Does Bb.Q Chicken have the right to establish a brand development fund?

Brand Development Fund: We have the right to establish and administer a brand development fund (the "Fund") to advertise the System and the products offered by Franchised Businesses on a regional or national basis. You must contribute 2% of the Gross Sales for the Franchised Business each month to the Fund, and your Fund contribution will be paid to us at the same time and in the same manner as the royalty fee. During the fiscal year ending December 31, 2024, the Brand Development Fund had the following expenditures:

10% was spent on production 63% was spent on media placement

17% was spent on customer retention program

7% was spent on out-of-home (OOH) placement

3% was spent on brand activation

The Fund is maintained and administered by us or our designee as follows:

• 1. We direct all advertising programs and have sole discretion to approve the creative concepts, materials and media used in the programs and their placement and allocation. Marketing and promotional materials may be developed in-house by us or we may employ one or more advertising agencies to develop these materials. The Fund is intended to maximize general public recognition and acceptance of the Marks and improve the collective success of all Franchised Businesses operating under the System. We may use monies from the Fund to support our website and to conduct social media initiatives. Any Franchised Businesses operated by us will contribute to the Fund on the same basis as you. In administering the Fund, we and our designees are not required to make expenditures for you that are equivalent or proportionate to your contribution or make sure that any particular franchisee benefits directly or pro rata from the placement of advertising. We are not obligated to spend any amount on advertising in your area or territory separate from the Fund.
• 1. The Fund may be used to satisfy the costs of maintaining, administering, directing and preparing advertising, including the cost of preparing and conducting television, radio, magazine and newspaper advertising campaigns; direct mail and outdoor billboard advertising; public relations activities; employing advertising agencies; menu and product development; development and maintenance of our website; and costs of our personnel and other departmental costs for advertising that we administer or prepare internally. All sums you pay to the Fund will be accounted for separately from our general funds. We may reimburse ourselves out of the Fund for our reasonable administrative costs and expenses that we may incur in the administration or direction of the Fund and advertising programs for you and the System. The Fund and its earnings will not otherwise benefit us except that any resulting technology and intellectual property shall be deemed our property. The Fund is operated solely as a conduit for collecting and expending the Brand Development Fees as outlined above. Any sums paid to the Fund that are not spent in the year they are collected will be carried over to the following year. No portion of the Fund will be used for advertising that is primarily a solicitation of franchise sales.

• 1. We will prepare an annual statement of the operations of the Fund that will be made available to you by written request. We are not required to have the Fund statements audited.
• 1. Although the Fund is intended to be perpetual, we may terminate the Fund at any time. The Fund will not be terminated until all monies in the Fund have been spent for advertising or promotional purposes or returned to contributors on a pro rata basis. If we terminate the Fund, we have the option to reinstate it at any time and it will be operated as described above.
• 1. Money in the Fund can be used to produce commercials and ad layout templates that you must adapt for your Franchised Business and may use in local marketing, at your expense. The Fund may also develop new menus and table tents for use by all Franchised Businesses in the System, and we may designate that our approved supplier will automatically ship these items to you, at your expense, when they are to be used.
  • 1. We are not a fiduciary of the Fund.

Source: Item 11 — FRANCHISOR'S ASSISTANCE, ADVERTISING, COMPUTER SYSTEMS AND TRAINING (FDD pages 33–41)