articles 19 and 21, will survive such cancellation. Since the possibility of such termination exists, you understand that if you make any investments or sign any documents prior to completion of training, you're at risk. Alternatively, we can require you to hire a substitute manager and arrange for him/her to complete the training program to our satisfaction.

You and your manager must attend additional and/or refresher training programs conducted at location(s) specified by us, including national and regional conferences, conventions and meetings, and your other employees may be required to attend mandatory training programs presented by us at your Relax The Back® Store. You'll be responsible for all travel, living, incidental and other expenses and compensation of you and your personnel attending any training program. We may charge a fee for any optional training programs.

We will offer to provide on an annual, tuition free basis a minimum of one on-site training session of our choosing at your Traditional Relax The Back Store. We also will conduct on an annual basis a minimum of one on-site visit for general business purposes, which may be combined with an on-site training session in satisfaction of both annual obligations.

5.2        Guidance and Assistance. We'll furnish guidance to you with respect to: (1) specifications, standards and operating procedures utilized by Relax The Back® Stores, including any modifications; (2) purchasing approved equipment, fixtures, signs, inventory, operating materials and supplies; (3) developing and implementing local marketing and public relations programs; (4)

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administrative, bookkeeping, accounting, inventory control, open to buy and general operating and management procedures; and (5) establishing and conducting employee training programs at your Relax The Back® Store. This guidance can, in our Business Judgment, be furnished in the Manuals, extranet site, bulletins, written reports and recommendations, other written materials, refresher training programs and/or telephonic consultations or consultations at our offices or at your Relax The Back® Store. You'll follow and comply with this guidance.

5.3 Manuals. During the term of the Franchise, we will loan you (or allow you electronic or other access to) one copy of the Manuals, containing mandatory and suggested specifications, standards and operating procedures prescribed from time-to-time by us. We can, in our Business Judgment, modify any aspect of the Manuals, the Relax The Back® System or otherwise, to, among other things, specify brands, types and/or models of equipment which must be used by you, to specify changes in the Products and Services used and/or offered by you, and/or the decor, format, image, products, services, operations or otherwise of a Relax The Back® Store. You'll promptly and continuously comply, at your sole expense, with all provisions of. and additions/deletions/chanqes to. the Manuals. However, we will not require more than once every five years a substantial remodel, refurbishment and/or redecoration of the Premises to comply with then-current standards for newly developed Traditional Relax The Back® Stores, unless such an earlier update recommended by us is considered and approved by the FAB. For purposes of this provision, "substantial" shall mean a remodel, refurbishment and/or redecoration in excess of $15,000. Any update required by us in connection with a transfer and/or a grant to you of a successor franchise will not be subject to the limitations described in this Section 5.3.

Any additions/deletions/changes to the Manuals will take precedence over all prior communications. In the event of a dispute, the master Manuals maintained at our office will control. The mandatory provisions of the Manuals, as added and/or modified from time-to-time, constitute provisions of this Agreement and are binding upon you. The Manuals contain proprietary information of ours and you agree to keep the Manuals confidential at all times and will not make or distribute any copies of any portion of any Manuals without our express written authorization.

6.          MARKS.

6.1         Goodwill and Ownership of Marks. Your right to use the Marks is derived solely from this Agreement and you'll use the Marks only as expressly authorized by us. Any unauthorized use of the Marks by you is a breach of this Agreement and an infringement of our rights in and to the Marks. You agree that if you breach any obligation regarding the Marks, we would have no adequate remedy at law and that we will be entitled to equitable relief with respect to any such breach. Your rights to the Marks are non-exclusive and we retain the sole right to grant other licenses for the Marks without providing you with any rights subject to the restrictions of Section 2.2, above. You won't oppose, or engage in any acts or omissions inconsistent with, our rights in and to the Marks. This Agreement, and your operation of your Relax The Back® Store, does not confer any goodwill or other interests in the Marks on you, all goodwill (whether relating to the Marks or otherwise) belonging exclusively to us. All provisions of this Agreement relating to the Marks will apply to any other trademarks, service marks and commercial symbols authorized for use by you. Any marks or other forms of identification developed by us in the future will remain our property and you will have no rights in or to them but we may require you to use them as we direct.

6.2        Limitations and Use of Marks. You will use the Marks as the sole identification for your Relax The Back® Store. You won't use any Mark in connection with the performance or sale of any unauthorized services or products or at any location or in any other manner not expressly authorized in writing by us. You'll not use any Mark as part of any corporate or trade name or as your primary business name or with any prefix, suffix, or other modifying words, terms, designs, or symbols, or in any modified form. You will, before adoption and/or use, submit any proposed corporate and/or trade name to us for our consent, which we may withhold, grant or condition in our Business Judgment. The use of any

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geographic or other designation in connection with the Marks will be only as permitted by us, you will have no rights with regard to any geographic or other designation and you will not take any action inhibiting or otherwise affecting the use of the Marks by any Relax The Back® Franchisee or anyone else. You'll display the Marks as we require and you won't use any of the Marks so as negatively affect the goodwill associated with the Marks. You'll give such trademark and other notices (including notices of independent ownership) as we direct and will, at your expense, obtain fictitious or assumed name registrations as may be required under law. You'll sign such documents and act as required by us from time-to-time to protect our interests in the Marks and you won't take any action, or omit to take an action, so as to jeopardize our interests or the validity or enforceability of the Marks.

6.3        Notification of Infringements and Claims. You'll immediately notify us of any apparent or actual infringement of, or challenge to, your use of the Marks, or any claim by any person of any rights in the Marks, and you won't communicate with anyone other than us and our counsel in connection with any such matter. We shall take such action as we deem appropriate in our sole discretion in connection with such (or related) matters. We shall have the right to control exclusively any settlement, litigation or proceeding arising out of or related to any such matters. You'll execute any and all instruments and documents, render such assistance, and do such acts and things as may, in our opinion, be advisable to protect and maintain our interests in the Marks.

6.4        Discontinuance of Use of Marks. If it becomes advisable at any time in our Business Judgment, for you to modify or discontinue the use of any of the Marks or use one or more additional or substitute trademarks or service marks, you will promptly comply (at your sole expense) with our directions, including (but not limited to) replacement of all signage, etc. We won't have any liability or obligation to you in such an event, whether of defense, indemnity, or otherwise, except and only as specifically provided below in this Section 6.4.) You agree to make no claim, for, or in connection with, any modification, discontinuance or otherwise, and/or any dispute regarding the Marks and/or your and/or our rights in or to them. We make no guaranty that a modification, discontinuance or otherwise may not be required, whether as a result of expiration, termination or limitation of our rights to the Marks or otherwise. You understand that there is always a possibility that there might be one or more businesses, similar to the business covered by the Franchise, operating in or near the area(s) where you may do business or otherwise, using a name and/or marks similar to ours and with superior rights to such name and/or marks as a result of prior use or otherwise. We strongly urge you to research this possibility, using telephone directories, local filings and other means, prior to your signing any documents, expending or paying any sums or making any commitments and you understand that if you fail to do so, you're at risk.

i)           If we require you to discontinue your use of the Relax The Back brand in the

operation of your Franchised Business at the Premises, then you will relocate to a mutually acceptable alternative site inside the Territory from which you may lawfully operate your Franchised Business under the Relax The Back brand and Marks; or

ii)           if such an alternative site cannot be found and/or lawfully operated within the

Territory, then relocate to a mutually acceptable site in an alternative available territory from which you may lawfully operate your Franchised Business under the Relax The Back brand and Marks; or

iii)          if such a mutually acceptable site cannot be found, we will identify and license to

you with a commercially reasonable alternative brand for your operation at the Premises.

We will compensate you for reasonable relocation-related and/or re-branding expenses (as applicable) up to a maximum of $25,000; provided that you, your owners and affiliates sign a release in a form acceptable to us in our Business Judgment of any and all claims, liabilities and/or obligations, of any nature whatsoever, known or unknown, whether against us and/or any or all of the Franchisor-Related Persons/Entities, arising out of or relating in any way to the Marks, any site relocation or change in Territory, any rebranding, or any other matter directly or indirectly related to your discontinued use of the

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Relax The Back brand in the operation of your Franchised Business at the Premises. Any such compensation may in our sole discretion be applied as a credit against royalties, Marketing Fund contributions or, at our option, any other money owed or to be owed by you to us and/or any Franchisor-Related Person/Entities.

I have read Art 6, understand it, and agree with it

Your Initials: _________/_________

7.          RELATIONSHIP OF THE PARTIES: INDEMNIFICATION.

7.1         Independent Contractor. You'll conspicuously and clearly identify yourself (through prominently placed signage and otherwise as we direct) in all dealings with customers, suppliers, public officials, employees and others as an independent owner of your Relax The Back® Store under a franchise awarded by us and make it clear that the operation of your Relax The Back® Store is separate and distinct from the operation of our business. In particular, you'll place notices of independent ownership on such forms, business cards, stationery, advertising, signs and other materials as we require from time-to-time. Subject to the requirements of this Agreement and the Manuals, you'll have complete operational control of your business, including the right to hire and fire each employee.

7.2        No Liability for Acts of Other Party. You won't commit any act or omission that may result in our liability for any indebtedness or obligations of yours, you won't make any express or implied agreements or representations, or incur any debt, in our name, or represent that your and our relationship is other than that of independent Franchisor and Franchisee. Neither you nor we will have any liability under any acts, omissions, agreements or representations made by the other that are not expressly authorized in writing.

7.3        Taxes. We'll have no liability for any taxes, whether levied on you, your Relax The Back® Store or your property, or on us, in connection with the sales made and/or business conducted by you (except for any taxes we are required by law to collect from you with respect to purchases from us). Payment of all taxes connected with the Franchised Business is your sole responsibility.

7.4        Responsibility. Indemnity, etc. You will indemnify and hold harmless us and all of the Franchisor-Related Persons/Entities from all fines, suits, proceedings, claims, demands, actions, loss, damages, costs, fees (including attorney's fees and related expenses) and/or any other expense, obligation and/or liability of any kind or nature, however arising, to the extent it grows out of or is otherwise connected with and/or related to any act, error and/or omission of yours (including, but not limited to, your ownership and/or operation of your Relax The Back® Store, any act or omission of your employees and/or agents, and/or any transfer of any interest in this Agreement, your Relax The Back® Store or otherwise). We'll have the right to control all litigation, and defend and/or settle any claim, against and/or including us and/or the Franchisor-Related Persons/Entities or affecting our and/or their interests, in such manner as we deem appropriate in our sole discretion, in each case without affecting our rights under this indemnity.

With respect to goods and/or services provided by us and/or the Franchisor-Related Persons/Entities, and other than specific written warranties expressly provided by us in connection with such items, such items are provided without any warranties by us. express or implied, the warranties of merchantability and fitness for a particular purpose being expressly disclaimed.

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I have read Sec. 7.4, understand it, and agree with it

Your Initials: _________/_________

7.5        Disclosure. We can disclose in offering circulars, related exhibits and/or as required by law any information relating to your Traditional Relax The Back® Store, including your name, any address and/or phone number, revenues, expenses, results of operations and/or other information; provided that we will not disclose any such information in a manner that identifies a specific store and its related financial results except as required by law, court order, judicial process or by similar proceedings. We will not for the term of this Agreement or any extension thereof disclose any information about customers of your Traditional Relax The Back Store to any party unrelated to the Relax The Back System, except as may be required by this Agreement, by law or by judicial process.

7.6        Relationship with Franchisee Association and Board Seat. We will provide one permanent, non-voting advisory seat on our Board of Directors to be filled by a representative selected by a majority of the governing body of the Franchisee Association (subject to the Franchisee Association providing one permanent non-voting advisory seat on the Franchisee Association's governing body (e.g. Board of Directors) to be filled by a representative selected by us, under terms substantially similar to those set out in this section and with appropriate indemnities from the Franchisee Association in our favor, etc.) Such representative shall act as a liaison between the Franchisee Association and our Board. The term for such representative shall be at least thirty-six (36) months, unless otherwise agreed upon by us and the majority of the governing body of the Franchisee Association. At the end of each 36 month period, a majority of the governing body of the Franchisee Association will designate a new representative, or designate the same representative. It is the intention of the parties that this advisory member shall have no fiduciary responsibility to us and/or the Franchisor-Related Persons/Entities or to any other person. We will provide all of the same insurance and indemnities to this advisory member as we provide to other members of our Board and, in any event, shall indemnify such member to the full extent permitted by law. The advisory member shall execute the same confidentiality agreement as the other members of our Board of Directors, except that the advisory member may disclose any matters presented to the Franchisee Association's governing body. We shall also sign an indemnity agreement whereby we indemnify the Franchisee Association's representative from claims against the representative based upon or relating to such representative's participation as an advisory member of our Board.

7.7        Franchisee Association Board ("FAB") and Selection Process. The FAB will consist of the governing board of the Franchisee Association, subject to the following requirements. Each Store will have the right to join and participate in the Franchisee Association in accordance with the Franchisee Association bylaws. With the exception of the non-voting advisory seat member described in Section 7.6, above, Board members shall be elected by Relax The Back Franchisees. All Relax The Back Franchisees who are in Good Standing under the Franchise Agreement are entitled to vote in such an election. Any Relax The Back Franchisee in Good Standing under the Franchise Agreement may nominate, or be nominated as, a candidate in any such election. Each such Franchisee will be entitled to one vote.

If in connection with any given election the franchisee group representing a majority of franchisees does not comply with the foregoing requirements, or if there is no single franchisee group whose members represent a majority of the then existing franchisees, then we shall establish guidelines for such an election by franchisees in our Business Judgment. In establishing any such guidelines, due consideration shall be given to achieving a representative group of Stores, each of which shall have a constituency in their geographical region. Franchisees selected by Stores in Good Standing pursuant to such an election conducted by us shall, for purposes of this Agreement, be deemed to constitute the FAB

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Any substantial changes to the bylaws adopted by the FAB shall be subject to our prior written consent, which shall not be unreasonably withheld.

7.8        Relax The Back® Merchandising Committee fthe "Merchandising Committee") and Marketing Committee. We will meet and consult with the Merchandising Committee, which shall be composed of four (4) members selected by a majority of the governing body of the Franchisee Association and three (3) members selected by us. The Merchandising Committee will provide Input on the content of the Relax The Back® catalog and Relax The Back.com. We will meet with the Relax The Back Merchandising Committee periodically to review such content, initial inventory and model floor stock recommendations, as well as new product introductions. The provisions herein are subject to compliance with applicable law. We will meet and consult with the Marketing Committee, which shall be composed of four (4) members selected by a majority of the governing body of the Franchisee Association and three (3) members selected by us. The Marketing Committee will provide Input on the content of Relax The Back® marketing programs. We will meet with the Relax The Back Marketing Committee periodically to review such programs.

7.9        Input from Franchisee Association. FAB. Merchandising Committee, Marketing Committee. We may seek Input from the FAB, the Merchandising Committee, Marketing Committee, and the Franchisee Association or other groups (individually and collectively, "Franchisee Advisory Groups") with regard to certain matters as specified in this Agreement, and as we consider appropriate from time to time. The final decision in such matters will remain ours, unless the provision expressly requires the applicable Franchisee Advisory Group's approval. Any approval of a matter by a majority vote of the FAB will be fully binding on you, regardless of whether or not such approval is required under this Agreement. We will be bound by a majority vote of the FAB on a matter only in those instances in which such FAB approval is required under this Agreement. Nothing in this Agreement will require a vote or other approval by all Relax The Back franchisees and/or all members of the Franchisee Association.

7.10      Business Planning Input. On or sixty (60) days before the beginning of each of our fiscal years (starting with the fiscal year beginning Fobruary 1, 2002), we will, with FAB Input, develop a business plan for the forthcoming fiscal year (but the content and otherwise of such business plans will ultimately be determined by us in our sole discretion). We will regularly review our financial statements with the FAB as soon as available, in each case subject to execution of appropriate confidentiality, etc. agreements.

8.          CONFIDENTIAL INFORMATION: EXCLUSIVE RELATIONSHIP.

8.1 Confidential Information - Non-Disclosure and Non-Use. "Confidential Information" includes all information used or useable in connection with the operation of a Relax The Back® Store or which relates to the System, including, among other things, all current and future: (1) techniques, policies, procedures, information, systems, and knowledge regarding the development, marketing, operation and franchising of Relax The Back® Stores; (2) information regarding, and suppliers of, items used and/or offered by Relax The Back® Stores, including the Products and Services and (3) all information regarding customers, including any statistical and/or financial information and all lists. Of course, the Confidential Information includes all Manuals and their contents, as well as all materials, information, manuals and advice provided by us during training or thereafter. In any dispute between you and us involving any question as to whether or not certain information is, in fact, confidential and/or proprietary to us, or any related issues, the burden of proof and the burden of going forward will be on you. We'll disclose to you parts of the Confidential Information needed for the operation of a Relax The Back® Store, and you may learn additional Confidential Information during the term of the Franchise and/or during the term of a prior franchise relationship with us. Between you and us, we have all rights to the Confidential information. Your only interest in the Confidential Information is the right to use it pursuant to this Agreement.

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You agree that you will forever: (1) not use the Confidential Information in any way other than the operation of your Relax The Back® Store under a Franchise Agreement in Good Standing with us; (2) maintain the absolute secrecy and confidentiality of the Confidential Information; (3) not make unauthorized copies of any portion of the Confidential Information; and (4) adopt and implement all procedures prescribed by us to prevent unauthorized use or disclosure of, or access to, the Confidential Information.

You'll fully and promptly disclose to us all ideas, techniques and otherwise relating to a Relax The Back® Store which are conceived or developed by you and/or your employees and we'll have the perpetual right to use, and to authorize others to use, such ideas, etc., without compensation or other obligation. Patented programs or products may be excluded from this provision in our Business Judgment.

You agree to comply with any practices or requirements we may implement through the Manuals or other written instruction that are intended to promote the proper use and nondisclosure of the Confidential Information by your employees, agents or other third parties, including their signing of a form of non-disclosure/confidentiality agreement approved by us.

8.2 Exclusive Relationship. Restrictions on Similar Businesses During Franchise Term and After Transfer. Termination. Expiration. Repurchase, etc. You and we share a mutual interest in avoiding situations where persons or companies who are, or have been, Relax The Back® Franchisees operate or otherwise become involved with, a Similar Business, anywhere, either during or after the term of this Agreement.

This mutual interest exists since (1) the operation of a Similar Business, irrespective of location, would inevitably draw on and benefit from the operator's training and experience as a Relax The Back® Franchisee, including methods of operation not known to you or other operators prior to becoming a Relax The Back® Franchisee, (2) operation of such a business would damage both us and other Relax The Back® Franchisees and unfairly limit reasonable expansion alternatives open to us and our Franchisees, particularly in light of the limited number of goods and services provided by us and our Franchisees and the limited number of favorable locations or areas available, thereby placing us and other Relax The Back® operators at a competitive disadvantage, (3) such activities would expose us and our Franchisees to a strategy under which a person could acquire a Relax The Back® franchise, learn all of our methods of doing business, default under the franchise agreement or otherwise obtain termination or expiration and then open an unlimited number of locations drawing on their experience and training as a Relax The Back® Franchisee, including access to favorable locations, (4) the possibility of such occurrences would discourage the free flow of information and innovation within the Relax The Back® System, (5) such activities could reduce your level of time and attention given to your operation of an Relax The Back® Store, and (6) if we were unable to protect Relax The Back® Franchisees from such consequences, it would be substantially more difficult to obtain, and retain, qualified Relax The Back® Franchisees.

You acknowledge that you've considered, as reasonable business alternatives, other franchise opportunities, as well as the possibility of your entering our industry as a non-franchised participant (in each instance not being subject to the restrictions of this Agreement) and that any adverse effect on you resulting from your violation of these restrictions will be entirely self-inflicted. You agree that the restrictions contained in this Section are reasonable and necessary for the protection of us and your fellow Relax The Back® Franchisees {and our and their respective investments), represent a reasonable balancing of legitimate long-term interests, and will not impose any undue hardship on you, since you have other valuable opportunities, skills, experience, education and abilities unrelated to the ownership and/or operation of a Relax The Back® Store and which will provide you with the opportunity to derive significant income from other endeavors.

Therefore, you agree as follows:

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A.          In Term Restrictions: During the term of this Agreement and any successor franchise, neither you, nor any affiliate of yours, nor any shareholder, member or partner of yours (if you are or become a business entity), nor any Immediate Family member of any of the foregoing, will:

(i) have any direct or indirect interest anywhere in any Similar Business, or in any entity awarding franchises or licenses or establishing joint ventures or other business enterprises for the operation of Similar Businesses; or

(ii) perform any services anywhere as an employee, agent, representative or in any capacity of any kind for any Similar Business, or for any entity awarding franchises or licenses or establishing joint ventures to operate Similar Businesses; or

(iii) employ or try to employ any employee of ours, of a Franchisor-Related Person/Entity or of any other Relax The Back franchisee, without providing notice to the respective employer and obtaining their prior written consent.

B.          Post Term Restrictions: For three (3) years after the later of the following terminating events: (i) any transfer, Repurchase and/or termination of this Agreement; (ii) the expiration of this Agreement (if a successor franchise or renewal term is not granted); and/or (iii) the date on which you stop operating your final Relax The Back Store or using the Marks and/or System, you and each of the persons and entities named in such Section 8.2, A., above:

1)    shall not do Similar Business with or solicit any person, firm or company that has been a Relax The Back customer during the period twelve months prior to termination, nor try to divert any such customers from any Relax The Back Store or Relax The Back enterprise of any kind (including any operations owned by us and/or any Franchisor-Related Persons/Entity); and

2)    shall be subject to all of the restrictions stated in Section 8.2 A., above, with respect to Similar Businesses located, and/or services to be performed, in the Territory and/or the marketing area of any Traditional Relax The Back Store ("Marketing Area"). For the purposes of this Agreement, a Marketing Area for a franchisee-operated Store is the territory defined by such franchisee's franchise agreement. For a Store owned by us or an affiliate, Marketing Area is defined as the geographic area comprised of those postal/zip code areas representing at least eighty five percent (85%) of such Relax The Back Store's customer base for the twenty-four (24) month period prior to the terminating event (or from the opening date of such Relax The Back Store, if such location has been operating less than twenty-four (24) months).

C.          You are responsible for learning whether or not a particular location is within a Relax The Back Store Marketing Area by providing us a written request for such information. In determining the Marketing Area, we generally will follow a process whereby the percentage of the applicable customer base will be calculated for the postal/zip code in which the Relax The Back Store is located, for each postal/zip code immediately surrounding it, and, if necessary, for postal/zip codes contiguous to the surrounding codes, until such codes representing at least eighty-five percent (85%) of the customer base for the appropriate twenty four (24) month period have been identified. In those instances in which varying combinations of surrounding and/or adjacent zip/postal codes may total at least eighty five percent (85%) of the customer base, we may select the combination that we consider in our Business Judgment to most appropriately be the Marketing Area. Any determination that we make regarding the Marketing Area will be final.

In the event of a violation by you of 8.2 A. (iii), above, our remedies will include, at our election, (i) termination of your rights and our obligations under this and all other agreements and (ii) recovery of damages and all other remedies allowed at law and/or equity [or payment to us by you of $5,000, such amount having been mutually agreed on by you and us in view of the extreme difficulty in accurately

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determining the damages suffered by us as a result of your violation (including effects on relationships with other employees, customers, retraining costs, lost sales, etc.) and your and our mutual interest in avoiding a lengthy and costly dispute over damages.], If we do not terminate your rights and our obligations under this and/or all other agreements for such violation, you (and each affiliate of yours) will execute a General Release in consideration thereof. In any case, you will first notify us and the employer before taking any action with respect to any such employment or offer of employment. You will obtain written non-competition commitments in such form as we direct from such persons subject to the noncompetition provisions of this Agreement as we may reasonably request.

In the event of a violation by you of any of the foregoing restrictions, our remedies will include, at our election, (i) termination of your rights and our obligations under this and all other agreements and (ii) recovery of damages and all other remedies allowed at law and/or equity, which vou expressly agree will include (but not be limited to) all net profits generated (and which would reasonably be anticipated to be generated) in connection with the operation of any Similar Business from the initial date of violation of such restrictions through fa) three (3) years after the date we give you notice of your violation of such restrictions or fb) the date vou cease to violate such restrictions, whichever comes first), such amount having been mutually agreed on by you and us in view of the extreme difficulty in accurately determining the damages suffered by us as a result of your violation (including effects on relationships with employees, customers, Relax The Back® Franchisees, retraining costs, lost sales, etc.) and your and our mutual interest in avoiding a lengthy and costly dispute over damages, and, in addition, you (and each affiliate of yours) will execute a General Release. Calculation of the profits to be recovered by us will exclude any costs not reasonably appropriate to the operation of the Similar Business. The foregoing notwithstanding, we shall use Business Judgment in evaluating whether or not the conduct of an Immediate Family member warrants our exercising any rights under this provision, considering your actual relationship to such member and his/her activities, among other factors.

If any of the restrictions of this Section are determined to be unenforceable due to excessive duration, geographic scope, business coverage or otherwise, they will be reduced to the level that provides the greatest restriction but which is still enforceable, notwithstanding any choice-of-law or other provisions in this Agreement to the contrary and may be reduced by us to such level at any time in our Business Judgment. If they are wholly unenforceable, or are reduced to a level which we find unacceptable, we may, in addition to any other remedies available to us, require you to pay a fee (either immediately on a present value basis or over time, as we select) of one-half (1/2) of the royalties and advertising/marketing contributions which would be payable if the business in question was a franchised Traditional Relax The Back Store, for three (3) years. You and we agreed on the amount payable because of (1) the difficulty of accurately predicting actual damages, (2) the fact you will inevitably benefit in the operation of such business from your training and experience as a Relax The Back Franchisee, (3) the possible impact on the expansion and operation of our system, including the expense and difficulty of a sale of a franchise in your area, and (4) you not having any rights, nor we having any obligations, with respect to such business under this Agreement or otherwise during such period.

The time period of the competitive restrictions described in this Agreement will be extended by the length of time during which you or any other person or entity are in breach of any provision of this Agreement (including the limitations of this Section). The restrictions of this Section don't apply to the ownership of shares of a Similar Business (of a class of securities listed on a stock exchange or traded on the over-the-counter market) which represent less than three percent (3%) of the number of shares of that class issued and outstanding.

If you violate any obligations under this Agreement (or otherwise) with respect to a Similar Business, our remedies will include the right to obtain equitable relief, notwithstanding any provisions of this Agreement to the contrary.

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I have read Sec. 8.1 & 8.2, understand them, and agree with them.

Your Initials: _________/_________

9-          FEES.

9.1         Initial Franchise Fee. Releases. Consistent Franchise Agreements, etc.

On signing this Agreement, you'll pay us an initial franchise fee of Twenty FiveThirty Thousand Dollars ($3025,000), which is fully earned by us on such signing and is entirely nonrefundable (as are all amounts paid to us and/or any affiliate), except for possible partial or other refund at our sole option as expressly provided in other Sections of this Agreement. The initial franchise fee (and other amounts charged) may not be same for all franchisees, depending on prior relationship, number of franchises awarded and other factors. If you are acquiring this Franchise in connection with a transfer of an existing franchise and a full ten year franchise term is awarded by us, then we reserve the right to require a payment from you concurrent with the signing of this Agreement. Such payment shall be calculated by multiplying the Initial Franchise Fee by the percentage representing the difference between the full ten year term and the remaining term of the franchise agreement that previously covered the Relax The Back® Store you acquired. By way of illustration, if four years of the initial term of a transferring franchise are remaining at the time of transfer, and if a new ten year term is awarded by us, then we reserve the right to charge the pro-rated fee, which shall be 60% of the Initial Franchise Fee. Any such fee is in addition to any transfer fees owed in connection with such transfer.

If you and/or any of your owners and/or affiliates have had a prior business or any other relationship with us and/or any of our affiliates then the execution of this Agreement by you and us will constitute:

i) a release of any and all claims, known or unknown, which you (and any affiliate/owner of you) may have against us and/or any of the Franchisor-Related Persons/Entities (including any and all claims related in any way to any franchise currently, or in the past, in which you or any affiliate/owner of yours holds, or has held, any interest), excepting only (where expressly so required by applicable law) those claims solely related to the offer and sale of this Franchise; and

ii) a release of any and all claims of ours against you and/or any affiliate/owner of yours which exist as of the time of the execution of this Agreement and are known by us, except that any such claims will be preserved by us if they are related to the offer and sale of this Franchise and/or are disclosed to you by us in writing.

You (and each affiliate of yours, together with each owner of you and/or your affiliates, if a business entity) will, as a condition to the awarding of any future, successor or other franchise execute, in a form prescribed by us, a General Release, excepting only (where expressly so required by applicable law) those claims solely related to the offer and sale of the new Franchise. If we fail to require such separate release(s) at any time, the execution of this Agreement, and each Franchise Agreement after this one, will be regarded as the equivalent of the granting of such releases.

9.2        Royalty. Payment Dates, etc. Every month (or otherwise as we require from time-to-time in our Business Judgment), you'll pay us a percentage of Adjusted Gross Sales as specified by us, up to and including (but not exceeding) five percent (5%) four percent (4%) of the "Gross VelumeAdjusted Gross Sales- received or earned during the preceding month. "Adjusted Gross Sales" is defined in Section 9.3, below. Royalties are to be paid on the 10th day after each month for

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The original documents were scanned as an image. The original file can be downloaded at the link above.