Can the Engineering For Kids Brand Fund contributions be used for national advertising?

During any periods that the Brand Fund is in effect, you must contribute the amounts that we specify to the Brand Fund as described in the first paragraph above under "Ongoing Advertising". We may use your contributions and any earnings on the Brand Fund for any costs associated with local, regional, and/or national advertising, marketing, public relations, and/or promotional programs and materials, and any other activities we believe would benefit Franchised Businesses and "Engineering For Kids" brand and the System generally, including advertising campaigns in various media; creation and maintenance of online marketing (including one or more websites or other Online Sites (as defined below), social media/networking and other digital media); direct mail advertising; market research and testing, including secret customers and customer satisfaction surveys; employing advertising and/or public relations agencies; purchasing promotional items; conducting and administering promotions, contests, giveaways, public relations events, community involvement activities, etc.; providing promotional and other marketing materials and services to our franchisees; and development of, or producing for franchisees, materials and items used in the Businesses for customer viewing and use; and on materials and/or services designed to promote the brand and employment opportunities in order to facilitate selection and hiring of qualified staff. We have the right to deduct from the Brand Fund 15% of the monies in the Brand Fund on contributions for administration and management of the Brand Fund. We have the right to direct all marketing programs, with the final decision over creative concepts, materials and media used in the programs and their placement. The Brand Fund contributions may be used for national, regional and/or local advertising activities and may take place in a variety of media (including television, radio, and print).

We will deposit all contributions to the Brand Fund in an account separate from our other funds and will not use them to defray any of our general operating expenses, except for reasonable administrative costs and overhead we incur in activities reasonably related to the administration of the Brand Fund or the management of Brand Fund-supported programs (including full or partial salaries of our personnel who devote full- or part-time to Brand Fund activities). Additionally, we may charge the Brand Fund fees at reasonable market rates for advertising, marketing, and promotional services that we ourselves actually provide in lieu of engaging third-party agencies to provide such services.

We may make, or refrain from making, any expenditures for advertising and promotional activities. In any calendar year, we may spend more or less than that year's aggregate Advertising Contributions to the Brand Fund. We may have the Brand Fund borrow from us or other lenders to cover any Brand Fund deficits. We may have the Brand Fund invest any surplus for the Brand Fund's future use.

We control the concepts and materials and all other matters relating to advertising, public relations, marketing, market research, and promotional campaigns. We may, however, spend the advertising contributions only for authorized purposes. Advertising contributions are intended to maximize general public recognition and acceptance of the Proprietary Marks for the benefit of the System as a whole. In administering the Brand Fund, we need not make expenditures for you that are equivalent or proportionate to your advertising contributions or insure that you benefit directly or pro rata from advertising or promotion conducted in connection with the advertising

contributions. Any promotional materials produced with Brand Fund monies will be made available to you at a reasonable cost, and the proceeds of such sales will also be deposited in the Brand Fund account.

The Advertising contributions belong to the Brand Fund; they are not our asset. We are not required to have an independent audit of the System Fund completed. We will make available an unaudited statement of contributions and expenditures for the Brand Fund 90 days after the close of our fiscal year to franchisees that make a written request for a copy. With respect to the maintaining, operating, or administering the Brand Fund, we are not a trustee or fiduciary and assume no other direct or indirect liability or obligation to you.

At any time, we may stop collecting and disbursing advertising contributions and terminate the Brand Fund. It will not be terminated, however, until all monies in the fund have been expended for marketing purposes.

The Brand Fund will not expend any money for advertising that is principally a solicitation for the sale of franchises. We do not currently operate any Businesses, but our affiliate currently operates two Businesses. Our current policy is that we or our affiliate. will contribute to the Brand Fund in the same manner as franchisees; however, we or our affiliate may count other marketing costs that we incur in connection with promoting the Engineering For Kids brand and products (such as towards maintaining the System website and other Online Sites) towards the required advertising contribution.

During the last fiscal year, the Brand Fund expenditures made were for, among other things, 70% on marketing promotional content and marketing support, 20% on digital assets, and 10% on the website. There was no surplus or deficit for the Brand Fund.

Source: Item 11 — FRANCHISOR'S ASSISTANCE, ADVERTISING, COMPUTER SYSTEMS, AND TRAINING (FDD pages 25–36)