Does Learningrx provide advertising and promotional materials to franchisees?

ew director's assessment to student rate reaches at least 40%. (See Section 8.05 of the Franchise Agreement).

• 1. Provide advertising, promotional materials, and services to you. Materials provided may include video and audiotapes, copy-ready print advertising materials, posters, banners and miscellaneous items. You will receive one sample of each at no charge. If you want additional copies you must pay duplication costs. We may use both outside advertising and marketing agencies and internal staff to create advertising. You may develop advertising materials for your own use, at your own cost. We must approve the advertising materials in advance and in writing within 15 days from receipt. We reserve the right to utilize advertising developed by you for the use of all Franchisees without any payment or other compensation to you. (See Section 9.03 of the Franchise Agreement).

Advertising Programs

Local Advertising. You are required to promote the franchise and advertise on a local basis. You are required to spend the greater of $2,000 for Micro Franchise and $3,000 for Standard Franchise or 5% of Gross Revenues per month on local advertising and promotion in your Territory. Your entire Local Advertising minimum required amount must be paid to independent third parties. Your failure to spend the Local Advertising amount required may result in the reduction or elimination of your Territory or the termination of the Franchise Agreement, in our sole discretion.

Boost Marketing Program: You are required to spend up to $3,000.00 per year for Boost marketing activities such as web directories, reputation management and other Boost marketing activities initiated by and paid to us. This amount is in addition to any other advertising requirement.

Initial Marketing Campaign: All new and transferred Centers must pay for an Initial Marketing Campaign of between $15,000.00 and $30,000.00 (depending on the size of the Territory) for an initial marketing opening campaign for media, print, public relations, marketing materials and products, and digital marketing services. You will have approval of the spending placement of advertising with the funds.

Center Marketing Plan: After the first year, the Center marketing plan will be required of a Center that generates less than $300,000 gross revenue for a standard franchise or $150,000 for a micro franchise for the previous 12-month period and the franchisee fails to meet its minimum marketing requirements for the past 12 months.

Advertising Cooperatives: You may, but are not obligated to, join with 1 or more other Franchisees or company-owned Centers in your market area (defined as the immediate metropolitan area within a radius of 25 miles) to form a local cooperative which shall be established and administered by a majority vote of the franchisees in the region in which you operate your Center. We reserve the right to require you to join any advertising cooperative we form. The cooperative will not be required to operate from written governing documents. The local advertising cooperative, when formed, will also assume responsibility for Yellow Pages advertising in the metropolitan area in which the cooperative operates. In your first 6 months of operation you may be required to spend the greater of 3% of Gross Revenues or 2/3 of the lowest amount paid by another Center in the cooperative, but not more than $3,000.00 per month (the "Maximum Cooperative Advertising Requirement"), toward the cooperative advertising. Beginning the 7th month of operations, you may be required to spend up to 3% of your Gross Revenues toward the cooperative advertising each month, but not more than the Maximum Cooperative Advertising Requirement each month. The cooperative may impose this requirement on you even if you are not otherwise required to spend money on local advertising. All franchises (including company owned) in the cooperative will contribute to the fund at the same rates. We may accumulate contributions to the Advertising Cooperative, and the balance may be carried over to subsequent years. We may also loan funds to the Advertising Cooperative at such times and on such terms as we determine, in our discretion. No cooperative funds will be used to sell franchises. The advertising cooperative must prepare annual financial statements, which must be delivered to us and all the franchisees in the cooperative within 120 days after our fiscal year end. As of the last fiscal year, no cooperatives were formed, therefore no monies were spent on advertising or carried forward. We reserve the right to form, change, dissolve, or merge advertising cooperatives in our discretion.

Marketing Development Fund (MDF): You will also be required to participate in the national marketing development program.

Source: Item 11 — FRANCHISOR'S ASSISTANCE, ADVERTISING, COMPUTER SYSTEM, AND TRAINING (FDD pages 26–33)