What is the purpose of the Floyds 99 National Marketing Fund?

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. The National Marketing Fund is not a trust fund, and the Franchisor does not owe the Franchisee a fiduciary duty with respect to the maintenance, direction or administration of the National Marketing Fund. Except as expressly provided in this Section 13.2, the Franchisor assumes no direct or indirect liability or obligation to the Franchisee with respect to the maintenance, direction or administration of the National Marketing Fund.
• j. The Franchisor reserves the right to terminate the National Marketing Fund, upon 30 days' written notice to the Franchisee. All unspent monies on the date of termination shall be distributed to the Franchisor's franchisees in proportion to their respective contributions to the National Marketing Fund during the preceding 12-month period. The Franchisor shall have the right to reinstate the National Marketing Fund upon the same terms and conditions set forth herein upon 30 days' prior written notice to the Franchisee.
• 13.3 Local Advertising. Franchisee shall spend at least 1% of the total amount of its quarterly Gross Sales on local advertising (the "Local Advertising Allocation") to create public awareness of the Franchisee's FLOYD'S 99 Shop. Franchisor has the right to require Franchisee to spend a minimum average per calendar quarter of up to 2% of Franchisee's total Gross Sales. Funds spent on local advertising must be focused on the promotion of Franchisee's Shop to consumers. Funds spent through sites or networks such as Indeed, Craigslist or other similar sites or professional networks, whether to recruit employees or for other purposes, are not approved as local advertising. When combined with Franchisee's National Marketing Contribution (described above in Section 13.2), Franchisee's total advertising obligation (the National Marketing Contribution plus Local Advertising Allocation) will not exceed 4% of Franchisee's Gross Sales. The Franchisee will submit to the Franchisor an accounting of the amounts spent on local advertising within 20 days following the end of each calendar quarter. If the Franchisee's lease requires it to advertise locally, the Franchisor may, in its sole discretion, count such expenditures toward the Franchisee's Local Advertising Allocation under this Section 13.3. The Franchisee shall obtain the Franchisor's prior written approval of all written advertising and promotional materials before publication. If the Franchisee fails to spend the Local Advertising Allocation, this Agreement will be subject to termination under Section 20.2 below or, in the Franchisor's sole discretion, the Franchisor may purchase local advertising for the Franchisee and the Franchisee will be obligated to reimburse the Franchisor for all such purchases.
• 13.4 Regional Advertising Programs. The Franchisor reserves the right, upon 30 days prior written notice to the Franchisee, to create a regional advertising association ("Co-op") for the benefit of FLOYD'S 99 franchisees located within a particular geographic area. If a Co-op is established for the area where the Franchisee is located, the Franchisee will be required to participate in the Co-op for the purpose of selecting and participating in regional marketing and promotion programs for FLOYD'S 99 Shops. The Franchisee will be required to remain a member of and be bound by the decisions of the majority of the members of

the Co-op regarding expenditures, assessments and dues of the Co-op, to the extent that they are approved by the Franchisor. Franchisor may require Franchisee to allocate up to 2% of Gross Sales under Section 13.3 (Franchisee's maximum Local Advertising Allocation) as a required advertising contribution to the Co-op.

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