How is the Browns Chicken Advertising Fund accounted for?

relations, market research and marketing activities; and providing advertising and marketing materials and menus to BROWN'S Stores. The Advertising Fund shall furnish Franchisee with approved advertising materials at its direct cost of producing such advertising materials.

The Advertising Fund is not Brown's asset. Although the Advertising Fund is not a trust, Brown will hold all Advertising Fund contributions for the benefit of the contributors and use contributions only for the purposes described in this Agreement. Brown does not owe any fiduciary obligation to Franchisee for administering the Advertising Fund or for any other reason. The Advertising Fund shall be accounted for separately from the other funds of Brown and shall not be used to defray any of Brown's general operating expenses, except for such reasonable salaries, administrative costs and overhead as Brown may incur in activities reasonably related to the administration of the Advertising Fund and its advertising programs (including, without limitation, conducting market research, preparing advertising and marketing materials and collecting and accounting for contributions to the Advertising Fund). Brown may spend in any fiscal year an amount greater or less than the aggregate contribution of BROWN'S Stores to the Advertising Fund in that year and the Advertising Fund may borrow from Brown or other lenders to cover deficits of the Advertising Fund or cause the Advertising Fund to invest

any surplus for future use by the Advertising Fund. Franchisee authorizes Brown to collect for remission to the Advertising Fund any advertising monies or credits offered by any supplier to Franchisee based upon purchases by Franchisee. All interest earned on monies contributed to the Advertising Fund will be used to pay advertising costs of the Advertising Fund before other assets of the Advertising Fund are expended. A statement of monies collected and costs incurred by the Advertising Fund shall be prepared annually by Brown and shall be furnished to Franchisee upon written request.

Franchisee understands and acknowledges that the Advertising Fund is intended to maximize recognition of the Marks and patronage of BROWN'S Stores. Although Brown will endeavor to utilize the Advertising Fund to develop advertising and marketing materials, and to place advertising in a manner, that will benefit all BROWN'S Stores, Brown undertakes no obligation to ensure that expenditures by the Advertising Fund in or affecting any geographic area are proportionate or equivalent to contributions to the Advertising Fund by BROWN'S Stores operating in that geographic area or that any BROWN'S Store will benefit directly or in proportion to its contribution to the Advertising Fund from the development of advertising and marketing materials or the placement of advertising. Except as expressly provided in this Section 11, Brown assumes no direct or indirect liability or obligation to Franchisee with respect to the maintenance, direction or administration of the Advertising Fund. Franchisee agrees and acknowledges that Brown has no fiduciary obligation to Franchisee or any other BROWN's Store in connection with the establishment of the Advertising Fund or the collection, control or administration of monies paid into the Advertising Fund.

Brown reserves the right, in its sole discretion, to terminate or discontinue the Advertising Fund upon thirty (30) days' written notice to Franchisee. All unspent monies on the date of termination or discontinuance shall be distributed to franchisees of Brown in proportion to their respective contributions made to the Advertising Fund during the previous twelve (12) month period.

Source: Item 22 — Contracts (FDD page 43)