Distance criterion for franchisees permits local appointments, with hotel chain relaxations and exemptions for hilly and north eastern areas. Franchisers (AD Category I/II banks or FFMCs) may appoint franchisees within a prescribed radius of their controlling branch; recognised hotel groups/ chains are exempted from the strict locality requirement if the group headquarters lies within that radius; hilly areas (as defined by State/UT) and the North Eastern States are not subject to the distance restriction.