What is the definition of 'National Marketing Fund' for a Floyds 99 franchisee?

ance with all of the Franchisor's standards and specifications. The Franchisee acknowledges and agrees that participation in a gift card or customer loyalty card program, whether voluntary or required, may require the Franchisee to pay fees, enter into agreements or purchase equipment or other products or services from the Franchisor or from a designated third-party supplier.

13.2 National Marketing Contribution. The Franchisee shall make contributions ("National Marketing Contributions") to a national advertising fund established by the Franchisor ("National Marketing Fund"). The amount of the National Marketing Contribution is currently 1.5% of Franchisee's Gross Sales and can be changed by Franchisor from time to time. The National Marketing Contribution

shall be paid to the Franchisor in addition to Royalties and in addition to any amounts spent on local or regional advertising, and the following terms and conditions shall apply:

• a. The National Marketing Contribution shall be payable concurrently with (or on another designated Due Date), and in the same manner as, the payment of the Royalties as described in Section 12.3.
• b. When combined with Franchisee's Local Advertising Allocation (described below in Section 13.3), Franchisee's total advertising obligation (the National Marketing Contribution plus Local Advertising Allocation) will not exceed 4% of Franchisee's Gross Sales.
• c. Franchisor may increase the amount of the National Marketing Contribution (up to a maximum of 3% of Gross Sales) by providing Franchisee with at least 90 days' prior written notice.
• d. The Franchisor shall have the right to verify National Marketing Contribution payments from time to time as it deems necessary, in any reasonable manner.
• e. The National Marketing Contributions will be subject to the same late charges and interest as the Royalties, in an amount and manner set forth in Section 12.3 above.
• f. Upon the request of the Franchisee, the Franchisor will make available to the Franchisee, no later than 120 days after the end of each fiscal year, an unaudited financial statement which indicates how the National Marketing Fund has been spent.
• g. The Franchisor shall direct all advertising and marketing programs financed by the National Marketing Fund, with sole discretion over the creative concepts, materials and endorsements used therein, geographic, market and media placement and allocation, and the administration thereof. The Franchisee agrees that the National Marketing Fund may be used to pay the costs of preparing and producing video, audio and written advertising materials, and Electronic Advertising (as defined in Section 13.6), including website design and maintenance and communication by social media and electronic mail; agency costs and commissions; implementing and administering gift card and stored value card programs and customer loyalty programs; creating and distributing proprietary in-shop music streaming programs; employee incentives and retention programs; training programs; administering multi-regional advertising programs, including, without limitation, purchasing and placing direct mail and other media advertising and employing advertising agencies and in-house staff to assist therewith; and supporting public relations, market research, brand recognition, third-party shopping services, and other advertising and marketing activities.
• h. The National Marketing Fund shall be accounted for separately from the Franchisor's other funds and shall not be used to defray any of the Franchisor's general operating expenses, except for such reasonable administrative costs, salaries and overhead as the Franchisor may incur in activities related to the administration of the National Marketing Fund and the implementation of its programs, including, without limitation, conducting market research, incurring related accounting and legal expenses, preparing material and collecting and accounting for National Marketing Fund contributions. The Franchisor may spend in any fiscal year an amount greater or less than the aggregate contribution of all FLOYD'S 99 Shops to the National Marketing Fund in that year and the National Marketing Fund may borrow from the Franchisor or other lenders to cover deficits or cause the National Marketing Fund to invest any surplus for future use. All interest earned on monies contributed to the National Marketing Fund will be first used to pay costs.

The National Marketing Fund may be incorporated or operated through an entity separate from the Franchisor at such time as the Franchisor deems appropriate, and such successor entity shall have all rights and duties of the Franchisor necessary to administer the National Marketing Fund pursuant to this Section 13.2.

• i. The Franchisee understands and acknowledges that the National Marketing Fund is intended to maximize recognition of the Marks and patronage of FLOYD'S 99 Shops. Although the Franchisor will endeavor to utilize the National Marketing Fund to develop advertising and marketing materials and programs and to place advertising that will benefit all FLOYD'S 99 Shops, the Franchisor undertakes no obligation to ensure that expenditures by the National Marketing Fund in or affecting any geographic area are proportionate or equivalent to the contributions by FLOYD'S 99 Shops operating in that geographic area or that any FLOYD'S 99 Shop will benefit directly or in proportion to its contribution from the development of advertising and marketing materials or the placement of advertising.

Source: Item 22 — CONTRACTS (FDD pages 57–58)