How must a Deka Lash franchisee operate their Franchised Business?

NTS**

WHEREAS, DL Franchising, LLC d/b/a Deka Lash ("Deka Lash," "we," "us," or "our") offer a franchise program to operate a studio offering eyelash extensions, eyebrow services, skincare, product sales, and other beauty related services ("Franchised Business").

WHEREAS, Developer and all Signators identified on the signature page to this Agreement, in your personal capacity, (collectively "Franchisee," "Developer," "you" or "your") desire to enter into an agreement with us to obtain the rights to operate multiple Franchised Businesses using the system developed by us or our affiliates, which includes specified standards, systems, concepts, identifications, methods, and procedures for the sales and marketing of these services and products (the "System").

WHEREAS, we and our franchisees use various trade names, trademarks and service marks including, without limitation, the trademark "Deka Lash," in connection with the System (the "Marks").

WHEREAS, we grant qualified third parties the right to develop a certain number of Franchised Businesses within a defined geographical area (the "Development Area") in accordance with a mandatory development schedule that must be strictly adhered to, with each Franchised Business within the Development Area being opened and operated utilizing the Marks and System pursuant to the terms and conditions set forth in our then-current form of franchise agreement (each, a "Franchise Agreement").

WHEREAS, you recognize the benefits from receiving the right to operate a Franchised Business and desire to: (i) become a multi-unit Franchised Business operator subject to the terms of this Agreement; and (ii) receive the benefits provided by us under this Agreement.

WHEREAS, you have applied for the right to open and operate a certain number of Franchised Businesses within the Development Area as set forth in this Agreement, and we have approved such application in reliance on your representations made therein.

WHEREAS, you acknowledge that adherence to the terms of this Agreement, including our Operations Manual and other System standards and specifications, are essential to the operation of all Franchised Businesses and our System as a whole.

NOW, THEREFORE, the parties agree as follows:

AGREEMENT

1. DEVELOPMENT AREA

• 1.1 Development Area. Subject to the terms and conditions set forth herein, we grant you the right, and you undertake the obligation, to develop and establish multiple Franchised Businesses within the Development Area described in the data sheet attached hereto as Appendix 1 (the "Data Sheet"), provided you open and commence operations of such Franchised Businesses in strict accordance with the mandatory Development Schedule set forth in the Data Sheet (the "Development Schedule"). During the term of this Agreement, and except as provided herein, we grant to you an exclusive territory in which we will not open or operate or license any third party the right to open or operate, any Franchised Business offering the same or similar goods or services under the same or similar Marks as we license you to use, that is physically located within the Development Area.
• 1.2 Non-Contiguous Development Areas. We generally require that development areas be contiguous. If you are awarded a Development Area with non-contiguous sections, each non-contiguous section will be assigned a number of franchise locations to be opened and operating in the associated non-contiguous area. Once you have executed the last lease for the required number of franchise locations required to be opened and operating in the specified non-contiguous area, your territorial protections associated with this non-contiguous Development Area will be terminated, and you will not have any rights or protections within the associated non-contiguous section of your Development Area other than the territorial rights granted in connection with any Franchised Businesses that you have opened and commenced operating within this non-contiguous Development Area.
• 1.3 Development Area Restrictions. While we will not license anyone the right to open or operate any Franchised Business that is physically located within the Development Area, this does not mean you can open or operate a Franchised Business anywhere within that Development Area. If a franchisee secures a location near your development area, and their associated protective radius (generally 1.5 miles) overlaps into your Development Area, you will not be able to locate a studio within the protected radius that overlaps your Development Area. We will let you know of any existing studios that have a protective radius overlapping into your Development Area prior to execution of this agreement, but we make no warranties that a franchisee will not subsequently choose a location that creates a protective radius that overlaps into the Development Area. Speed is of the essence. In a case where multiple franchisees have a similar search area, or search areas near each other, the first franchisee to secure a location and create a protective radius, as defined herein, gets the protective rights of that radius area and the other franchisees must adapt their location search accordingly.
• 1.4 Loss of Territorial Exclusivity in Development Territories.

Source: Item 23 — RECEIPT (FDD pages 63–234)