What is the geographic limit for the restriction on Chicken Guy operating or licensing others to operate Chicken Guy restaurants?

[Item 12: TERRITORY]

Development Agreement

If you sign a Development Agreement, you will receive a Development Territory, which will be mutually agreed upon by us and you, taking into consideration the density of the area and the number of Franchised Restaurants you agree to develop. A description of the Development Territory will be included in the Development Agreement. The perimeters of the Development Territory may be described by specific street boundaries, county lines, state lines, municipal boundaries, railroad tracks or other similar boundary descriptions, and the size may range from a portion of a metropolitan area to a county or a state in less densely populated areas. For each Chicken Guy! Restaurant you will develop under the Development Agreement, you must select a site which we approve, based on our then-current site selection criteria we establish from time to time.

Except as described in the preceding paragraph, we will not, during the term of the Development Agreement (which expires on the date that you sign the lease for the last Franchised Restaurant that you are required to develop under the Development Schedule) operate, or license others to operate, restaurants identified in whole or in part by the name and mark "Chicken Guy!" in the Development Territory, provided you are in compliance with the terms of the Development Agreement and other agreements with us or our affiliates and you are current on all obligations due to us and our affiliates. This does not prohibit us or our affiliates from: (1) operating, and licensing others to operate, during the term of the Development Agreement, restaurants identified in whole or in part by the name and mark "Chicken Guy!" at any location outside of the Development Territory; (2) operating, and licensing others to operate, after the Development Agreement terminates or expires, restaurants identified in whole or in part by the name and mark "Chicken Guy!" at any location; and (3) operating, and licensing others to operate, at any location, during or after the

Development Term, any type of restaurant other than a restaurant identified in whole or in part by the name and mark "Chicken Guy!." The restrictions above apply only to Chicken Guy and do not apply to restaurants identified in whole or in part by the name and mark "Chicken Guy!" under construction or in operation in the Development Territory as of the date of the Development Agreement. We are not required to compensate you for exercising any rights reserved to us in the Development Territory.

Franchise Agreement

If you sign a Franchise Agreement without a Development Agreement, you must select a site which we approve, based on the site selection criteria we establish from time to time. Under the Franchise Agreement, we grant you the right to operate the Franchised Restaurant continuously at the approved site (the "Franchised Location"). You may not relocate the Franchised Restaurant without our prior written consent, which may be withheld by us in our sole discretion after reviewing a variety of factors, including population density, the proximity of other Chicken Guy! Restaurants and other relevant demographic factors. If we approve a relocation of your Franchised Restaurant, we have the right to charge you for all reasonable expenses actually incurred in connection with consideration of the request, and we may condition our approval upon the payment of an agreed minimum royalty fee to Chicken Guy during the period in which the Franchised Restaurant is not in operation.

If you comply with the Franchise Agreement and any other agreements with us or our affiliates and are current on all obligations due us and our affiliates, during the term of the Franchise Agreement, we and our affiliates will not operate, or license others to operate, Chicken Guy! Restaurants in a geographic area surrounding the Franchised Location ("Protected Area"). This restriction applies only to Chicken Guy and does not apply to restaurants identified in whole or in part by the name and mark "Chicken Guy!" under construction or in operation in the Protected Area as of the date of the Franchise Agreement. The size of the Protected Area will vary depending on, among other things, the location in which you wish to operate the Franchised Restaurant. Typically, the Protected Area will be set as a radius around the Franchised Location. The perimeters of the Protected Area may be described by specific street boundaries, county lines, state lines, municipal boundaries, railroad tracks, or other similar boundary descriptions. Factors that we will use in order to determine the Protected Area include demographics, population density and number of households in the area, the growth profile of the populations within the area, the competitive environment in that market, and other factors that we will take into account. If you develop Franchised Restaurants under a Development Agreement, we will determine the Protected Area for each Franchised Restaurant according to the policies that are then in place when you sign each Franchise Agreement.

The System (including the products sold under the Proprietary Marks) has been developed, and is designed, to function effectively in a wide variety of retail environments, many of which are not practically available to you. Accordingly, under the Development Agreement, we reserve to ourselves the right to: (1) operate, and license others to operate, restaurants identified in whole or in part by the name and mark "Chicken Guy!" in the Development Territory at Nontraditional Locations; (2) award national or regional licenses to third parties to sell products under the name and mark "Chicken Guy!" in foodservice facilities primarily identified by the third party's trademark; (3) develop and operate, and license others to develop and operate, restaurants other than restaurants identified in whole or in part by the name and mark "Chicken Guy!" in the Development Territory; (4) merchandise and distribute products identified by some or all of the Proprietary Marks in the Development Territory through any other method or channel of distribution; and (5) sell and distribute products identified by some or all of the Proprietary Marks in the Development Territory to restaurants other than restaurants identified in whole or in part by the name and mark "Chicken Guy!," provided those restaurants are not licensed to use the Proprietary Marks in connection with their retail sales.

Source: Item 12 — TERRITORY (FDD pages 34–36)