Does Annex Brands require franchisees to use marketing materials provided by them?

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Our marketing programs are currently divided into 3 types, as described below: new center/new owner marketing program, in-Center TV marketing program, and continuing marketing. You must participate in each type of program.

New Center/New Owner Marketing Program Deposit.

Under our new center/new owner marketing program, you must deposit with us at least $5,500: before or at initial training, for or a new standard, flex or express retail center, or for a conversion standard or flex center; or on or before the closing date of a transfer, if you assume operation of an existing retail center by transfer. We will use the deposit to promote your retail center before, and for about 90 days after, you (i) open your retail center, (ii) assume the operation of an existing retail center by transfer, or (iii) convert an existing business to a retail center. We will use the deposit to purchase promotional items and advertising in 1 or more types of media, including Internet, print and/or digital, direct mail and/or any other media, in our sole discretion. Currently, when the New Center/New Owner Marketing Program ends, as part of continuing marketing, you will be automatically enrolled in and billed directly for Google PPC Ads ongoing at a monthly amount determined by us (currently $600/month) to promote a service determined by us (currently Shipping Services), but you may opt out with 30 days' advance notice by following instructions provided in Retail Marketing Manual for Standard, Express and Flex Retail Centers, in New Center/New Owner Marketing Program documents, in Manuals, or otherwise in writing. We may, in our sole discretion, modify and/or discontinue the automatic enrollment program as noted above with 30 days' advance notice to you in as provided in Retail Marketing Manual for Standard, Express and Flex Retail Centers, in New Center/New Owner Marketing Program documents, in Manuals, or otherwise in writing. We will not place any advertising outside your Area of Dominant Influence ("ADI"). An ADI is defined as an area covered by a particular advertising medium as recognized in the advertising industry. The deposit will not be used for signage, including electronic signs, window graphics or banners, or logo floor mats, etc., but we may allocate up to $300 to purchase required logo attire (see Item 8) and to cover the cost of the in-Center TV marketing program device and initial set up. We will not use the deposit for any other purpose, without your consent. We will generally use all of the deposit, and will provide you with a written accounting of how the deposit was used a reasonable time after the deposit is exhausted, or about 150 days after you (i) open your retail center, (ii) assume the operation of an existing retail center by transfer, or (iii) convert an existing business to a retail center. However, we will not refund any portion of the deposit if you (i) attend initial training, even if you do not open or convert your retail center, (ii) open your retail center, (iii) assume the operation of an existing retail center by transfer, or (iv) convert an existing business to a retail center.

In-Center TV Marketing Program.

Under our in-Center marketing program, we will provide marketing information regarding the various products and services you offer on a TV that is mounted on a wall behind the customer counter. The cost of the in-Center TV marketing program device and initial set-up fee (currently $60) needed to connect the TV to the control panel in order to receive the advertising content is paid for out of your new center/new owner marketing program deposit (see Item 6).

Continuing Marketing. Under our continuing marketing program, we will conceive and create print and digital materials for periodic marketing/advertising and promotional programs. We will make those materials available to you, and we may require usage or specifications for usage. For example, we will sometimes provide you with advertisement proofs that you can take to a printer on our list of approved suppliers. Also, we may sometimes design, print and provide you with certain quantities of materials (such as posters or brochures), and you may be required to buy or have the option to buy additional quantities, if available.

Under our continuing marketing program, you must participate in a system-wide marketing fund. You must participate in all marketing fund programs. You will set your own prices, except that you must fully honor all coupons, price-reduction promotions and other promotions/programs as we direct. The fund may advertise in print or digital media, direct mail, publicity posters, brochures, coupons, presentation booklets, radio, television, Internet, email marketing programs, social media platforms, online directory listings, other networking platforms, and related media. The coverage of the media may be local, regional or national. We manage the preparation of marketing, advertising, and promotional materials and brand publicity in-house, but may use a regional or national advertising agency or supplier to produce and/or distribute materials.

All retail franchisees and any retail company-owned businesses contribute equally to the fund on a weekly basis. Contributions are 2% of weekly Gross Receipts. We may require you to make payments at an interval as established by us. We will administer the fund. The fund is not audited. We will prepare an unaudited report of the operation of the fund annually within 90-120 days after each fiscal year end, and on your written request, we will make the report available to you. We may use contributions to the fund and associated earnings for soliciting the sale of franchises. Other than reimbursement for reasonable costs and overhead incurred in activities related to the administration or direction of the fund, neither we nor any affiliate will receive any payment for providing products or services to the fund. If we spend more than the contributions accumulated in the fund during any fiscal year, we will have the right to receive, on demand, reimbursement from the fund in later years to the extent of the excess expenditure. If any contributions to the fund, including any associated earnings, are not spent in the fiscal year in which they accrue, they will remain in the fund for use in following years. We reserve the right to terminate the fund at any time, but we will not do so until all monies in the fund have been expended for the purposes described in the franchise agreement.

We are not required to spend any amount from the fund, or any amount from any other source, on marketing, advertising, or promotions in your geographic area. However, under our current Matching Funds Advertising Program (Subsection 10.A of the franchise agreement), your Advertising Association may apply to us for a portion of the fund for use in your geographic area.

In our fiscal year ended September 30, 2024, the retail fund was used for: soliciting the sale of franchises, 4%; production of marketing, advertising and promotional materials, and media

placement, 14%; Internet, website and public relations, 19%; administrative expenses, 25%;

Source: Item 11 — Franchisor's Assistance, Advertising, Computer Systems, and Training (FDD pages 45–62)