[Item 12: Territory]

While you will receive a protected Franchise Agreement, you will not receive an exclusive territory. You may face competition from other franchisees, from outlets that we own, or from other channels of distribution or competitive brands that we control. However, as stated above, we will not place or authorize anyone else to place an Afuri restaurant within your Franchise Territory.

Our Use of the Marks and Afuri Products and Services

We retain all rights not specifically granted to you in the Franchise Agreement. This includes our right to use or license the use of our Marks or any other marks to anyone, and for any purpose, and at any location (except that we will not place an Afuri restaurant within your Franchise Territory). Neither we nor our affiliates are restricted from participating in other distribution methods, whether or not within your Franchise Territory, (1) under the Marks, or (2) under marks and product or service configurations different than those offered through your Franchise. For example, we may place present and future Afuri products for sale in grocery stores and food markets at any location, whether or not within the Franchise Territory or within close proximity to your Afuri Franchise. Other distribution methods may also include internet sales, telephone sales, catalogue sales, sales via online marketplaces (such as Goldbelly.com, for example), and sales by other means. We will have no obligation to compensate you for any such sales made within your Franchise Territory.

We may place Afuri establishments in airport and mall food courts, stadiums, and similar limited access environments in your Franchise Territory and regardless of the location of other Afuri operations. We will have no obligation to compensate you for any such sales made within your Franchise Territory.

Development Area for Multiple Franchise Purchases

If you sign the Multiple Franchise Purchase Addendum to purchase multiple Franchises simultaneously, then we will designate a Development Area in which you will open your Franchises.

You will not receive an exclusive territory. You may face competition from other franchisees, from outlets that we own, or from other channels of distribution or competitive brands that we control.

However, we will not establish or allow others to establish an Afuri business physically located within your Development Area using our Marks and System so long as the Franchise Agreements and corresponding Multiple Franchise Purchase Addenda are in force and you are not in default in any material provision of such agreement, and except as provided in the paragraphs under the heading "Our Use of the Marks and Afuri Products and Services" below. Therefore, your Development Area will be protected but not exclusive.

Item 12 Territory

Franchise Premises and Franchise Territory

You will be given a specific territory for your Franchise (the "Franchise Territory" or "Territory"). A typical franchise territory will be a mileage radius around the center of the Franchise Premises. The standard radius is 5 miles, but the radius may be as low as 1/4 of a mile in downtown urban areas. We reserve the right to designate a different mileage radius based on factors we deem reasonable. For example, your Franchise Territory may vary in size and dimensions based on population, growth trends, affluence of nearby population, topography, geography, density and demographics. The Franchise Territory will be identified in Section 1.1 of the Franchise Agreement. The exact determination of the Franchise Territory will depend upon our market analysis, market penetration plans and franchise placement strategies. Among the factors we may consider to determine the feasibility of possible franchise territory locations are population demographics and other businesses in the area pursuant to census and chamber of commerce information.

Source: Item 12 — Territory (FDD pages 34–37)