ograms are regularly reviewed and updated.

Item 12: Territory

Your Franchise Agreement grants you the right to operate a single Chatime Store in a location approved by usin a designated territory ("Territory") identified in your Franchise Agreement. 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.

The designated territorial rights to the protected territory granted to you under the Franchise Agreement are contingent upon complying with your obligations under the Franchise Agreement. We have the right to terminate or reduce your designated territorial rights or to terminate your Franchise Agreement if you fail to comply with your obligations under the Franchise Agreement.

There is no minimum Territory. Your Territory will typically be a two-mile radius around your approved location, unless your approved location is located in a major metropolitan downtown area or similarly-situated/populated central business district (a "Central Business District"). If your approved location is located in a Central Business District, your Territory may be limited to a geographic area comprised of anywhere from a radius of two blocks to two miles around your approved location, as we deem appropriate in our discretion. The size of your Territory may vary from the territory granted to other franchisees based on the location and demographics surrounding your approved location.

The boundaries of your Territory may be described in terms of zip codes, streets, landmarks (both natural and man-made) or county lines, or otherwise delineated on a map. The sources we use to determine the population within your Territory will be publicly available population information (such as data published by the U.S. Census Bureau or other governmental agencies and commercial sources).

You do not have the right to distribute products through alternative channels of distribution. We may use alternative channels of distribution for our products and trademarks and we may expand our sale of products on a local, regional, national, or international basis. We have the absolute right to sell, distribute or license others to distribute products identified by the Trademarks (or by any other name or trademark) anywhere and in any form (e.g., in packaged form or otherwise), regardless of the proximity to your location, through any alternative distribution methods or channels (such as grocery stores, the internet, or other alternative distribution methods or channels). These other sources of distribution may compete with you. We reserve the absolute right to distribute goods or services through the use of the Internet or other electronic communications, telephone, mail, or similar methods, under our trademarks or any other marks, regardless of the destination of the products or services. If we elect to distribute goods or services in your Territory through alternative distribution methods or channels, we are under no obligation to compensate you for conducting business, or soliciting or accepting orders, inside your Territory through such means.

There are no restrictions on your soliciting or accepting orders outside your Territory. However, we retain the sole right to use our trademarks on the Internet, including in connection with websites, domain names, directory addresses, metatags, as graphic images on webpages, linking, advertising, co-branding, and other arrangements. You may not maintain a website or social media accounts without our prior written consent. If we do ever approve of a website that you promote and develop, we have the right to condition our approval on the terms that we determine are necessary, such as requiring that your domain name and home page belong to us and be licensed to you for your use during the term of your agreement.

You do not have the right to relocate your Chatime Store without our permission. If you request relocation, you must obtain our prior written approval for the site and meet our then-current criteria for relocation. Our approval process is substantially the same process we use in approving a new location. You must comply with all your obligations to us and sign our then-current form of Franchise Agreement with all then-current ongoing fees, for a term equal to the term remaining on your Franchise Agreement for the previous location or to align with the new lease term being no

greater than 10 years on the new location, at a pro rata fee of the initial Franchise Fee entered into. The then-current Franchise Agreement may contain materially different terms and conditions than your original Franchise Agreement. There is no additional Initial Franchise Fee paid to us for relocation unless we grant you a term greater than the term remaining on the Franchise Agreement for the previous location.