How are Marketing and Promotion Fees calculated for Bhc?

g Date, Franchisee must pay Franchisor a "Royalty" of 4.5% of Franchisee's Gross Revenues.

• (b) Royalties are due and payable on a monthly basis on the following 5th day for the previous month (unless that day is a banking holiday, in which case the Royalties are due and payable on the next business day). Royalties will be calculated on the Gross Revenues received during the prior

month. Monthly payments of Royalties are to be accompanied by a revenue report in the form prescribed by Franchisor.

4.4 Marketing, Advertising and Promotion.

• (a) Beginning on the Opening Date, Franchisee must pay Franchisor a "Marketing and Promotion Fee" of 2.5 of Franchisee's Gross Revenues. However, Franchisor is not requiring this contribution at this time because Franchisor does not anticipate brand marketing until Franchisor has at least 50 Franchised BHC Restaurants in operation. If established, this fee is due and payable at the same time and in the same manner as Royalty Fee. Franchisor reserves the right to require payment of this fee once Franchisor has more than 50 Franchised BHC Restaurants in operation. Once BHC starts to require payment, Marketing and Promotion Fees collected from BHC franchisees less a 15% administration fee will be spent for national and regional advertising and promotional campaigns designed to promote and enhance the value of the BHC trademarks and their general public recognition and acceptance. We need not ensure that any particular franchisee benefits directly or proportionately from the Marketing and Promotion Fee.
• (b) When applicable, Marketing and Promotion Fees are due and payable on a monthly basis on the 14th of each month (unless that day is a banking holiday, in which case the Marketing and Promotion Fees are due and payable on the next business day). Marketing and Promotion Fees will be calculated on the Gross Revenues received during the monthly periods ending on the last day of each month.
• (c) During the 60 days after the Opening Date, Franchisee must spend in Franchisee's Territory at least $10,000 to $13,000 on the initial opening advertising and promotion event of Franchisee's Franchised BHC Restaurant, using the grand opening advertising and promotional program that Franchisor approves, including the "soft opening" to be held on or about the Opening Date and the grand opening event. Not later than 75 days after the Opening Date, Franchisee must provide Franchisor with a report itemizing Franchisee's expenditures on the grand opening advertising and promotion of Franchisee's Franchised BHC Restaurant. If you fail to meet the initial opening advertising and promotion, you will be required to add the shortage toward the Marketing and Promotion Fee.
• (d) Commencing with the third full calendar month after the Opening Date, Franchisee must (i) spend at least 1% of Franchisee's annual (January 1 through December 31) Gross Revenues on the local marketing, advertising, and promotion of Franchisee's Franchised BHC Restaurant, using marketing and promotional materials pre-approved or otherwise authorized in writing by Franchisor ("Local Advertising"). Franchisee must submit to Franchisor a Local Advertising plan which details the Local Advertising for the next 12-month period for Franchisor's approval. Within thirty (30) days after the end of each of the above-mentioned periods, Franchisor will provide a template to Franchisee and Franchisee must submit to Franchisor, a fully completed marketing report of Franchisee's Local Advertising for the preceding concluded period in form and substance specified by Franchisor, including evidence to verify such expenditure during such period.
• (e) On a regional or system-wide basis, Franchisor may impose an additional assessment upon affected franchisees for special designated advertising or promotional activities if two-thirds of all affected Franchised BHC Restaurants agree to such additional assessment by affirmative vote.

Source: Item 23 — Receipts (FDD pages 52–230)