Who owns the Zoomin Groomin location in Fort Collins?

. A year will include each fiscal year (including any partial year) ending on December 31.

1.7.Dual Distribution

A. Protected Territory

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. However, you will receive a protected territory, meaning a geographical area within which we promise not to establish a Zoomin Groomin company owned or franchised outlet. You may not accept orders from consumers to provide Services outside of your Territory, nor may you use other channels of distribution, such as the Internet, catalog sales, telemarketing, or other direct marketing, to make sales outside your Territory without our prior written approval as provided in Section 1.3 (C) of this Agreement.

B. Limitations on Exclusivity

Your right to exclusivity is limited by our Reserved Rights under Section 1.1. (E) of this Agreement and this Section 1.7. You may also face competition from other franchisees, outlets that we own, other channels of distribution or competitive brands that we control for a Client that resides in your Territory.

C. Other Brands

We or an affiliate may make sales within your Territory using trademarks different from the ones you will use under this Agreement. As of the Effective Date, we and our parent plan to establish (or acquire) and operate or franchise a business under a different trademark which will sell goods or services similar to those you will offer. Under this plan, franchisees will offer pet grooming services through brick-and-mortar locations under a different trademark. As the new franchise system develops, the new franchisor or its franchisees who use the different trademark will solicit and accept orders within your Territory.

D. Profit Passover

We are not obligated to pay compensation to you for soliciting or accepting sales from a Client inside your Territory. However, we will normally direct all inquiries for mobile pet grooming from within your Territory to your Franchised Business. Should you (i) provide Services or otherwise operate your Franchised Business in another franchisee's territory or (ii) fail to strictly comply with Section 1.3 (C) within fifteen (15) days after being advised that our permission to provide Services or otherwise operate the Franchised Business outside the Territory is revoked because a new franchisee purchased certain rights, then you will pay to the franchisee in whose territory such Services were provided an amount equal to 100% of all grooming and convenience fees charged. Furthermore, you must notify such franchisee who has rights in such territory and provide payment to them within ten (10) days of receipt of payment by you.

1.8.Advertising

A. Grand Opening Advertising

We do not require you to spend a certain amount on Grand Opening Advertising; however, we recommend that you spend between $500 and $5,000 on your initial local advertising which includes local advertising and promotion of your Franchise Business from one month before opening through three months after you open. We recommend you spend a minimum of $1,200 per year on local advertising.

B. Local Advertising and Promotions

Your advertising and promotions will conform to the following requirements:

• 1. You will advertise and promote only in a manner that will reflect favorably on us.
• 1. You will participate in all promotional programs that we create, offer or advertise.
• 1. Your advertising must comply with federal, state, and local laws.

C. Advertising Fee

You will contribute 2% of your Gross Revenues into our Advertising Fund.

D.

Source: Item 9 — 01. Financial Statements and Exhibits. (FDD pages 68–156)