Does Beauty Bungalows allow competition from company-owned outlets within a franchisee's territory?

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.

Neither Beauty Bungalows, nor any affiliate, will operate, a Business using the Marks you are authorized to use nor grant franchisees the right to operate a Business using the Marks you are authorized to use within your Protected Territory, but Beauty Bungalows, its affiliate and its franchisees have the right to operate a Business using the Marks anywhere outside your Protected Territory. Neither Beauty Bungalows, nor any affiliate currently plan to operate or franchise a business under a different trademark that sells or will sell goods or services similar to those you will offer.

We and our affiliates may sell products under the Marks within and outside your Protected Territory through any method of distribution other than a dedicated Beauty Bungalows location, including, sales through such channels of distribution as the Internet, catalog sales, telemarketing, or other direct marketing sales (together, "alternative distribution channels"). You may not use alternative distribution channels to make sales outside or inside your Protected Territory except as described in the following paragraph and you will receive no compensation for our sales through alternative distribution channels except as described in the following paragraph.

We and our affiliates can use alternative distribution channels to make sales within your Protected Territory of products or services under trademarks different from the Marks you will use under the Franchise Agreement.

We reserve the following rights, among others:

• 1. to own, franchise, or operate Beauty Bungalows Franchises at any location outside of the Protected Territory, regardless of the proximity to your Site;
• 1. to use the Marks and the System to sell any goods or services, including salon equipment or services, or beauty supplies similar to those which you will sell, through any alternative distribution channels within or outside of the Protected Territory. This includes, but is not limited to, other channels of distribution such as television, mail order, catalog sales, wholesale sale to unrelated franchises, or over the Internet. We exclusively reserve the Internet as a channel of distribution for us, and you may not independently market on the Internet or conduct e-commerce.
• 1. to purchase or be purchased by, or merge or combine with, any businesses, including a business that competes directly with your Beauty Bungalows Franchise, wherever located; and
• 1. to implement multi-area marketing programs which may allow us or others to solicit or sell to customers anywhere. We also reserve the right to issue mandatory policies to coordinate such multi-area marketing programs.
• 1. to use, license and franchise the use of trademarks or service marks that are not the same or similar to the Marks, whether in alternative channels of distribution or at any location including within the Protected Territory, in association with operations that are the same as, similar to, or different than Beauty Bungalows Franchises.

Source: Item 12 — TERRITORY (FDD pages 30–32)