be limited to marketing solely within the Designated Territory described in the individual Franchise Agreements.

You will not receive an exclusive territory. You may face competition from other franchisees, from businesses that we own, or from other channels of distribution or competitive brands that we control.

Continuation of your development rights does not depend on your achieving a certain sales volume, market penetration or other contingency. However, if you are in default of the Development Agreement (which may include, but is not limited to, a default for failing to comply with the Development Schedule) or any Franchise Agreement and fail to cure the default within the applicable cure period (if any), we may terminate the Development Agreement and your territorial rights in the Development Area, or other remedy as provided in the Development Agreement. There are no other circumstances in which we can unilaterally modify your territorial rights in the Development Area.

Franchise Agreement

You will be granted a designated territory as described below and which will be defined in the Franchise Agreement (the "Designated Territory").

You may operate the business office of the Franchised Business from your home at any location and do not need our permission before relocating. If you operate your business office from your home you must secure a virtual address located within the Designated Territory for the website listing, search engine optimization and all Franchise Business related purposes.

If you operate your business office for the Franchised Business from a commercial property such as leased office space, the business office must be located within the Designated Territory. You do not need our permission before relocating as long as the leased or purchased office is within your Designated Territory.

If you relocate or your address changes you must notify us of the change at least 7 days prior to the relocation.

You will be granted a Designated Territory with an approximate business population of 3,000 to 3,500 qualified businesses (defined as businesses with 10 or more employees) as identified by a database of business establishments and employment. We offer pre-defined territories by state which are defined by contiguous zip codes with drive times and minimum and maximum number of qualifying businesses taken into consideration. The size and population density of your Designated Territory could vary depending on the demographic information and business population density of the area included in the Designated Territory. For example, your Territory could vary in size from a city in an urban location to a county in a more suburban area.

You maintain your rights to your Designated Territory as long as you abide by the terms of your Franchise Agreement. We may not alter your Designated Territory without your consent.

We will not establish or license another to establish any other CINCH I.T. businesses within your Designated Territory while your Franchise Agreement is in effect and you are not in default.

You do not receive an automatic the right to acquire additional franchises within your Territory.

Minimum Performance Standards

The grant of your designated Territory is expressly conditioned upon your successful penetration of the market in the Designated Territory. You must promote actively and aggressively the products and services of your CINCH I.T. Franchised Business within your Designated Territory.

If you do not sell one new managed service provider ("Managed Service Provider" or "MSP") contract for 3 consecutive months, we will require you to undertake and complete a performance improvement plan ("Plan") over a consecutive 3 month period. The Performance Improvement Plan consists of a list of activity metrics assigned by us that must be performed by you each week. You must also attend a weekly accountability telephone conference to review the assigned metrics and your results. You will be charged in one hour increments at our then-current rate for remedial training for each accountability conference. If after completion of the Plan you do not sell one new MSP contract within 3 months, you will be in default of your Franchise Agreement and we may we may terminate the Franchise Agreement.

As fully detailed in our confidential Operations Manual, a Managed Services Contract is a Technology Support Plan that offers Support, Proactive Maintenance, a Cybersecurity Suite of Services and Consultation. The Support Plans are priced per user and have a minimum of 10 users.

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.

If a client in your Designated Territory has satellite offices in another franchisee's territories, we recommend working together to provide on-site support and sharing revenue.

You may not market or advertise outside of the Designated Territory. Except for the limitations on advertising and marketing outside of your Designated Territory, you have no restrictions on who your clients are or where they come from. You may accept, service and retain business from outside of your Territory without permission or special payment.

We do not restrict you from passively attracting clients from outside your Designated Territory and likewise we do not restrict other franchisees from passively attracting clients outside their designated territory which may include your Territory.

Source: Item 12 — TERRITORY (FDD pages 39–43)