Does the Closet Storage Concepts franchisee have a right of first refusal during the initial term?

• 2.5 Franchisee Right of First Refusal.

If at any time during the initial term or the Renewal Period, Franchisor reasonably determines, based on pertinent marketing data, that one (1) or more additional Closet & Storage Concepts business locations are necessary in the Territory in order to avoid loss of market position and business to competitors and that Franchisee is unable to adequately service the Territory by its existing Closet & Storage Concepts business location(s), Franchisee, Franchisor or a new franchisee licensed by Franchisor may operate such additional business location so long as the following conditions are met:

• 2.5.3 Franchisor communicates in writing to Franchisee its intention to open said additional location, based on the reasonable market projections and determinations set forth above;

• 2.5.4 Franchisor provides Franchisee a thirty (30) day right of first refusal to elect to open the additional location in the Territory, following receipt of notification from Franchisor;

• 2.5.5 in the event Franchisee elects not to open the additional Closet & Storage Concepts business location pursuant to this Section or fails to open said location within three (3) months after it makes the election (except if such failure is due to reasons beyond the control of Franchisee such as Acts of God, war or similar occurrences provided that Franchisee has made a good faith effort to open the location), Franchisor shall have the right to accept, in its sole and exclusive discretion, offers from other parties to become a franchisee in the Territory or to operate a Franchisor-owned Closet & Storage Concepts business location in the Territory;

• 2.5.6 in the event that Franchisee elects to open the additional Closet & Storage Concepts business location pursuant to this Section, the right to operate such location shall be governed by the terms and conditions of this Agreement as amended, including, but not limited to, Franchisee's obligation to pay Royalties under Article 3 of this Agreement and NAP and Local Advertising fees with respect to each and every additional Closet & Storage Concepts business location established hereunder by aggregating the Gross Revenues of all of its locations within a single Territory.

There will be no payment of any additional initial franchise fee with respect to an additional location;

• 2.5.7 the election of Franchisee not to open the additional Closet & Storage Concepts business location pursuant to this Section shall not prevent Franchisee from exercising its rights to open additional locations in the Territory in accordance with Section 1.4 of this Agreement, provided, however, that Franchisor may consider the proximity of any such additional location to the additional Closet & Storage Concepts business location(s) opened hereunder in determining whether to give its consent to any such other additional location, and Franchisor's decision to withhold its consent based upon such consideration shall not be or be deemed to be unreasonable; and

• 2.5.8 in the event that more than one Closet & Storage Concepts business location is determined to be necessary in the Territory by Franchisor, Franchisee shall notify Franchisor within thirty (30) days after the opening of the first additional Closet & Storage Concepts business location of Franchisee's desire to open the additional Business locations deemed necessary in the Territory after which Franchisor and Franchisee shall proceed again as outlined in this Section.

Source: Item 22 — CONTRACTS (FDD page 59)