Does a Lees Famous Recipe franchisee receive an exclusive territory?

[Item 12: TERRITORY]

You will not receive an exclusive territory. You may face competition from other franchisees, from businesses that we own or from other channels of distribution or competitive brands that we control. You will not receive an exclusive territory because we reserve the right to operate, or grant others the right to operate Lee's Famous Recipe Restaurants at "Non-Traditional Venues" within your Designated Territory. The term "Non-Traditional Venues" includes any regional, enclosed or similarly situated shopping centers or malls, airports or other transportation terminals, travel stations, toll roads, train stations, ships, ports, piers, sports facilities, stadiums, college and university campuses, schools, institutional settings, corporate campuses, a department within an existing retail store, big box retailers, hotels and motels, grocery stores, office or in-plant food service facilities, supermarkets and convenience stores, warehouse club stores, amusement parks, and all properties controlled by the amusement park, casinos, theatres, building supply stores, hospitals, military and other governmental facilities, and any site for which the lessor, owner or operator shall have indicated its intent to prefer or limit the operation of its food service facilities to a master concessionaire or contract food service provider or other similar types of locations that have a restricted trade area.

Franchise Agreement

You will receive a designated territory surrounding the Restaurant location (the "Designated Territory"). The Designated Territory will be delineated by a mile-radius or other boundaries as we determine in our sole discretion. The size of the Designated Territory depends on (1) the type of Restaurant you will be operating and (2) the population density, zip codes, counties, median household income and economic development. The Designated Territory for a Traditional Standalone location and a Streamlined location is typically a circle having a zero to one mile radius with the Restaurant as the center. We may designate this radius in our discretion, and in doing so, will take into account whether the Restaurant is located in an urban, suburban, or rural area. In the case of Non-Traditional locations, we will determine the Designated Territory in our sole discretion based upon anticipated customer counts (and the above-mentioned criteria) and may limit the Designated Territory to the Non-Traditional location. We will determine in our sole discretion whether your location will be classified as a Traditional Stand-alone, Streamlined or Non-Traditional location and will specifically describe it in Exhibit A to the Franchise Agreement.

Reservation of Rights (Franchise Agreement and Area Development Agreement)

We (for us and our affiliates) retain the right:

• 1. to directly operate, or to grant other persons the right to operate, Lee's Famous Recipe Restaurants at locations outside the Designated Territory;
• 1. to directly operate, or to grant other persons the right to operate, Lee's Famous Recipe Restaurants at Non-Traditional Venues within and outside the Designated Territory;
• 1. to promote, sell and distribute anywhere, including through restaurants and other establishments, the Products and the services authorized for sale at Lee's Famous Recipe Restaurants under trademarks and service marks other than the Marks through similar or dissimilar channels of distribution;

Source: Item 12 — TERRITORY (FDD pages 47–50)