Is the territory granted to a Dermani Medspa franchisee an exclusive territory?

, including, without limitation, in mobile clinics or limited service temporary locations (such as at a "health fair" or at a convention).

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.

You may not offer or sell products or services authorized under the Franchise Agreement through any other means, including without limitation, through delivery, satellite locations, temporary locations, via telephone, mail order, the Internet, or through any electronic media, without our prior written approval, and only according to our policies as they may be developed and/or modified periodically. When a client purchases a membership from one franchisee and then receives services from another franchisee, the client's payment for services is allocated between the two franchisees in accordance with our then-current policies as set forth in our Manual or otherwise in writing. You may not offer or sell any products or services from any location other than your Premises.

The Franchise Agreement (and the Area Development Agreement) do not require that we pay any compensation for soliciting or accepting orders for products or services within a franchisee's Territory or a developer's Development Area.

The continuation of your territorial protection during the initial term of the Franchise Agreement does not depend on the achievement of any particular sales volume, market penetration, or other contingency. If you default under the Franchise Agreement, we reserve the right to undertake certain actions in lieu of termination of the Franchise Agreement, including modifying, or eliminating completely, the Territory.

If you execute a successor Franchise Agreement (the "Successor Franchise Agreement") for an additional term, we reserve the right to re-evaluate your then-existing Territory according to certain demographics, including population. Since your Territory includes a certain minimum population, your Territory under the Successor Franchise Agreement will be modified to accommodate shifts and changes in population. Our intent is to make the target demographics of your successor Territory similar to the target demographics of then-current new franchises being granted. A re-evaluation of your Territory may result in your successor Territory being smaller or larger than your original Territory. We cannot guarantee

that you will achieve any particular level of success with the renewal Territory or that your results will be the same as or similar to your results from operating in the original Territory. This is applicable only if your Territory includes a minimum population, as described above.

Area Development Agreement

As described in Item 1, if you sign an Area Development Agreement, you will receive a Development Area in which you must develop multiple Franchised Businesses. The Development Area may be all or part of a Metropolitan Statistical Area (or "MSA") Your rights within the Development Area are non-exclusive, and we may award the same Development Area to multiple area developers, however, we will not sell the right to develop more dermani MEDSPA®s than the total number of available territories available in the Development Area. You will not receive an exclusive territory under your Development Agreement. You may face competition from other franchisees, from outlets that we control, or from other channels of distribution or competitive brands that we control.

Once you have secured an approved site for a given dermani MEDSPA® under a Franchise Agreement to fulfill your development obligations under your Development Agreement, we will grant you a Territory around that dermani MEDSPA® wherein you will have territorial protection as previously discussed in this Item 12.

We will retain all other rights, and therefore we retain the right (among others), and without granting to you:

• 1. the right to operate, and to grant others the right to operate, Franchised Businesses, dermani MEDSPA®s, and similar medical management businesses or similar medspas or medical centers under different names or marks located anywhere within or outside the Development Area under any terms and conditions we deem appropriate and regardless of proximity to any of your dermani MEDSPA®s or the Development Area;
• 1. the right to establish and operate (and to grant to others the right to establish and operate) any other businesses offering products and services that are different from the products or services offered at dermani MEDSPA®s through similar or dissimilar channels of distribution (including, but not limited to: (i) sales through direct marketing, such as over the Internet or through catalogs or telemarketing; (ii) sales through retail stores that do not operate under the Marks;

Source: Item 12 — TERRITORY (FDD pages 43–46)