What is the basis for Chatime restricting a developer's ability to compete with the franchisor?

ly or contingently or hold options over shares or any other securities or units of any entity engaging in a Restrained Business; and

• (d) procure, employ, seek to employ or engage, or appoint in any capacity (whether as a consultant, director or otherwise), any person who is or has been in the 12 months prior to such action an employee, independent contractor, or prospective franchisee of the Franchisor, its affiliates, or any Chatime Store Business.

9.3 Restraint Applies to Conduct in Any Capacity

The agreement by Franchisee Parties in clause 9.2 applies to any of them, the Interested Parties, and those acting:

• (1) Either alone or in partnership or association with another person;
• (2) As principal, agent, representative, director, officer, employee, or financier;
• (3) As member, shareholder, debenture holder, note holder, or holder of any other security;
• (4) As trustee of or as a consultant or adviser to any person; or
• (5) In any other capacity.

9.4 Separate Restraint Agreements

Clauses 9.2 and 9.3 have effect as comprising each of the separate provisions which results from each combination of a capacity referred to in clause 9.3, a category of conduct referred to in clause 9.2, in the Restraint Area and for the Restraint Period. Each of these separate provisions operates concurrently and independently. If any separate provision is unenforceable, illegal, or void, that

provision is severed and the other separate provisions remain in force.

9.5 Directors, Managers, and Key Employees

Franchisee must ensure that any of its directors who are not a party to this Agreement, any Interested Party, manager, and any of its key employees nominated by Franchisor enter into confidentiality and non-competition agreements before they receive or are granted access to any of the Confidential Information.

9.6 Other Interested Parties

Franchisee must procure that any Interested Party specified by Franchisor enters into a noncompete and confidentiality agreement with Franchisor that contains:

• (1) Similar reasonable restraints as imposed on Franchisee and Guarantor pursuant to clause 9.2; and
• (2) Similar confidentiality obligations to the obligations imposed pursuant to clause 8,

as and when required by Franchisor.

9.7 Acceptable Conduct

Nothing in this clause prevents Franchisee or Guarantor from:

• (1) Owning less than 5%, by value, of securities in a listed corporation;
• (2) Engaging or being concerned or interested in the Franchised Business in accordance with this Agreement; or
• (3) Engaging or being concerned or interested in any business or activity pursuant to which Franchisor has given its prior written consent.

Source: Item 23 — Receipts (FDD pages 58–262)