of five days in any calendar year.

ITEM 12 TERRITORY

Your Location

Under the Franchise Agreement, we will grant to you the right to develop and operate one Casiola Business within a designated Operating Market (your "Operating Market").

Grant of Territory

The scope of your Operating Market will vary from the scope and size of the operating territories of other franchisees in our System depending on local factors, market conditions, and the number of Territories that you purchase at the time of signing your Franchise Agreement. A Territory, generally, will consist of a resort, vacation area, market, and/or geographic area that includes up to approximately 5,000 potential rentable individual unit shortterm rental properties within a 40 minute drive time from your administrative office. Subject to availability, our approval, and payment of additional Initial Franchise Fees identified in Item 5 of this Disclosure Document, you may add Additional Territories. Each Additional Territory will consist of a geographic area that includes up to approximately 5,000 potential rentable individual short-term rental properties. The number of potential rentable individual short-term rental properties will be determined by us at the time of signing your Franchise Agreement and will be determined based on our evaluation of industry data related to potential available individual unit rental properties that may be rented on a short-term basis. Your Minimum Monthly Royalty Fee Requirement and local marketing expenditure will increase if you add Additional Territories.

Relocation

Your right to relocate your Casiola Business and, thereby, your Operating Market is not guaranteed and approval of a relocation request by you is completely at our discretion. We evaluate relocation requests on a case-by-case basis and consider factors such as operational history, the location of your Operating Market, our expansion plans, and other factors that, at the time of a relocation request, are relevant to us.

Establishment of Additional Franchised Businesses

You do not have the right to establish additional Casiola Businesses.

Options and Rights of First Refusal to Acquire Additional Franchises

You are not granted any options, rights of first refusal, or similar rights to acquire additional franchises.

Territory Rights

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. However, during the term of the Franchise Agreement, provided that you are not in default of your obligations to us or our affiliates and except as to our Reserved Rights set forth below, we will not open and operate and we will not grant another franchisee the right to open and operate a Casiola Business within your Operating Market.

We and our affiliates reserve to ourselves the exclusive right on any and all terms and conditions that we deem advisable and, without any compensation or consideration to you (Franchise Agreement, Article 2.D.), to engage in the following activities (our "Reserved Rights"): (a) operate and grant to others the right to develop and operate Casiola Businesses using the System and Licensed Marks outside your Operating Market, as we deem appropriate and irrespective of the proximity to your Operating Market; (b) acquire, develop, merge with or otherwise affiliate with one or more businesses of any kind, including businesses that offer and sell products and services that are the same as, or similar to, your Casiola Business, and after such acquisition, merger or affiliation, to own and operate and to franchise or license others to own and operate and to continue to own and operate such businesses of any kind, even if such businesses offer and sell products and services that are the same as or similar to a the Franchised Business (but not utilizing the Licensed Marks) within your Operating Market;

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