irst refusal or similar rights to acquire additional franchises.

Rights We Retain

Under the Franchise Agreement we (and our affiliates) retain the right in our sole discretion to:

• 1. Sell or otherwise distribute any products or services anywhere, whether at wholesale, retail or otherwise and whether or not using the Marks or System, without restriction of any kind, in any alternative or other channel of distribution other than mobile facilities providing pet grooming services under the Marks and System, whether or not located in the Territory, and to customers located anywhere.
• 1. Distribute branded products through any outlet (including sales through general retail stores, pet stores or otherwise and/or by electronic means) located anywhere;
• 1. Own and/or operate ourselves or authorize others to own and/or operate (a) any business located outside the Territory, whether or not using the Marks and/or System, (b) any business anywhere, whether using the Marks and/or System or not, which is not substantially similar to the business franchised to you under the Agreement and/or (c) any business anywhere which does not use the Marks;

• 1. Acquire, merge, affiliate with or engage in any transaction with other businesses (whether competitive or not), with units located anywhere, including arrangements in which we are acquired, and/or company-owned, franchised or other businesses are converted to another format, maintained under the HydroDog System or otherwise. The HydroDog Business awarded to you will fully participate in any conversion subject to any person/entity merging with, or acquiring us, reimbursing you for reasonable costs directly related to the conversion; and
• 1. Offer/provide products and/or services through the Internet, World Wide Web and/or other similar venues no matter where the customer is located.

We are not required to pay you any amount if we exercise any of these rights.

National Accounts

Periodically we may enter into agreements with certain regional or national businesses (each a "National Account") to provide services to clients at designated National Account locations. We will identify and designate any National Account in our Manual, and periodically we may add or remove National Accounts. We have the sole business judgment on who may provide services or products to any National Account, including at a single location of any such National Account. We may, in our sole business judgment, offer you the opportunity to accept and provide services or products under the terms of any such National Account agreement (including, without limitation, any central invoicing or fixed fee terms). In the case of a National Account agreement under which the client will pay a fixed amount for services or products at all locations listed in such agreement, we will allocate reasonably such fixed amount among the HydroDog businesses providing the services or products.

Source: Item 12 — TERRITORY (FDD pages 30–32)