Can Body20's media advertising be local in scope?

o a different Brand Fund.

In fiscal year 2024, Brand Fund expenditures by Predecessor were allocated as follows: 61.46% on production; 18.5% on administrative expenses; and 20.04% on media placement.

Local Marketing. You must participate in such advertising, promotional, and community outreach programs that we may specify periodically, at your own expense. You must use your best efforts to promote the use of the Marks in your Territory. You must ensure that all advertising, marketing, promotional, customer relationship management, public relations, and other Brandrelated programs and materials that you or your agents or representatives develop or implement relating to the Studio (i) are completely clear, factual, and not misleading, (ii) comply with all Applicable Laws, and (iii) conform to the highest ethical standards and the advertising and marketing policies that we periodically specify. Any media advertising or direct mail marketing that you conduct must be predominantly focused within your Territory, unless we agree otherwise. There are no territorial restrictions from accepting business from retail customers that reside or work or are otherwise based outside of your Territory if these customers contact you, but we reserve the right to implement rules and restrictions regarding soliciting such customers in the future in our Manuals or otherwise in writing.

You must obtain our advance written approval prior to using or producing any advertising or marketing materials using any of the Marks, in whole or in part. You will conduct all advertising in a dignified manner and to conform to the standards and requirements we specify in the Manuals. We will have the final decision on all creative development of advertising and

promotional messages. If our written approval is not received within 14 days from the date we received the material, the material is considered disapproved. We reserve the right to require you to discontinue the use of any advertising or marketing materials.

You must spend at least $1,500 per month on local advertising and promotional activities (the "Marketing Spending Requirement"). Your Marketing Spending Requirement is in addition to your Brand Fund Fee. We have the right to designate in the Manuals the types of expenditures that will or will not count toward the Marketing Spending Requirement. At our request, you must submit appropriate documentation to verify compliance with the Marketing Spending Requirement. If you fail to spend (or prove that you spent) the Marketing Spending Requirement in any month, then we may, in addition to and without limiting our other rights and remedies, require you to pay us the shortfall as an additional Brand Fund Fee or to pay us the shortfall for us to spend on local marketing for your Studio. Alternatively, we may require you to pay us the Marketing Spending Requirement, which we will use to conduct local advertising and promotional activities for your Studio on your behalf in a manner that we determine in our sole discretion.

In connection with the opening of the Studio, you must spend a minimum of $15,000 for grand opening advertising and promotion beginning at least 60 days before, and ending 30 days after, the opening of your Studio under the terms of a plan that you must submit to us for our approval. We have the right to modify your grand opening plan, in our sole discretion, and may require you to use a public relations firm to assist with your grand opening.

Source: Item 11 — FRANCHISOR'S ASSISTANCE, ADVERTISING, COMPUTER SYSTEMS, AND TRAINING (FDD pages 38–49)