What factors affect Bambu's ability to collect amounts due from franchisees?

yment of the Royalty Fees, Marketing and Technology Fees, and other amounts owed by Franchisee to Bambu arising from or relating to this Agreement. Bambu reserves the right to require the monthly Royalty Fee or the Marketing and Technology Fee payments be made on a weekly or bi-weekly basis if Franchisee does not timely or fully submit the required payment or maintain a sufficient amount in its accounts to permit Bambu to initiate a debt entry of amounts then due. Notwithstanding any designation by Franchisee, Bambu shall have sole discretion to apply any payments by Franchisee, and any amounts received by Bambu on Franchisee's behalf from third party vendors or customers to any of Franchisee's past due indebtedness to Bambu for the Royalty Fee, the Marketing and Technology Fee, purchases from Bambu or its affiliates, interest or any other indebtedness. Franchisee acknowledges that Bambu has the right to set-off any amounts Franchisee may owe to Bambu against any amounts Bambu might owe to Franchisee.

• d. Franchisee shall not subordinate to any other obligation its obligation to pay the Royalty Fee or any other fee or charge hereunder.
• 12.4 Net Revenues Defined. The term "Net Revenues" shall mean the total gross revenue derived by Franchisee from the operation of its Bambū shoppe, whether from sales for cash or credit, and irrespective of the collection thereof, including sales of both merchandise and services, but exclusive of all sales taxes, use taxes, gross receipts taxes, and other similar taxes added to the sales price and collected from the customer, and less any bona fide refunds, rebates, discounts, and tips.
• 12.5 Late Payments. In the event that Franchisee fails to have sufficient funds in its account or otherwise fails to pay the Marketing and Technology Fee, Royalty Fee, or other payments due to Bambu as of the date due, Franchisee shall owe in addition to the Marketing and Technology Fee, Royalty Fee, or other amounts due, interest at the highest applicable legal rate for open account credit, not to exceed 1½ percent per month. Franchisee acknowledges that this Section 12.5 shall not constitute Bambu's or its affiliates' agreement to accept such payments after they are due or a commitment to extend credit to or otherwise finance operations of the shoppe. In no event shall Franchisee be required to pay interest at a rate greater than the maximum interest rate permitted by applicable law. Bambu reserves the right to automatically assess Franchisee a monthly $50 late charge for any Marketing and Technology Fee payment, Royalty Fee payment, or other payment due under this Agreement which is not timely paid, which late fee shall be due and payable in full upon demand.
• 12.6 Nonrefundable Fees. Except as specifically contemplated in this Agreement, all fees once paid, shall be nonrefundable in all circumstances.

13. ADVERTISING

13.1 Approval of Advertising. Franchisee shall obtain Bambu's prior written approval of all advertising or other marketing or promotional programs or materials regarding the Bambū shoppe, whether printed or digital, including, without limitation, online directory or search engine marketing, newspaper ads, flyers, brochures, magazines, coupons, direct mail pieces, specialty and novelty items, and radio, television, social media materials and videos, and in-shoppe marketing. Franchisee shall also obtain Bambu's prior written approval before using any promotional materials that vendors may provide. The proposed written or electronic advertising or a description of the marketing or promotional program shall be submitted to Bambu at least 30 days prior to publication, broadcast, posting or other use. Bambu may

withhold its approval of advertising in its sole discretion. Franchisee acknowledges that advertising and promoting the Bambū shoppe in accordance with Bambu's standards and specifications is an essential aspect of the Bambū system, and Franchisee agrees to comply with all advertising and marketing standards and specifications. Franchisee shall display all required promotional materials, signs, point of purchase displays and other marketing materials in its Bambū shoppe and in the manner prescribed by Bambu.

13.2 Local Advertising. Bambu recommends Franchisee conduct local advertising to create public awareness of Franchisee's Bambū shoppe. Franchisee shall obtain Bambu's prior written approval of all advertising and promotional materials before publication.

13.3 Marketing and Technology Fund.

• a. Bambu will maintain a separate account designation in its accounting software for the Marketing and Technology Fees and expenses associated with marketing and technology efforts. The Marketing and Technology Fund will be administered by Bambu. Bambu shall direct all advertising and marketing programs financed by the Marketing and Technology Fund, with sole discretion over the creative concepts, materials and endorsements used therein, geographic, market and media placement and allocation, and the administration thereof. Franchisee agrees that the Marketing and Technology Fund may be used for applications that promote Bambū shoppes, such as loyalty programs and other specialized applications that can add business to the shoppes, such as catering and charitable events, as well as for covering the costs of researching, preparing, maintaining, administering and directing advertising and promotional materials and public relations programs, including production of commercial print, radio, television, magazine, newspaper, Internet advertising, direct response literature, direct mailings, brochures, collateral materials advertising, surveys of advertising effectiveness, advisory council expenses, convention expenses, social media marketing, and other advertising or public relations expenditures, for any international, national, or regional media. The Marketing and Technology Fund may also be used to pay for the expenses related to researching, developing, implementing, servicing, and operating any technology used in any manner related to the Bambū franchise system or Bambū shoppes, including any technologies utilized in or related to Bambu's website, search engine optimization, reporting of information for Bambū shoppes, the equipment used in Bambū shoppes, and Bambū shoppe computer systems (collectively, the "Technology").

Source: Item 23 — Receipts (FDD pages 52–209)