Does this section of the Burros Fries agreement impose any geographic limits on the franchise?

establishing wage and hour requirements, hiring, firing, setting wages, disciplining, supervising and record keeping of employees.

5. FRANCHISE GRANT

We hereby grants to Franchisee, upon the terms and conditions herein contained and subject to this Agreement, the right, license, and privilege, and Franchisee hereby accepts a franchise under the terms and conditions set forth herein, to operate a Burros & Fries Business that has been assigned a protected territory as set forth in Section VI (referred to asthe "Territory"), with the right to use solely in connection therewith our Names and Marks, Products, Services, its advertising and merchandising methods, and our System, as they may be changed, improved and further developed from time to time only at the Accepted Location as set forth in Section VI and provided the Franchisee shall adhere to the terms and conditions hereof.

It is understood and agreed that, except as expressly provided herein or if any other agreement is executed, this franchise includes no right of Franchisee to sub franchise.

Except as provided in this Agreement, Franchisee shall be free to use the materials provided by us in the manner that Franchisee, in Franchisee's sole and absolute discretion, deems most appropriate for the Business, provided that Franchisee shall not violate any applicable law, regulation or provision of this Agreement in exercising such discretion.

6. TERRITORY

Franchisee is not granted an exclusive territory. The Franchisee is granted a Territory that is a protected territory as defined in this Agreement. The location of the Franchise Business shall be as the parties agree, usually about a radius of three (3) miles. If the actual Franchise Business address has not yet been chosen by the time the parties sign the Franchise Agreement they shall agree upon a temporary territory. The final Territory will be defined from the actual Business address once chosen.

The exact "Accepted Location" for the Business is:

The protected Territory for a Business that is not in a Non-Traditional Location will be: _____________miles driven from any direction of the Business.

If the parties do not select a Territory in which to operate the Business prior to the signing of this Franchise Agreement, then they shall agree to it at a later date, under the terms of this Agreement. Failure to secure a lease for the Business within eighteen (18) month s from the execution of this Agreement will permit us to terminate this Agreement, as provided in Section 23.C. The Territory, under the terms of this Agreement will normally include up to three (3) miles driven in any direction from the Business as defined by MapQuest or a similar computer mapping program. We reserve the right to grant a Territory that is larger or smaller than the three (3) mile area described above, in order to account for more densely or sparsely populated areas. We will determine population based on the most recently published data from the U.S. Census Bureau (or such other source we may indicate to you). Franchisee may not conduct business out of any other location or locations other than the Accepted Location identified above. Franchisee can service guests and sell Products to anyone who comes from anywhere and can conduct offsite events (such as: community events, consumer shows, festivals, expos, etc.) to promote its Business and perform Services so long as such off-site events and Services performed are within its Territory or the parameters of its Non-Traditional Location. Franchisee may face competition for Services from other franchises, company-owned businesses or from other channels of distribution we control.

The Territory will be determined by population base, demographics of the surrounding area, traffic patterns, proximity to major roads, available parking, competition, business potential, availability of appropriate sites, adequate square footage, reasonable rent or other conditions important to the successful operation of a Franchised Business as we deem appropriate. The Territory is determined once a location is chosen and approved by us, and will not be altered even if there is a population increase or decrease during the term of this Agreement. The Territory is not dependent upon achievement of certain revenues, market penetration or any other contingency. The boundaries of the Territory described above shall be determined by major topographical features which clearly define contiguous areas such as: Streets, highways,freeways or other roadways, rivers, streams, mountains and underdeveloped land. We determine the size and boundaries of the protected Territory.

Franchisee shall not relocate its Business that has been assigned a Territory without our prior written consent (specified in Section 22.A). If Franchisee is provided with a Territory then during the term of this Agreement, we shall not establish, nor license another party or entity to establish, Burros & Fries Business within the Territory outlined above. If Franchisee decides to open additional Businesses and buys the rights to additional Franchises, then those separate franchise agreement(s) will dictate the terms of the applicable territory (a separate Franchise Agreement is required for each additional Business as defined in Section 9.D of this Agreement).

Franchisee must operate its Business within the specific Territory as identified in this Section VI. Franchisee may not open a Business at any other location other than the Accepted Location that has been set forth in this Agreement or made a part hereof by an addendum attached to this Agreement. Franchisee

may accept business, service guests and sell Products to anyone who comes from anywhere so long as the Products are being sold from the Accepted Location within its Territory. However, Franchisee can only provide Services within its Territory. Franchisee may perform Services outside its Territory, away from its facility (as described below). We, company-owned locations, other franchisees reserve the same right to sell Products and serve anyone who comes from anywhere. Franchisee is prohibited from selling Products through any alternative channels of distribution (such as Websites as defined below) without our written approval. If Franchisee is granted permission to sell Products through an alternative channel of distribution, per our written approval, Franchisee may sell Products to anyone from anywhere without compensation to another franchisee or company-owned business. Our response to Franchisee's request will be made by email or any other form of written communication within thirty (30) days after we receive it. Approval may be revoked in our sole discretion.

Source: Item 22 — CONTRACTS (FDD page 53)