What must a Degree Wellness franchisee do regarding marketing programs after commencing operations?

• a. You agree at your own expense to do the following (i) within 12 months of the date of this Agreement, or (ii) if you sign this Agreement pursuant to the purchase of a Development Agreement, by the Opening Deadline defined in Exhibit 1:
  • (10) at all times after commencing operations, utilize all approved internal and external marketing programs for the Franchise;

You further agree to refrain from any business or advertising practice that may be harmful to the business of Degree Wellness, the Franchise, and/or the goodwill associated with the Marks and other Degree Wellness franchises.

In addition to the Fund, as stated in Paragraph 6.3b, we may establish a program in the future to provide additional marketing services to Studio franchises. This program will involve the placement of individuals on a local basis to perform marketing activities for your benefit, subject to applicable law. This program will be required for Studio franchises. You agree to pay the fee specified in Paragraph 6.3b. If we choose to establish this program in the future, you agree to comply with all specifications and requirements contained in the Operations Manual concerning this program.

Recognizing the value of advertising and branding to the goodwill and public image of Studio franchises, we will establish, maintain and administer an advertising fund (the "Fund") for such brand development as we may deem necessary or appropriate in our sole discretion.

You agree to contribute to the Fund in the amount of one percent (1%) of the gross revenues of the Franchise.

We will provide you with 60 days' advance notice of the establishment or termination of the Fund and any change in the required contribution.

These contributions will be payable weekly with and at the same time as your Continuing Franchise Fees payable under Paragraph 6.2 above.

At no time during the term of this Agreement will your contribution to the Fund exceed 2% of gross revenue.

You understand and acknowledge that the Fund will be intended to maximize recognition of the Marks and the goodwill and patronage of Degree Wellness Studio franchises. Although we will endeavor to use the Fund to develop advertising and marketing materials, and to place advertising in a manner that will benefit all Degree Wellness Studio franchises, we undertake no obligation in developing, implementing, or administering advertising or promotional programs to ensure that expenditures by the Fund in or affecting any geographic area are proportionate or equivalent to contributions to the Fund by Degree Wellness Studio franchises operating in that geographic area, or that any Degree Wellness Studio franchise will benefit directly or in proportion to its contribution to the Fund from the development of advertising and marketing materials or the placement of advertising. Degree Wellness shall not be a fiduciary to you with respect to the management of the Fund. Except as expressly provided in this

Paragraph, we assume no direct or indirect liability or obligation to you with respect to the maintenance, direction, or administration of the Fund.

We will have the right to terminate the Fund by giving you 30 days' advance written notice. All unspent monies on date of termination will be divided between Degree Wellness and the contributing Degree Wellness Studio franchisees in proportion to our and their respective contributions. At any time thereafter, we will have the right to reinstate the Fund under the same terms and conditions as described in this Paragraph (including the rights to terminate and reinstate the Fund) by giving you thirty (30) days' advance written notice of reinstatement.

Source: Item 23 — Receipts (FDD pages 66–257)