a resolution of the Franchisee Entity authorizing the execution of this Agreement, a copy of its organizational documents and a current Certificate of Good Standing. All Owners and their spouses must sign a Franchise Owner Agreement.

10. ADVERTISING & MARKETING.

• 10.1. Brand Fund. We administer a brand and system development fund to promote public awareness of our brand and improve our System. On each royalty fee due date, you must pay us a brand fund fee equal to 2% of Gross Sales for the prior reporting period. We deposit all brand fund fees and noncompliance fees we collect into the fund. We may use the fund to pay for any of the following:

  • (a) developing, administering or distributing advertising and marketing materials and programs
  • (b) conducting and administering promotions, contests or giveaways;
  • (c) public and consumer relations and publicity;
  • (d) brand development;
  • (e) sponsorships and charitable and non-profit donations and events;
  • (f) research and development of technology, products and services;
  • (g) website development and search engine optimization;
  • (h) development, maintenance and promotion of an ecommerce platform;
  • (i) development and implementation of quality control programs and customer satisfaction surveys;

• (j) conducting market research;

• (k) changes and improvements to the System;

• (l) fees and expenses charged by advertising agencies we engage to provide marketing services;

• (m) collecting and accounting for brand fund fees and preparing financial accountings of the fund;

• (n) any other programs or activities we deem appropriate to promote or improve the System;

• (o) legal fees to defend Claims brought against the fund (or against you or other franchisees) based on fund expenditures or activities; and

• (p) direct or indirect labor, administrative, overhead and other expenses incurred by us and/or our affiliates relating to any of these activities, including salary, benefits and other compensation of any of our (and any of our affiliate's) officers, employees or independent contractors based on time spent working on any brand fund matters described above.

We have sole discretion in determining the content, concepts, materials, media, endorsements, frequency, placement, location and all other matters pertaining to marketing or advertising activities. Any surplus in the fund may be invested and we may lend money to the fund if there is a deficit. The fund is not a trust and we have no fiduciary obligations to you with respect to our administration of the fund. In terms of marketing activities paid for by the fund, we do not ensure that: (a) expenditures in (or affecting) a given geographic area are proportionate or equivalent to the brand fund fees paid by franchisees in that geographic area; or (b) franchisees benefit directly or in proportion to their brand fund fees. We will prepare, and make available to you upon request, an annual statement of fund operations, including deposits and disbursements. We may suspend or discontinue the fund at any time upon 30 days' prior notice.

10.2. Marketing Assistance From Us. We will provide reasonable marketing consulting, guidance and support throughout the Term on an as-needed basis. Prior to your opening date we will provide you with an initial supply of approved promotional materials and assist you in developing a marketing plan for your Salon, including a grand opening marketing plan.

Source: Item 23 — RECEIPT (FDD pages 44–190)