What payment method must an Engineering For Kids franchisee use for fees and charges?

f the Proprietary Marks. |

Notes:

• 1. General. We impose and collect all fees, except for certain local advertising that you will spend directly (see Item 11 for details) and except for product and service purchases described in Item 8. For all fees and charges, you must use the payment method we designate, which may include electronic funds transfer. All fees are non-refundable. All fees are uniformly applied to new system franchisees. However, in some instances in which it is appropriate to do so, we may waive or modify these fees for a particular franchisee.
• 1. Royalty Fees, and Electronic Payment. You must pay your royalties and (if applicable) Advertising Contributions by 5th day of each Period (or the next business day if the 5th day

is a federal holiday). The amounts will be based on the Gross Sales for the prior Period (but the Royalty payment will not be less than the "Minimum Royalty" when applicable). The Minimum Royalty requirement will not apply during the first six months after you and we sign the Franchise Agreement. Beginning in the seventh month after signing the Franchise Agreement, the "Minimum Royalty" will be equal to $300 per month. To qualify for the reduced Applicable Royalty Rates (e.g., those less than 7%), you must be in compliance with your Royalty and Brand Fund Contribution requirements.

We have the right to require you to make these payments by means of ACH (electronic fund transfer). As described in the Franchise Agreement, unless we specify otherwise in writing to you, you will pay the royalties monthly and a "Period" is a Month, but we have the right (after giving you written notice) to change the designated Period to alternative time frames including bi-weekly or weekly. The term "Month" means a calendar month or another 4-5 week period that we may otherwise designate.

If we require payment via wire transfer or electronic debit to your bank account, you must maintain sufficient balance in your operating account to meet the payment requirements. You must furnish us and your bank with all authorizations necessary to effect payment by the methods we specify. You may not, under any circumstances, set off, deduct or otherwise withhold any royalty fees, Advertising Contributions, interest charges, or any other monies payable under the Franchise Agreement on grounds of our alleged nonperformance of any obligations.

In addition to the Royalty Fee payment, you must also provide us with a correct statement of your Gross Sales for the Period just ended and any Period reports outlined in our Brand Excellence Manual (the "Manual"). You will also allow us to reasonably inspect your original books and records.

• 1. Advertising Obligations.

Source: Item 6 — OTHER FEES (FDD pages 10–15)