What is the Brand Development Fund for Eos Worldwide used for?

We currently do not have a Brand Development Fund (i.e., any national, regional, or international marketing fund) for the EOS Franchise System, but we may form a Brand Development Fund in the future to promote EOS, the EOS Franchise System and/or its Services and Products and reserve the right to do so in the Franchise Agreement. If we form a Brand Development Fund, we anticipate that the terms will be consistent with those for marketing funds in other franchise systems, such as:

• you will be required to contribute to it;
• if we establish franchisor-owned businesses, then they will be required to contribute to the Brand Development Fund on the same basis as the franchisees;
• our Brand Development Fund will be used for international, national and regional advertising, publicity and promotion relating to EOS and the EOS Franchise System;
• we will have the right to determine the manner in which the contributions to the Brand Development Fund are spent;
• we could use any form of media we determine is appropriate to conduct the advertising and may utilize an in-house advertising department or outside agencies;
• some portion of the Brand Development Fund may be used for creative concept production, website development, marketing surveys, test marketing and related purposes;
• we will have the right to direct all advertising activities with sole discretion over creative concepts, materials and media used, as well as their placement and allocation;
• we will also have the right to determine, in our sole discretion, the composition of all geographic and market areas for the implementation of these advertising and promotional activities'
• we will have the right to reimburse ourselves out of the Brand Development Fund for the total costs (including indirect costs) of developing, producing and distributing any advertising materials and administering the Brand Development Fund (including without limitation, legal, auditing and accounting fees, salaries of in-house advertising personnel and outside advertising agencies and other expenses incurred in connection with collecting any Brand Development Fund Fees or other amounts);
• funds from the Brand Development Fund paid will be kept separate and distinct and will be accounted for separately from our other funds; these funds will not be used to defray any of our general operating expenses, except as described in the paragraph above;
• any sums paid to the Brand Development Fund that are not spent in the year they are collected will carry over to the following year;
• within one hundred twenty (120) days of the fiscal year-end, we will prepare, and furnish to you upon written request, an annual, unaudited statement of funds collected and costs incurred. (Section 11 Franchise Agreement).

We anticipate that any Brand Development Fund we create would strive to maximize general public recognition in all media of the Marks and patronage of EOS Worldwide businesses. There will however never be any obligation to ensure that expenditures of the Brand Development Fund in or affecting any geographic area are proportionate or equivalent to contributions into the Brand Development Fund by franchisees operating in that geographic area or that any franchisees will benefit directly or in proportion to the amounts paid for the development of advertising and marketing materials or the placement of advertising.

We will not require ourselves to spend any amount on advertising in any franchisee's area or territory, and no amount of the Brand Development Fund will be spent for advertising that is principally a

Source: Item 11 — Franchisor's Assistance, Advertising, Computer Systems, and Training (FDD pages 32–43)