Is a City Publications franchisee allowed to divert business from other franchisee-owned City Publications businesses to a Competitive Business?

[Item 23: RECEIPT]

A. Restriction During Term of Agreement

Franchisee covenants that, except as otherwise approved in writing by Franchisor, neither Franchisee nor any partner(s), officer(s), director(s), member(s), executives, professional staff or sales staff or the spouses of any of the foregoing shall, during the term hereof, either directly or indirectly, for itself or through, on behalf of or in conjunction with, any person, persons, partnership, corporation, limited liability company or other entity:

• 1. Divert business of customers of the Franchised Business or other Franchisor or franchisee-owned CITY PUBLICATIONS Businesses to any Competitive Business.

B. Restriction After Termination

Franchisee covenants that, except as otherwise approved in writing by Franchisor, neither Franchisee nor any partner(s), officer(s), director(s), member(s), executives, or professional staff or sales staff or their spouses of any of the foregoing shall for a period of two (2) years after the expiration or termination of this Agreement regardless of the cause, either directly or indirectly, for itself or through, on behalf of or in conjunction with, any person, persons, partnership, corporation, limited liability company or other entity: [Item 23: RECEIPT]

SECTION 1. DEFINITIONS

Whenever used in this Agreement, unless there is something in the subject matter or context inconsistent therewith, the following words and terms shall have the respective meanings ascribed to them as follows:

• "Competitive Business" means any business that sells, or grants franchises or licenses to others to operate a business that

sells, direct mail advertising or similar services to those offered as part of the CITY PUBLICATIONS System or in which Confidential Information could be used to the disadvantage of Franchisor or its other franchisees; provided, however, that the term "Competitive Business" shall not apply to: (a) any business operated by Franchisee under a Franchise Agreement with Franchisor, or (b) ownership for investment purposes of less than five percent (5%) of the stock of any publicly-traded corporation in which similar services as those offered as part of the System are sold only as an ancillary product, constituting less than ten percent (10%) of the aggregate gross sales of such business. Without limiting the foregoing, "Competitive Business" includes, among other things, magazines and any other print ads, internet advertising, email advertising, QR codes, and search engine optimization services; [Item 23: RECEIPT]

C. Reasonableness of Restrictions

Franchisee acknowledges that the restrictive covenants contained in Section 17 are essential elements of this Agreement

and that without their inclusion, Franchisor would not have entered into this Agreement. Franchisee agrees that each of the terms set forth herein, including the restrictive covenants, is fair and reasonable, and are reasonably required for the protection of Franchisor and the Franchise System. [Item 23: RECEIPT]

D. Remedies

As any breach by Franchisee of any of the covenants contained in this Section would result in irreparable injury to Franchisor, and as the damages arising out of any such breach would be difficult to ascertain, Franchisee agrees that, in addition to all other remedies provided by law or in equity, Franchisor, in the event of a breach or threatened breach of the covenants herein contained, shall be entitled to seek immediate equitable remedies including, but not limited to, restraining orders, preliminary and permanent injunctions in order to prevent Franchisee, its partners, members, officers, directors or employees from continuing to breach the covenants contained in this Section 17.

Source: Item 23 — RECEIPT (FDD pages 39–129)