Is the size of the Franchisee Territory for a Carbones Pizzeria restaurant negotiable?

At the time you acquire the site we have approved we will grant you a territory. This territory will be an area that is generally 5 miles surrounding your Restaurant ("Franchisee Territory"). However, in heavily populated areas this area will be less than 5 miles. The criteria we use for determining the boundaries of the Franchisee Territory in your Franchise Agreement include density of population, growth trends of population, and natural boundaries. We will negotiate the ultimate size of the radius of the Franchisee Territory with you. An approved territory Map and written description will be included as an exhibit in your Franchise Agreement. Territories we grant to franchisees may overlap, but we will not approve anyone opening a Carbone's Pizza restaurant, or relocating a restaurant, the physical premises of which will be in your Franchisee Territory.

As long as you are in compliance with your Franchise Agreement with us we will not establish, nor will we grant a third party the right to establish a restaurant operating under the Carbone's Pizza or Carbone's Pizzeria name, the physical premises of which is in your Franchisee Territory. Other than these limitations there are no prohibitions on us in your Franchisee Territory. For example, we and our affiliates can operate and allow others to operate similar or identical businesses within the Franchisee Territory if such businesses do not operate under the Carbone's Pizza or Carbone's Pizzeria names, and to operate similar or identical business outside of your Franchisee Territory under any trademarks even if the businesses compete with your Restaurant. We and our affiliates can also operate or allow others to operate businesses or other ventures inside the Franchisee Territory under any trademarks, including the Carbone's Pizza or Carbone's Pizzeria marks so long as the businesses are not competitive with your Restaurant. We and our affiliates can sell any products we or our affiliates provide to you for use in your Restaurant to any person, whether in or outside your Franchisee Territory. We and our affiliates can sell or grant third parties the right to sell goods and services competitive with those sold by your Restaurant under any trademarks, including Carbone's Pizza and Carbone's Pizzeria marks, through other distribution channels including the Internet, catalog sales, telemarketing or other direct marketing, in and outside of your Franchisee Territory. We and our affiliates can also sell frozen pizzas and other frozen items, whether under our trademarks or other trademarks, to customers and resellers who may be located in your Franchisee Territory, which includes supermarkets and convenience stores. We and our affiliates can also acquire businesses in the Franchisee Territory that are similar to your Restaurant or sell our business whether through a sale of assets or stock to anyone, regardless whether they operate or franchise the operation of businesses similar to your Restaurant.

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

Source: Item 12 — TERRITORY (FDD pages 19–21)