Franchise Agreement Dated Aug 1, 2005

EXHIBIT 10.26 FRANCHISE AGREEMENT THIS FRANCHISE AGREEMENT is made as of August 1, 2005.BETWEEN: LULULEMON ATHLETICA INC. , 1945 McLean Drive. Vancouver, British
Columbia, V5N 3J7
(the " Franchisor" or " Lululemon" )AND: RYAN SMITH and, KIM SMITH, on behalf of themselves and CB Ventures
Inc., both of 5073 Cordova Bay Road, Victoria, B.C., V8Y 2K1
(Hereinafter called the " Franchisee" ) RECITALS WHEREAS: A. Franchisor has developed a format, system and plan for the operation of retail stores featuring and offering for sale Oqoqo trade-marked clothing and accessories, and related products and services, all of controlled quality, in accordance with Franchisor' s prescribed standards, specifications, policies and procedures, under the name, trade mark and style of " Oqoqo" (the " Franchise System" ); B. Franchisor owns and controls the trade name and trade mark Oqoqo and related trade marks and designs used in connection with the franchised business and Franchise System (the " Marks" or the " Trade Marks" ); C. Franchisee has applied for a franchise to operate an Oqoqo retail store at the location set forth in Schedule " B" , utilizing and in conformity with Franchisor' s business method, format and Franchise System and the Trade Marks at one or more approved retail locations, and distributing Oqoqo trade-marked clothing and accessories within the Franchised Territory set out below, and Franchisor has agreed to supply Oqoqo trade-marked clothing and accessories and to grant such a franchise to Franchisee upon the terms and conditions of this Agreement; NOW THEREFORE in consideration of the premises and of the mutual covenants and agreements herein contained, and for other consideration acknowledged by the parties to be of good and sufficient value, the parties agree as follows: 1. Definitions In this Agreement, the following capitalized terms shall have the following meanings unless the context requires otherwise:


(a) " Additional Amount" means the book value of the inventory paid for and in the possession of the Franchisee, plus the value of all leasehold improvements after depreciation of 33.333% per annum and on a pro-rated basis, plus any prepaid amounts by the Franchisee to the Franchisor; (b) " Agreement" means this Franchise Agreement and all schedules thereof and any subsequent agreement in writing which amends or supplements this Agreement; (c) " Approved Retail Location" means the retail location which has been approved by Lululemon for the operation by Franchisee of a retail sales outlet as set forth in Schedule " B" , as may be amended or supplemented from time to time; (d) " Commencement Date" means the Commencement Date as set forth in Schedule " B" ; (e) " CPI" means the Consumer Price Index For Canada, All Items (Not Seasonally Adjusted), 1992 = 100, Annual, or any successor Index thereto, as published by Statistics Canada or any successor Agency thereto; (f) " Disposition Transaction" has the meaning specified in Section 25; (g) " Effective Date" means the Effective Date as set forth in Schedule " B" : (h) " Franchise" means a business operated by a Franchisee which is engaged in the retail sale of Oqoqo Products in the Territory or any part thereof: (i) " Franchise Agreement" means an agreement between Lululemon and a Franchisee or prospective Franchisee the subject matter of which relates to the acquisition or operation of a Franchise; (j) " Franchise Fee" means a direct or indirect payment (whether payable on a one-time or recurring basis) which is required to be paid by a Franchisee to Lululemon, or to any affiliate of Lululemon, as consideration for the grant of a right to acquire or operate a Franchise; (k) " Franchised Territory" means the same thing as " Territory" ; (l) " Franchisee" means Franchisee as the authorized retailer of Oqoqo Products at an Approved Retail Location, as well as a person at arm' s length to Franchisee who is granted a right or license by Lululemon to operate a Franchise in the Territory; (m) " Gross Sales" means, for a specified period, the gross sales of all Products sold by Franchisee at an Approved Retail Location during that period less: (i) returns of Product at the Approved Retail Location during that period, (ii) refunds and allowances made by Franchisee at the Approved Retail Location during that period,

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(iii) store credits redeemed by Franchisee at the Approved Retail Location during that period, (iv) amounts received by Franchisee from the sale of gift certificates at the Approved Retail Location during that period (it being understood and agreed that the redemption of gift certificates will be included as Gross Sales for the period in which they are redeemed), and (v) amounts collected by Franchisee at the Approved Retail Location during that period on account of taxes; (n) " License Agreement" means the same thing as " Franchise Agreement" ; (o) " License Fee" means the same thing as " Franchise Fee" , except as otherwise specified in this Agreement in respect of the Approved Retail Locations; (p) " Licensed Product" means a third party product which is approved for sale by Lululemon in association with the Marks and which is distributed or sold by Franchisee; (q) " Marks" means the trade-marks, trade names and other commercial symbols and related logos as set forth in Schedule " C" hereto, including the trade names OQOQO, together with such other trade names, trade-marks, symbols, logos, distinctive names, slogans, service marks, certification marks, logo designs, insignia or otherwise which may be designated by Lululemon from time to time; (r) " Oqoqo Products" means clothing and accessories, other than Licensed Products, which (i) display the Marks, or (ii) are distributed or sold under a system of distribution or sale in which the use or display of the Marks is an integral part thereof; (s) " Products" means collectively Oqoqo Products and Licensed Products; (t) " Territory" means the Territory as set forth in Schedule " B" ; (u) " Trade Marks" means the same thing as " Marks" . 2. Term, Renewal and License Fee (a) Subject to any right of earlier termination as provided for herein, the initial term of this Agreement shall be for a period of five (5) years (the " Initial Term" ). The Initial Term shall commence on the Commencement Date. (b) Provided that Franchisee achieves sales after taxes in either of the last of two (2) years of the Initial Term of the amount as set forth in Schedule " B" . it shall have the further right to renew this Agreement for subsequent terms of five (5) years each, unless Franchisee shall fail to meet the then-current terms and conditions of renewal as specified herein or in the then-current Franchise Agreement. The terms and conditions for renewal of this Agreement are as follows:

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(i) Franchisee shall notify Franchisor in writing at least three (3) months prior to the expiry of the term that it wishes to exercise this option to renew; (ii) Franchisee' s option to renew shall only be effective if at the time of its exercise and at the time of commencement of the renewal term Franchisee shall have fully complied with all of the material terms and conditions of this Agreement; (iii) in the event of non-compliance by Franchisee, if Franchisor shall determine not to allow Franchisee to renew this Agreement, then Franchisor shall notify Franchisee in writing setting forth Franchisor' s reasons for non-renewal, and Franchisor shall give as much notice of non-renewal to Franchisee as is reasonably practicable in the circumstances; (iv) Franchisee shall execute and deliver to Franchisor a new Franchise Agreement for the renewal term in Franchisor' s then-current standard form, which may include terms and conditions which differ from those contained in this Agreement, except that Franchisee shall not be obligated to pay any License Fee for the renewal term, and the royalties to be paid by the Franchisee during the renewal term shall not exceed the percentage royalties to be paid by Franchisee during the last year of the Initial Term and the Franchisee will continue to have the rights provided it under paragraphs 3(f), 4(b) and 25 of this Agreement; (v) Franchisee shall carry out Franchisor' s reasonably required upgrading and improvements to the franchised business in order to conform with Franchisor' s then-current standards and specifications; and (vi) Franchisee shall reimburse Franchisor for all of its reasonable costs and expenses incurred in connection with the renewal, including inspection of the franchised business and providing any required additional training. (c) Franchisee shall pay Franchisor as a License Fee for this Agreement and any further Approved Retail Locations the sum as set forth in Schedule " B" for the Initial Term. (d) The License Fee shall be deemed to have been fully earned by and payable to Franchisor upon the granting of this Franchise and no portion of the License Fee shall be refundable to or become not payable by Franchisee for any reason. (e) The License Fee to he paid for the Initial Term is payable within thirty (30) days of the Effective Date. 3. Appointment and Use of Marks on Products (a) Subject to any termination or non-renewal of this Agreement, and except as otherwise provided in this Agreement, Franchisor appoints Franchisee, for so long as this Agreement remains in effect, as a non-exclusive retailer of Oqoqo Products at one or more Approved Retail Locations in the Territory. (b) Each Approved Retail Location to be established and operated by Franchisee in the Territory must first be approved by Franchisor, such approval not to be unreasonably

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withheld or delayed, and, except for the Approved Retail Location as set forth in Schedule " B" , shall be the subject of a separate Franchise Agreement to be entered into between the parties prior to its opening. Each such Franchise Agreement will contain the same financial obligations of Franchisee, including payment of a License Fee for each Approved Retail Location in an amount agreed to by the parties thereto, and will otherwise contain substantially the same terms and conditions as are set forth in this Franchise Agreement pertaining to the Approved Retail Location. If for any reason the parties do not enter into a separate Franchise Agreement, then the terms and conditions of this Franchise Agreement will apply to each such Approved Retail Location, except that the Effective Date will be read as fifteen (15) days prior to the opening date of such Approved Retail Location; and the Commencement Date will be read as being the same as the opening date of such Approved Retail Location; and the amount of sales that Franchisee will be required to achieve after taxes in either of the last two (2) years of the Initial Term in order to have the right to renew the Franchise Agreement for a subsequent term of five (5) years will be adjusted upwards from the Commencement Date of this Agreement to the first day of the last year of the Initial Term which pertains to such Approved Retail Location in accordance with increases in the CPI over such period. (c) During the currency of this Agreement, but except as otherwise provided in this Agreement, Franchisor shall permit Franchisee to hold itself out as an authorized retailer of Oqoqo Products. (d) Franchisee shall prepare and submit for Franchisor' s review and reasonable approval a budget for the development and first year' s operations of each Approved Retail Location, at the time of presenting each proposed retail location to Franchisor for its approval. Franchisor will provide assistance to Franchisee, but only for the purposes of guidance. Franchisee will be solely responsible to work with its own advisors in preparing and finalizing such budgets. (e) In the event that Franchisee wishes to relocate any existing Approved Retail Location to another location due to: (i) unfavourable business conditions; or (ii) a change in the nature or character of the area where the Approved Retail Location is located; or (iii) the Approved Retail Location is no longer adequate to support actual or potential business volumes,then Franchisee shall submit a written request to Franchisor requesting such permission and providing the reasons for such request and Franchisor, acting reasonably, shall consider and respond to any such request and shall notify Franchisee in writing within 30 days following receipt of such request of its decision thereof (f) For so long as the Approved Retail Location provided for herein operates in accordance with the terms of this Agreement. Franchisor shall not establish its own retail locations, or license any other person to establish a retail location, selling Licensed Products or Oqoqo Products in the Territory, except as provided for in Section 4(b).

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(g) Franchisee shall not use any Mark in association with any third party product or engage in the retail sale of any third party product at an Approved Retail Location unless such product is a Licensed Product. Where Franchisee wishes to obtain the approval of Franchisor for the sale of a third party product as a Licensed Product, it shall submit a request in writing or by electronic mail to Franchisor and shall provide Franchisor with one (1) sample of such proposed product and, where applicable, a colour scheme for such proposed product. Franchisor shall within thirty (30) days of receipt of Franchisee' s request, or such longer period of time as may be required if Dennis J. (Chip) Wilson or the party designated by Franchisor as the approving party from time to time is away from Franchisor' s home office, in which ease such period of thirty (30) days shall commence upon that party' s return, advise Franchisee in writing or by electronic mail of its acceptance or rejection of such request. Franchisor shall act reasonably in making any such determination and where it elects to reject any such request it shall advise Franchisee of its reasons for doing so. In the event that Franchisor fails to notify Franchisee of its decision within the thirty (30) day period provided as aforesaid, it shall be deemed to have refused Franchisee' s request. (h) Franchisee will be responsible for the reasonable cost of adding the Approved Retail Location and subsequent Approved Retail Locations of Franchisee to Franchisor' s master website, when developed by Franchisor. Lululemon will refer leads from prospective retail customers in the Territory to Franchisee, or upon the establishment of additional retail locations, to the retail location which is closest to the prospective retail customer' s place of residence. (i) Franchisee shall be entitled to fill any and all athletic team, group, corporate or similar orders in the Territory. 4. Reservation of Rights to Franchisor (a) Franchisor may also acquire, develop, operate, licence and franchise other types of retail locations which may involve the distribution and sale of similar products and services but which operate under different trade marks and which may be located anywhere including nearby to the Approved Retail Locations and within the Franchised Territory, and in particular Franchisor may establish a higher-priced or lower-priced brand of apparel similar in design and composition to the Oqoqo Products and Franchisor shall incur no liability to Franchisee in connection therewith. (b) In the second (2 nd ) year of the initial term of this Agreement Franchisor or its principals shall have the right to purchase all assets located at or used in the operation of the Franchise Store and the entire equity ownership of Franchisee. Upon written notice of the exercise of such right or option from Franchisor, Franchisee shall sell the Franchised Store to Franchisor at a price determined as set for in schedule 4(b)(i). The closing of the sale of the assets of the Franchised Store or the equity of Franchisee, as the case may be, shall be completed on or before the sixtieth (60th) day following receipt by Franchisee of such notice, or on such other day as the parties reasonably agree. The purchase price payable by Franchisor to Franchisee pursuant to this paragraph shall be paid in 24 equal and consecutive monthly payments commencing on the

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closing of the sale and of the Franchisee' s Franchise and thereafter on the first day of each month until paid in full.(i) Buy-out price for the initial term is as follows:Year one (I) $500,000 plus 100% of Additional AmountsYear two (2) $400,000 plus 100% of Additional AmountsYear three (3) $300,000 plus 100% of Additional AmountsYear four (4) $200,000 plus 100% of Additional AmountsYear five (5) and any subsequent terms -$100,000 plus 100% of Additional Amounts (c) Notwithstanding any other provision of this Agreement, Franchisor may itself or through an affiliate acquire, develop, operate, licence or franchise any form of business anywhere which is not specifically granted, franchised and licensed to Franchisee under this Agreement; and it may do so using a similar or a different trade-mark; and any such form of business may be competitive with the franchised business but operate under a different trade-mark; and if any such business uses a similar trade-mark, Franchisor will act in a commercially reasonable manner in the exercise of such rights and will endeavour through such use of the same or a similar trade mark to enhance the overall public recognition and goodwill thereof, and Franchisor shall incur no liability to Franchisee in connection therewith. 5. Management Personnel Franchisee acknowledges that Franchisor has granted this Franchise on the representations of Franchisee that, except with the Franchisor' s prior approval, which approval shall not be unreasonably withheld or delayed, the current principals of Franchise shall in aggregate participate actively on a full-time basis (40 hours per week) in the management and operation of the franchised business (which, for the purposes of this Section 5 shall include the Approved Retail Location provided for hereunder and any other Approved Retail Locations, if any, established by Franchisee or his affiliates) and each work at least one (1) day per week (eight (8) hours) on average on the store floor. Franchisee shall not appoint replacement management personnel without the prior written approval of Franchisor who will not unreasonably withhold such approval but who in granting such approval may prescribe, as a condition thereof that any such replacement management personnel satisfactorily complete the training requirements set out herein. Franchisor reserves the right to charge a reasonable standard fee and its reasonable expenses incurred in providing such training. 6. Training of Franchisee (a) Franchisor shall furnish Franchisee and the management personnel, if any, proposed to he employed by Franchisee in the franchised business including at each Approved Retail Location with initial training of three (3) weeks in duration in respect of the management,

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administration and operation of an Oqoqo franchised business. The training shall be given at a location designated by Franchisor. Franchisor will pay no compensation for any services performed by trainees during such training and all expenses incurred by Franchisee or the trainees in connection with such training shall be for the account of Franchisee. Such initial training is intended to enable Franchisee or its management personnel thereafter to hire and train its assistant manager and other employees. Franchisor shall also furnish Franchisee with retail store opening assistance of seven (7) days in duration but only upon the opening of the first Approved Retail Location of Franchisee. The cost of such initial training for up to three (3) persons at the same time and of such retail store opening assistance is included in the License Fee. Additional persons will be accommodated for such initial training or for subsequent equivalent training at Franchisee' s request, or in the event that the initial trainees shall fail to satisfactorily complete such initial training and Franchisee is required to hire a manager or replacement manager to satisfactorily complete such initial training, and in the event of a change of management personnel for the franchised business. Franchisor reserves the right to charge a reasonable standard fee and its reasonable expenses incurred in providing such additional training. (b) Franchisee and each manager, if any, of the franchised business shall satisfactorily complete such training prior to the commencement of the franchised business, or in the case of a new manager, prior to or immediately upon and after taking charge. unless waived by Franchisor in its discretion by reason of such person' s prior training and experience or by reason of Franchisee' s ability to satisfactorily train its management personnel. Franchisee shall advise Franchisor of its proposed operational structure and personnel prior to the commencement of business, and Franchisor will determine and advise Franchisee as to which personnel will require training. Franchisor may require retraining of any personnel at any time based upon performance. Franchisor may specify additional training which may be mandatory at any time due to system upgrades or changes. Franchisor may also conduct follow-up training seminars covering various topics from time to time. Franchisor may designate one (1) of such follow-up training seminars per year to be mandatory for Franchisee and its management personnel. Franchisee acknowledges that Franchisor' s training programs and materials are proprietary confidential information forming part of the Franchise System. (c) If additional assistance or training over and above that normally furnished by Franchisor is required or requested by Franchisee at any time, Franchisor and Franchisee shall discuss and reasonably agree upon what is required and Franchisor will furnish such additional assistance or training. Franchisor reserves the right to charge a reasonable standard fee and its reasonable expenses incurred in providing such additional assistance or training including but not limited to salaries, materials, transportation and accommodation. 7. Consultation Franchisor agrees to consult with Franchisee from time to time as to market conditions, merchandising trends and potential product line opportunities in the Territory. Franchisor will act reasonably and give due consideration to Franchisee' s views on such matters; however, Franchisee acknowledges that Franchisor will have final discretion to determine matters related to the production and design of all Oqoqo Products. Franchisee will report to

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Franchisor as reasonably required from time to time as to market conditions, merchandising trends and potential product line opportunities in the Territory. 8. Pricing, Ordering and Payment (a) Franchisee will provide Franchisor with a retail dollar amount forecast of its requirement for Oqoqo Products at least six (6) months in advance of the desired delivery date. (b) Franchisor shall sell Oqoqo Products to Franchisee at an amount equal to 35% of the lesser of the suggested retail price for the Oqoqo Products purchased and the retail price charged for such Oqoqo Products at the retail locations (other than factory outlets) owned by the Franchisor. (c) In the event of any shortfall in availability, Franchisee will receive a percentage of monthly production, in styles, colours and sizes, based on the production forecast for the month, divided by the total of all Oqoqo stores forecasts. Franchisee shall pay Franchisor the entire amount of the estimated purchase price of the goods for each month as a downpayment (" Downpayment" ) in respect of each order. Such payments shall be made to Franchisor by electronic bank transfer or cheque and shall be provided not less than 35 days prior to the first day of the scheduled delivery month of such order. Franchisor shall not commence production of any Oqoqo Products ordered by Franchisee until such time as it has received the applicable Downpayment. If, as a result of any Disposition Transaction, Dennis J. (Chip) Wilson will not control the Franchisor (or any successor of the Franchisor) after the completion of the Disposition Transaction, the Franchisor agrees that it will cause any successor to acknowledge and agree: (i) to accept responsibility for the delivery of all orders for which a Downpayment has been made prior to the completion of the Disposition Transaction but which has not been completed as at such date; and (ii) that that any Downpayment or other payment made by the Franchisee pursuant to this paragraph prior to the completion of the Disposition Transaction will be applied to satisfy or reduce the purchase price for the order to which such payment(s) relate. (d) At the end of each month, Franchisor will send a statement of shipping status and an invoice. Any shortfalls or overages in shipments of Oqoqo Products to Franchisee at the end of any month will be carried forward to the following month for shipment (if a shortfall) or for treatment as a partial fulfillment of a subsequent order (if an overage), provided that payments for Oqoqo Products delivered to Franchisee shall be made in accordance with the payment terms set forth herein. (e) The Oqoqo Products so ordered shall be delivered to Franchisee f.o.b. on the transport carrier of Franchisee' s choice from Franchisor' s Vancouver warehouse. (f) Franchisor will endeavour to send Franchisee Oqoqo Products above the forecast amount on request of Franchisee and dependent upon availability of inventory. Such shipments

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shall be paid for in full by Franchisee by credit card authorization or electronic bank transfer before the goods are shipped. 9. Title and Risk of Loss Title to and the risk of loss in any products ordered by one party from the other party shall pass at the time of delivery. 10. Winning Formula Franchisee will adhere in a commercially reasonable manner to the Winning Formula described in the attached Schedule " A" and, as amended by Franchisor from time to time, provided that Franchisor and Franchisee each acting reasonably may jointly agree to amend the Winning Formula where changes in local market conditions reasonably require any such change. 11. Royalties For so long as this Agreement remains in effect, Franchisee shall pay Franchisor a monthly royalty in the following amounts: (a) for the first 12 month period following the Commencement Date, 5% of its Gross Sales during each such month; (b) for the second 12 month period following the Commencement Date, 12.5% of its Gross Sales for each such month; and (c) thereafter, 25% of its Gross Sales for each such month.The monthly royalty shall be paid within fifteen (15) days of the end of each month and will be paid to Franchisor by electronic transfer, credit card authorization or bank draft. Franchisee will provide Franchisor with a monthly sales report showing the calculation of the monthly royalty amount, in such form and containing such detail as Franchisor may reasonably require from time to time. Franchisor will have the right to audit and inspect Franchisee' s records during normal business hours in order to verify the accuracy of the monthly royalty payments on giving Franchisee not less than twenty-four (24) hours' prior written notice. If Franchisee' s Gross Sales as reported to Franchisor should be found to be understated by more than three percent (3%) or if Franchisee shall have failed to report its Gross Sales to Franchisor as required, Franchisee shall pay the cost of the review or audit as well as the additional amount payable as shown thereby. In addition, if Franchisee' s Gross Sales as reported to Franchisor should be found to be understated by more than five percent (5%), or if Franchisee shall have failed to report its Gross Sales to Franchisor on two or more occasions, or if Franchisee' s Gross Sales as reported to Franchisor should be found to be understated by more than three percent (3%) on two or more occasions, this shall constitute a default under and a material breach of this Agreement.

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Franchisee' s sales will be downloaded daily to Franchisor. 12. Quarterly Reporting Franchisee shall provide to Franchisor on a quarterly basis, on or before the twentieth (20 th ) day of each month following each calendar quarter, an income and expense statement and a balance sheet in such form and detail as shall from time to time be reasonably required by Franchisor in respect of the franchised business during the preceding calendar quarter, which shall be certified as accurate by Franchisee. 13. Annual Reporting Franchisee shall also provide to Franchisor on an annual basis, within ni ...