How does Bambu's assistance in designating a Protected Area in Item 11 relate to the franchisee's ability to operate their shoppe and use the Marks as described in Item 12?

e require you or your employees to attend additional training specifically for you.

ITEM 12

TERRITORY

You may operate your shoppe and use the Marks and the Bambū system only at the Franchised Location which has been approved by us. You may not operate another Bambū shoppe at any site other than the Franchised Location without first obtaining our written consent, which will require you acquiring another franchise and entering into another franchise agreement, the terms of which may be materially different than the terms set forth in the Franchise Agreement attached to this Disclosure Document. We base our approval of your proposed Franchised Location on a variety of factors including the visibility and demographics of the proposed Franchised Location. See Item 11. If you execute your Franchise Agreement before you select and we approve a site, we will designate a "Designated Area" within which you must find a Franchised Location. The designation of the Designated Area does not in any manner grant to you any continuing territorial rights in or to the Designated Area.

Your Franchise Agreement designates a geographic area ("Protected Area") in which we will not establish and operate, or franchise anyone else to establish and operate, other Bambū shoppes, except as described below. The Protected Area may be defined by a radius around the shoppe, zip code boundaries, street boundaries or similar designations. The placement of a shoppe and the designation of a Protected Area by us depends on various demographic and market conditions around a proposed Franchised Location, including density of population, number of competitors and other food uses in the market, site availability, traffic, access and growth potential.

The designation of your Franchised Location, Protected Area or, if applicable, Development Area, does not grant you the exclusive right to any particular market or customers. You may advertise your Bambū shoppe in any geographic area and you may serve all customers who enter your shoppe, subject to reasonable restrictions and policies as we may place on your activities which may include restrictions and policies regarding: (1) electronic advertising (including Internet advertising); (2) the content, methods, media and means used to advertise, market and promote your shoppe; and (3) limitations on advertising, marketing or conducting business in areas outside of your Protected Area. Other Bambū franchisees have the same rights to conduct advertising anywhere and provide programs and products to all persons who enter their shoppes, subject to any restrictions set forth in our FRC Materials. You may not use other channels of distribution such as the Internet, catalog sales, telemarketing or other direct marketing to make sales outside of your Protected Area without our prior written consent.

You may not change the location of your Franchised Location or your Protected Area without our written consent before making the change. Upon our approval of your new location, you must also pay us a relocation fee of $15,000. We will base our approval of your new location on the same variety of factors as your initial proposed Franchised Location. Upon payment of the relocation fee, we will provide you similar new Bambū shoppe operations support, including two site visits and three days of additional training support as determined by us. If you close your existing Bambū shoppe while you are relocating it, you will continue to be responsible for Royalty Fee payments during the closure period, although we will waive the Marketing and Technology Fee until your relocated Bambū shoppe has opened. Unless you sign a MUD Agreement, described below, and except as described below related to Drive-thru shoppes (defined below) in your Protected Area, you have no option, right of first refusal or similar contractual right to acquire additional Bambū franchises. We reserve the right, in our sole discretion, to offer an existing franchisee the first right to purchase an additional franchise in the market area adjacent to that served by the franchisee's existing Franchised Location. Continuation of your rights to the Protected Area is not dependent on achieving a certain sales volume, market penetration or other contingency.

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.