What can Beauty Bungalows do with the rebated funds from the centralized purchasing system?

Multi-Area Marketing Programs and monthly contribution to the Brand Fund will not exceed two percent (2%) of Gross Revenue. Franchisor will hold contributions to the Brand Fund in a separate bank account. Franchisor will administer contributions to the Brand Fund in Franchisor's sole determination for the creation and development of marketing, advertising, promotions, and related programs and materials, including electronic, print, and internet media, as well as

the planning and purchasing of national, regional, and/or local advertising. The general purpose of the Brand Fund is to maximize general public recognition and acceptance of the Beauty Bungalows brand, increase business, and enhance the collective success of salons operating under the System. Franchisor will direct all advertising and marketing programs funded by Brand Fund, including but not limited to research methods, branding, creative concepts and materials, sponsorships, and endorsements, selection of geographic and media markets, and media placement and allocation thereof. Franchisee acknowledges and agrees that expenditures from the Brand Fund may or may not be proportionate to contributions made by Franchisee or provide a direct or any benefit to Franchisee. Franchisor has no fiduciary duty with regard to the Brand Fund. Franchisor may accumulate these contributions, and the balance may be carried over to subsequent years and used for the purposes determined by Franchisor. If the Brand Fund operates at a deficit or requires additional funds at any time, Franchisor reserves the right to loan such funds to the Brand Fund on any terms Franchisor determines. Franchisor may also utilize the Brand Fund to reimburse itself for expenses in administering the Brand Fund or any MAM Program(s), including expenses related to thirdparty services, in-house services, contractors, employees and other costs related to the managing the Brand Fund and the collection of required contributions to the Brand Fund, including but not limited to: (a) the costs or preparing and conducting marketing campaigns intended to enhance the brand, including marketing, advertising, or promotions that are directed at consumers, salon professionals or general business professionals such as lenders to franchisees, landlords and beauty industry participants, (b) internet marketing, (c) social media marketing, (d) in-store and point of purchase marketing, (e) public relations activities or events, intended to enhance the brand, that are directed at consumers, salon professionals or general business professionals such as lenders to franchisees, landlords and beauty industry participants, (f) employing or engaging advertising and/or marketing personnel, contractors or agencies, (g) development, enhancement and maintenance of Franchisor-sponsored or promoted websites and mobile applications, (h) costs incurred by Franchisor for personnel and other departmental costs for marketing purposes, (i) Beauty Bungalows programs and differentiators relating to education and support, (j) technologies and other platforms used by Beauty Bungalows franchisees and Customers, and (k) other internal or administrative costs, expenses, or overhead caused by or related to the collecting, administering and managing the Brand Fund or any MAM Program(s) or creating, preparing, distributing, monitoring and managing marketing related marketing or advertising programs or campaigns, websites and mobile applications. Franchisor will not use the Brand Fund for advertising that is principally a solicitation for the sale of franchises, but Franchisor reserves the sole right to pursue any franchisee or business opportunity that results from the use of Brand Fund, including marketing, promotional, public relations, and advertisement activities.

Source: Item 22 — CONTRACTS (FDD pages 47–48)