What are the advertising restrictions for a Bonchon franchise, and what happens if the franchisee does not participate in advertising and sales promotion programs?

not cure the breach within three days following delivery of our notice, then we may terminate or remove any unauthorized advertising at your expense, and will also be entitled to terminate this Agreement unilaterally and immediately upon notice to you (which we may also do if your breach, by its nature, is incurable).

Under this Agreement, the term "advertising" is defined to mean any and all advertising, identification and promotional materials and programs of any type or nature whatsoever including print and broadcast advertisements; direct mail materials; brochures; advertising specialties; electronic commerce communications and "bulletin boards"; any advertising on the internet/worldwide web; public relations and brand awareness programs; direct mail; door hangers; freestanding inserts and coupons; sponsorships; point of sale materials; press releases; business cards; displays; leaflets; telephone and computer greetings; messages and voice-mail/e-mail sent to or accessible by customers or other third parties; promotional material captured in any electronic medium; and, any other material or communication which we denominate as "advertising" in our Manuals or otherwise.

You agree to submit to us for approval, before use or dissemination, copies of all proposed advertising you intend to use (except for advertising which we furnish to you under this Agreement or advertising you have previously submitted and we have approved). Our approval of any of your proposed advertising may be withheld for any or no reason. If we do not respond within ten business days following our documented receipt of your proposed advertising material, then our approval will be deemed withheld and the proposed advertising material not approved. You may not use any advertising material approved by us if our approval took place more than 12 months prior to the proposed use. Our grant or denial of our approval of your proposed advertising will not give rise to any liability on our part and you will not assert claims against us to the contrary.

You agree to conduct all local advertising in accordance with the requirements and procedures set forth in our Manuals or otherwise, which may include restrictions on your ability to advertise your Restaurant to customers located proximate to other franchised or company-owned Bonchon Restaurants.

We may require you to, in any and all advertising, marketing and other promotional materials feature the fact that franchises for Bonchon Restaurants are available, such notice to be in the form, style and placement we designate. You must furnish any and all such advertising, marketing and other promotional materials to us, electronically or in such other form we designate, prior to your use, with the express understanding that we may be legally required to file same with various state regulatory

authorities, which filings you will be required to assent to in connection with entering into the Franchise Agreement.

10.03 New Restaurant Marketing Plan, Local Advertising and Promotion

We will provide you with a New Restaurant Marketing Plan, which will set forth your advertising and promotional obligations during the period beginning one month before the scheduled opening of the franchised Restaurant and continuing until four months following the commencement of operation of the franchised Business (including, without limitation, your obligation to spend a minimum total of $5,000 to promote your Restaurant over the course of the period beginning one month before the scheduled opening of your Restaurant and continuing to four months after your Restaurant's opening). You may request modifications to the New Restaurant Marketing Plan which we may approve or disapprove in our sole judgment. Once a final New Restaurant Marketing Plan has been finalized and approved, you agree to execute the New Restaurant Marketing Plan and to fulfill your obligations under same. We may require you and you agree to submit proof of your expenditures under the New Restaurant Marketing Plan. In addition to the expenditures that you must make under your New Restaurant Marketing Plan, you must also purchase pre-opening materials known as the NRO Kit.

After your obligations under the New Restaurant Marketing Plan have been fully satisfied and continuing through the end of your Bonchon Business' first full calendar year of operations, you agree to expend on average the greater of: $1,166 per month or 1% of the preceding month's Gross Revenues on Local advertising and promotion. Following your Bonchon Business' first full calendar year and continuing for the remainder of the Initial Term, you agree to expend annually at least 2% of the previous year's Gross Revenues on Local advertising and promotion. "Local advertising and promotion" means the local or regional Advertising and promotional activities that we specify in our Manuals or otherwise, or approve in advance as provided in Section 10.02, including expenditures on television, radio, newspaper, magazines, out of home, posters, banners, brochure, direct mail, social media platforms such as Facebook, Instagram, yelp, and other digital platforms. For the avoidance of doubt, any expenditures you make on the following items shall not be applied towards and/or used to satisfy your New Restaurant Marketing Plan nor your minimum local advertising and promotional expenditure requirement: (1) an incentive program for your employees or agents; (2) charitable, political or other contributions or donations; (3) store fixtures or equipment; and/or (4) online business listings.

On or before January 15th of each year during the term of this Agreement, and at any other times that we may require, you agree to furnish to us copies of all statements, invoices and checks issued during the preceding year showing that you have spent the required amounts for local advertising. You further agree to furnish to us an accurate accounting of all expenditures for local advertising and promotion in the previous calendar year, at the same time that you submit the annual financial statements required by Section 11.01 below.

You will be entitled to a credit against your minimum local advertising and promotion requirement for contributions made to an advertising cooperative (as provided for in Section 10.04).

10.04 Advertising Cooperatives

We may, from time to time, establish, change, merge or dissolve regional advertising cooperatives for a geographic area which encompasses three or more Bonchon Businesses (each a "Regional Advertising Cooperative"). We will furnish to you written notice of the establishment of any Regional Advertising Cooperative for your geographic area. The notice will specify the date you are to begin contributions and the amount of the contributions. Contributions will be calculated as a percentage of Gross Revenues as defined in Section 5.05 above. Your contributions to a Regional Advertising Cooperative will not be less than 1% nor more than 4% of your Gross Revenues, unless the maximum contribution is changed by franchisee Cooperative members in accordance with the terms of the Bylaws of the Cooperative. You will be entitled to a credit against your minimum local

advertising and promotion requirement as set forth in Section 10.03 for contributions made to an advertising cooperative.

Bonchon Businesses that are owned and operated by us or an affiliate of ours and are within the geographic area of a Regional Advertising Cooperative will participate in and contribute to the Cooperative on the same basis as required of franchisee members of the Cooperative. All Regional Advertising Cooperatives will be governed by Bylaws in the form of Exhibit G, except as modified to conform with the laws of any specific jurisdiction.

The Regional Advertising Cooperative may expend its funds for any or all of the following purposes: (i) development of advertising ideas and concepts; (ii) development of market research and merchandising programs; (iii) preparation of advertising campaigns; (iv) development of promotional ideas and strategies; (v) preparation of collateral creative materials; (vi) preparation of advertisements; (vii) placing and paying for regional marketing and advertising; (viii) planning, negotiating, contracting and trafficking all media programs; (viii) employing advertising agencies to assist in these activities and securing other technical and professional advice in connection with the above; (x) other public relations; and, (xi) administration of the Cooperative, including legal and accounting services to administer the Cooperative. It will not be a requirement that expenditures made by a Regional Advertising Cooperative be proportionate to your contributions or those of any other franchisee. The Regional Advertising Cooperative funds will also cover all costs of administering, directing, preparing, placing and paying for advertising specific to the region. This includes: production and media;

Source: Item 23 — RECEIPTS (FDD pages 92–536)