s that may have additional costs to you should you decide to participate.

Advertising by Us - Advertising Funds

We have the right to create separate advertising funds (the "Ad Fund") for our Clinic franchises to accomplish those national, regional and local advertising and promotional programs we deem necessary or appropriate in our sole discretion for each type of franchise. See Item 6 for the amount of your required contribution to any Ad Fund that includes all or any part of your Protected Territory. We require all HealthSource Chiropractic Clinics to contribute 2% of their gross revenues to the Ad Fund. All HealthSource Chiropractic Clinic will be required to contribute to the Ad Fund on the same basis as you, respectively, unless prohibited by law. We have the right to increase or decrease your contribution to the Ad Fund upon 30 days written notice to you. HealthSource Chiropractic franchises owned by us or our affiliates must contribute to an Ad Fund on the same basis as you, subject only to limitation under applicable law.

We will administer and direct all marketing programs financed by an Ad Fund, and will have sole discretion over the creative concepts, materials, endorsements and media used by the Fund, and the geographic, market, and allocation of the Fund. We have the right to determine, in our sole discretion, the composition of all geographic territories and market areas for the development and implementation of such programs. An Ad Fund may be used to pay any and all costs of maintaining, administering, directing, and preparing national, regional or local advertising materials, programs, and marketing activities, including, without limitation, (a) costs for preparing and conducting television, radio, magazine, billboard, newspaper, internet and other media programs and activities, (b) costs associated with conducting marketing research, (c) costs associated with website development, maintenance, hosting and marketing, including without limitation, search engine optimization and social media, (d) administering regional and multiregional advertising programs, including, without limitation, purchasing direct mail and other media advertising, (e) employing advertising, program and marketing agencies, and vendors providing marketing services, (f) development, implementation and maintenance of online asset management tools, (g) marketing and advertising training programs and materials, and (h) costs for providing promotional brochures and advertising templates and materials to HealthSource Chiropractic Clinic franchises. Advertising materials developed or produced by an Ad Fund may include video, audio, and written advertising materials, which will be prepared by our in-house advertising department. The Ad Fund will furnish you with approved advertising materials at its direct cost of producing those advertising materials. Amounts contributed to an Ad Fund may be used to place advertising in television, radio, newspaper, or other media as solely determined by us. We will not use Clinic Ad Fund contributions for advertising that is principally a solicitation for the sale of franchises.

An Ad Fund will be accounted for separately from our other funds and will not be used to pay any of our general operating expenses, except for salaries, administrative costs, and overhead that we incur in activities reasonably related to the administration of the Ad Fund and its marketing programs, including preparing advertising and marketing materials, and collecting and accounting for contributions to the Ad Fund. We may spend in any fiscal year an amount greater or less than the aggregate contributions to the Ad Fund in that year, and the Ad Fund may borrow from us or other lenders to cover the Ad Fund's deficits or invest any surplus for future use by the Ad Fund. We will prepare an annual unaudited statement of monies collected and costs incurred by the Ad Fund and will provide it to you upon written request. During the 2024 fiscal year the Ad Fund spent 14.5% on production, 29.3% on media placement, 53.1% on administrative expenses and 3.1% on other expenses (including annual conference branding and promotional expenses).

We may cause an Ad Fund to be incorporated or operated through an entity separate from us when we deem appropriate, and the entity will have the same rights and duties as we do under your Franchise Agreement.

Source: Item 11 — Franchisor's Assistance, Advertising, Computer Systems, and Training (FDD pages 34–44)