Does Carvel grant franchisees an exclusive territory?

[Item 12: Territory]

No Exclusive 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.

No Protected Territory for All Shoppes other than Co-Branded Shoppes in Streetside Locations

This Section applies to all Shoppes other than Co-Branded Shoppes in Streetside Locations.

The Franchise Agreement licenses you to manufacture and sell Approved Products at retail only from the Accepted Location. We do not grant you any exclusive territory or other territorial rights under these agreements other than the right to sell Approved Products at retail from the Shoppe.

Limited Protected Territorial Rights for Co-Branded Shoppes in Streetside Locations

This Section applies only to Co-Branded Shoppes in Streetside Locations.

If you operate a Co-Branded Shoppe in a Streetside Location, while you will not receive an exclusive territory, you will receive a territory with limited protected rights (an "Area of Protection") as described in this Item. For a Co-Branded Shoppe (other than a Swirl Shoppe), this means that, during the term of the Franchise Agreement, we will not establish or operate, nor license any other person to establish or operate, another Co-Branded Shoppe (other than a Swirl Shoppe) at a Streetside Location within the Area of Protection. For the avoidance of doubt, we may operate, or license others to operate, single-branded Shoppes, Swirl Shoppes, or Shoppes that do not include the exact combination of brands as the Co-Branded Shoppe (such as a Shoppe that is co-branded with a brand other than the second brand in the Co-Branded Shoppe or that is multi-branded with such second brand and one or more other brands).

If you operate a Swirl Shoppe in a Streetside Location, during the term of the Franchise Agreement, we will not establish or operate, nor license any other person to establish or operate, another Swirl Shoppe at a Streetside Location within the Area of Protection. For the avoidance of doubt, we may operate, or license others to operate, single-branded Shoppes or Cinnabon Co-Branded Shoppes inside or outside the Area of Protection.

We may negotiate your Area of Protection with you. The size and scope of the Area of Protection will be in the Franchise Agreement and will be determined on a case-by-case basis. The Area of Protection will not exceed a one-block radius for a Shoppe in an urban location (the downtown area of the 100 largest U.S. cities as measured by population as of the effective date of the Franchise Agreement) or a one-mile radius for a Shoppe in any non-urban location. There is no minimum Area of Protection for a Shoppe. The factors that we consider in determining the size of an Area of Protection include current and projected market demand, demographics and population based on our research and experience, median household income, presence of other businesses, location of competitors, traffic patterns, access and visibility, location of other Shoppes, our future development plans and other market conditions.

If the Accepted Location is not known when you sign the Franchise Agreement, we will designate the Area of Protection once we authorize a location for the Shoppe and the Accepted Location and Area of Protection will be documented when we accept the location. If the Accepted Location is known when you sign the Franchise Agreement, the Franchise Agreement will specify the Accepted Location for your Shoppe and the Area of Protection.

If you default under the Franchise Agreement and fail to cure the default in the applicable cure period (if any), we have the right to reduce or eliminate your Area of Protection, in addition to our other remedies. Except for as described in the previous sentence, the Area of Protection may not be altered before the expiration or termination of the Franchise Agreement. Your territorial

protection is not dependent on achievement of a certain sales volume, market penetration or other factors, other than compliance with the Franchise Agreement.

Our Reserved Rights Under the Franchise Agreement

Under the Franchise Agreement, we and our affiliates retain all the rights that we do not specifically grant to you. For example, without limitation, we retain the following rights, without providing any rights or compensation to you:

• (i) We and/or our affiliates may establish or license franchises and/or companyowned businesses offering products or services that are similar or identical to the Approved Products using the System or elements of the System under the Proprietary Marks or any other marks anywhere, including at or near your Accepted Location;
• (ii) We and/or our affiliates may produce and/or sell Approved Products or any other products or services, and authorize others to produce and/or sell Approved Products or any other products or services, using the Proprietary Marks, the System, an

Source: Item 12 — Territory (FDD pages 74–79)