What is the Brand Development Fund Fee for Alloy franchises used for?

• C.

Brand Development Fund Fee.

You must pay to us a weekly Brand Development Fund Fee in an amount equal to 2% of Gross Sales.

The Brand Development Fund Fee is separate from any local marketing requirements.

The Brand Development Fund Fees are not held by us in trust and will be spent in accordance with subparagraph 8.A of this Agreement.

BRAND ADVERTISING AND MARKETING

You agree to actively promote your Business, to abide by all of our advertising requirements and to comply with the following provisions:

• A.

Brand Development Fund.

You must pay to us a Brand Development Fund Fee as set forth in subparagraph 9.D.

All Brand Development Fund Fees will be placed in a Brand Development Fund ("Fund") that we manage.

The Fund is not a trust or escrow account, and we have no fiduciary obligation to franchisees with respect to the Fund; provided, however, we will make a good faith effort to expend such fees in a manner that we determine is in the general best interests of the System.

We have the right to determine the expenditures of the amounts collected and the methods of marketing, advertising, media employed and contents, terms and conditions of marketing campaigns and promotional programs.

Because of the methods used, we are not required to spend a prorated amount on each facility or in each advertising market.

We have the right to make disbursements from the Fund for expenses incurred in connection with the cost of formulating, developing and implementing marketing, advertising and promotional campaigns.

The disbursements may include payments to us for the expense of administering the Fund, including accounting expenses and salaries and benefits paid to our employees engaged in the advertising functions.

If requested, we will provide you an annual unaudited statement of the financial condition of the Fund.

Source: Item 23 — RECEIPTS (FDD pages 69–245)