What are Floors To Go's obligations during the operation of the FTG System?

they charge to their customers.

B. FTG's Obligations During Membership Operation

During the operation of the FTG System, FTG's obligations are limited to selecting floor covering and window treatment products that meet FTG's quality standards, negotiating with vendors to offer favorable pricing to FTG members (see Section 5 of the

Membership Agreement), controlling the management and disbursement of the funds received as Advertising Fees (see Sections 5.2 and 6.4 of the Membership Agreement), and providing certain approved artwork, print media presentations, direct mail flyers, promotional materials, point-of-sale formats, audio and video presentations for our approved advertising programs and information we develop for your use in marketing and conducting local advertising for your FTG Showroom at a reasonable cost to you (see Sections 5.2 and 6.4 of the Membership Agreement).

FTG is also obligated to use its commercially reasonable efforts to:

• (1) maintain the reputation of the FTG System;
• (2) maintain a wide variety of floor covering and window treatment products at favorable prices; and
• (3) defend the Marks licensed with the FTG System.

FTG is also obligated to provide and deliver to you at your Showroom the racks, displays and samples necessary to convert your Showroom to a FTG Showroom, as well as a store design consultant to assist you with adapting the FTG Showroom design package to your Showroom (the "Redesign"). FTG will not purchase any tenant improvement items, including, among other things, installation of floor coverings in showrooms, furniture, or office equipment (see Section 5.2 of the Membership Agreement).

C. Expected Days to Commence Operations

The typical length of time between the signing of the Membership Agreement and the opening of the member's showroom as a FTG Showroom is 30 to 90 days. Since all current FTG members have established floor covering stores prior to becoming a member, there are generally no delays occasioned by the new member needing to obtain a lease or to secure financing and building permits. The time period between the signing of the Membership Agreement and the new member commencing use of the FTG System may be impacted by the length of time needed to ensure that such member's FTG Showroom signage complies with local zoning and other ordinances and by delays in the installation of equipment, fixtures and signs in connection with the Redesign.

D. Member Training

Since FTG members already have experience in owning and operating floor covering stores, FTG does not offer an initial training program.

From time to time, FTG may offer seminars focused on topics of interest to FTG members (e.g., sales and marketing techniques, retail management best practices, new product offerings, and Internet applications), in which FTG members may voluntarily choose to participate. Since these seminars are specifically designed in response to timely issues faced by FTG members, the subjects taught, as well as the formats and venues in which such subjects are presented, vary from year to year. There is no predetermined plan with respect to the locations at which such seminars are held; nor is there any predetermined plan with respect to the seminar instructors or the nature of corresponding instructional materials.

There are no plans or instructors for the seminars. Attending members are expected to bear the expenses of attending these elective seminars, including lodging and meals.

In addition, FTG may hold conferences or conventions at various times to discuss matters such as sales techniques, product selection and costs, performance standards, advertising programs, new products, and operational modifications and updates. You must attend FTG's annual convention. FTG will bear the cost of your registration fee for your first convention, but you must pay all related travel, lodging and other personal expenses you incur (see Section 5.2(b) of the Membership Agreement). In addition, you must also attend FTG's annual convention in subsequent years, in order to receive the full benefit of the FTG System, and we reserve the right to charge you a fee if you elect not to attend. FTG will charge you a registration fee for your attendance at all subsequent annual conventions, and you must pay all related travel, lodging and other personal expenses that you incur during such conventions. The annual conventions, voluntary training programs, and other elective conferences and conventions will be held in a location within the United States designated by FTG.

During the past 12 months, one hundred percent (100%) of new members enrolled in our voluntary training programs and elective conferences and conventions.

E. Advertising Materials, Fees, Services and Responsibilities

FTG will develop advertising materials and marketing programs during the term of your Membership Agreement and provide these materials and programs to you and all FTG members (see Section 6.4 of the Membership Agreement).

Some advertising materials are prepared by FTG, and you are permitted to develop your own advertising material consistent with FTG's standards or otherwise subject to FTG's approval. All advertising, marketing and promotional materials which you use in connection with your Showroom must conform to all restrictions and specifications provided by us from time to time.

Source: Item 11 — FRANCHISOR'S ASSISTANCE, ADVERTISING, COMPUTER SYSTEMS, AND TRAINING (FDD pages 22–27)