Does Chesters intend to establish other franchised restaurants under a different trade name?

erritory.

Except as described below, neither we nor any affiliate has established, or presently intends to establish, other franchised or company-operated restaurants or another distribution channel (such as the Internet, catalog sales, telemarketing, or other direct marketing sales) selling or leasing similar products or services under a different trade name or trademark (although we have the right to do so, as noted above).

As described in Item 1 above, the First Chester's and Giles licensed retail operators operate restaurants or sell chicken products under the CHESTER FRIED Total Program. We are now the licensor of those Chester Fried Licensed Restaurants. Those retail operators may continue using the CHESTER FRIED trademark if they satisfy certain standards and procedures. In certain parts of the United States, we may continue allowing certain experienced food-service operators, and chain accounts who already operate one or more Chester Fried Licensed Restaurants, to develop and operate additional Chester Fried Licensed Restaurants. We generally anticipate doing so only when the experienced food-service operator or chain account prefers (for its own business reasons) not to acquire a CHESTER'S Restaurant franchise.

As further described in Item 1 above, the CHESTER'S Licensed Restaurants use the Marks, including the Primary Mark, to offer and sell our proprietary products so long as they satisfy certain standards and procedures. We are the licensor to the CHESTER'S Licensed Restaurants. We currently offer qualified individuals or entities the right to operate CHESTER'S Licensed Restaurants from existing foodservice or restaurant operations. We anticipate entering into license agreements for CHESTER'S Licensed Restaurants with experienced foodservice operators or chain account holders to operate within supermarkets or similar locations.

We do not anticipate any material conflicts (in terms of customers and franchisor support) between the CHESTER'S Restaurant franchises offered in this disclosure document and CHESTER FRIED Licensed Restaurants or CHESTER'S Licensed Restaurants because the Licensed Restaurants operating at these various locations generally focus on different customer groups. Nevertheless, we will use reasonable efforts to resolve any conflicts that do arise because it is in our best interests to do so.

Besides our franchising activities described in Item 1 and above, we currently sell to our franchisees—either directly or indirectly through unaffiliated third-party distributors and grocery wholesalers who then resell to franchisees—various consumable products (manufactured for us by a third party), including the blended products (breading, batter dip, and marinades) used to prepare chicken sold under the Marks. We also sell packaging and other paper materials used by franchisees and sell them to unaffiliated third-party distributors and grocery wholesalers for resale to franchisees.

We may also sell to non-Chester's food-service operators (directly or through unaffiliated distributors) chicken cooking equipment that is similar to the equipment you will buy from us or unaffiliated distributors and then use in operating your Restaurant.

An affiliate of ours, BirdShack, LLC ("BirdShack"), sells chicken-related food products (under the BirdShack name) to non-Chester's food-service operators (directly or through unaffiliated distributors). These operators have no right to use any Mark you have the right to use under your Agreement. They will sell chicken products as a menu item under their own trade names and brands as part of their existing retail foodservice businesses, or under the BirdShack name. These operators sell their chicken products from their own physical premises, although they might engage in some off-premises advertising that competes with your advertising. We do not anticipate any material conflicts between CHESTER'S Restaurant franchises and these other food-service operators in terms of customers and support, although we will use reasonable efforts to resolve any conflicts that do arise.

Source: Item 12 — TERRITORY (FDD pages 29–31)