What is the franchisee's obligation regarding contributing to the Big Blue Swim School Brand Fund?

ting Programs

Brand Fund

We have established the Brand Fund to which you and other franchisees must contribute the amounts we periodically specify, not to exceed 3% of your School's Gross Revenue during the applicable preceding Calculation Period. We currently require you and other franchisees to contribute 2% of Gross Revenue. (Franchise Agreement – Section 13.B)

Until the total number of operational franchised BIG BLUE Swim Schools equals the total number of operational company- and affiliate-owned BIG BLUE Swim Schools, the operational company- and affiliate-owned BIG BLUE Swim Schools collectively need only match for each Calculation Period the total Brand Fund contributions actually made for that Calculation Period by all operational franchised BIG BLUE Swim Schools. Once the total number of operational franchised BIG BLUE Swim Schools equals the total number of operational company- and affiliate-owned BIG BLUE Swim Schools, each operational company- and affiliate-owned BIG BLUE Swim School will contribute to the Brand Fund for each Calculation Period on the same percentage basis as franchisees, provided, however, that no operational company- or affiliateowned BIG BLUE Swim School must contribute to the Brand Fund for any Calculation Period during the franchise term more than the highest-contributing operational franchised BIG BLUE Swim School actually contributed for that Calculation Period.

We will direct all programs the Brand Fund finances, with sole control over and ownership of all creative and business aspects of the Fund's activities. The Brand Fund may pay for, among other things, preparing, producing, and placing video, audio, and written materials, digital marketing, and Social Media; developing, maintaining, and administering one or more System Websites; administering national, regional, and multi-regional marketing and advertising programs, including purchasing trade journal, direct mail, and other media advertising and using advertising, promotion, and marketing agencies and other advisors to provide assistance; implementing and supporting franchisees' local market introduction programs; establishing regional and national promotions and partnerships and hiring spokespersons to promote the BIG BLUE Swim School brand; supporting public relations, market research, and other advertising, promotion, marketing, and brand-related activities; creating and implementing customersatisfaction surveys; organizing and hosting franchisee conferences, conventions, and meetings; and supporting and hosting charitable or nonprofit events and community-based activities.

The Brand Fund may advertise locally, regionally, and/or nationally in printed and on other tangible materials, on radio or television, and/or on the Internet, as we think best. We and/or an outside regional or national advertising agency will produce all advertising and marketing. The Brand Fund periodically may give you sample Marketing Materials at no cost. We may sell you multiple copies of Marketing Materials at our direct production costs, plus any related shipping, handling, and storage charges.

We will account for the Brand Fund separately from our other funds (although we need not keep Brand Fund contributions in a separate bank account) and will not use the Brand Fund for any of our general operating expenses. However, the Brand Fund may reimburse us and our affiliates for the reasonable salaries and benefits of personnel who manage and administer, or

otherwise provide assistance or services to, the Brand Fund; the Brand Fund's administrative costs; travel-related expenses of personnel while they are on Brand Fund business; meeting costs; overhead relating to Brand Fund business; and other expenses we and our affiliates incur administering or directing the Brand Fund and its programs, including conducting market research, preparing Marketing Materials, collecting and accounting for Brand Fund contributions, paying taxes due on Brand Fund contributions we receive; and any other costs or expenses we incur operating or as a consequence of the Fund. We will not use the Brand Fund specifically to develop materials and programs to solicit franchisees. However, media, materials, and programs prepared using Brand Fund contributions may describe our franchise program, reference the availability of franchises and related information, and process franchise leads. Of the Brand Fund's 2024 expenditures, 18% was spent on digital marketing and public relations agencies, 7% was spent on search engine optimization, 2% was spent on social and creative, 10% was spent on marketing software, 10% was spent on strategic projects, and 53% was spent on overhead.

The Brand Fund is not a trust, and we do not owe you fiduciary obligations because we maintain, direct, or administer the Brand Fund or for any other reason.

The Brand Fund may spend in any fiscal year more or less than the total Brand Fund contributions during that year, borrow from us or others (paying reasonable interest) to cover deficits, or invest any surplus for future use. Unspent monies in the Brand Fund at the end of the year will be rolled over for potential use in the following year. We have the right to use new Brand Fund contributions to pay Brand Fund deficits incurred during previous years. We will use all interest earned on Brand Fund contributions to pay costs before using the Brand Fund's other assets. We will prepare an annual, unaudited statement of Brand Fund collections and expenses and share the statement electronically within ninety (90) days after our fiscal-year end or otherwise give you a copy of the statement upon reasonable request. We have the right (but no obligation) to have the Brand Fund audited annually, at the Brand Fund's expense, by a certified public accountant we designate. We have the right to incorporate the Brand Fund or operate it through a separate entity whenever we deem appropriate. The successor entity will have all of the rights and duties specified here.

The Brand Fund's principal purposes are to maximize recognition of the Marks, increase patronage of BIG BLUE Swim Schools, and enhance, promote, and protect the BIG BLUE Swim School brand and franchise system.

Source: Item 11 — FRANCHISOR'S ASSISTANCE, ADVERTISING, COMPUTER SYSTEMS, AND TRAINING (FDD pages 37–51)