Who determines how the Mr. Sandless Advertising Fund will be spent?

must submit your grand opening advertising plan to us for our approval.

The Advertising Fund

We have established an advertising fund ("Advertising Fund") to promote the System, Mr. Sandless and the products and services offered by Mr. Sandless Businesses. You must contribute each month to the Advertising Fund an amount equal to 1% of your Gross Sales. Your contributions to the Advertising Fund are in addition to your local advertising requirement described above. The Advertising Fund will be used for national, regional and local advertising, publicity and promotion relating to our business. We will determine, in our fully unrestricted discretion, the manner in which the Advertising Fund will be spent. Some portion of the Advertising Fund may be used for creative concept production, seminars and training programs, market research, marketing surveys, services of advertising and/or public relations agencies, television, radio, magazine, social media, and newspaper and electronic advertising campaigns and related purposes, as well as for website development, enhancement and maintenance. We have the right to direct all advertising activities with sole discretion over creative concepts, materials and media used, as well as their placement and allocation.

We also have the right to determine, in our sole discretion, the composition of all geographic and market areas for the implementation of these advertising and promotional activities. The Advertising Fund is intended to maximize general public recognition in all media of the Proprietary Marks and patronage of Mr. Sandless

Businesses. We will use monies from the Advertising Fund to develop and prepare advertising which we will distribute to our franchisees for their placement in local media. Even though the Advertising Fund will prepare and distribute this advertising, every franchisee in the System may not derive the same or similar benefit from this advertising. We have no obligation to make sure that expenditures of the Advertising Fund in or affecting any geographic area are proportionate or equivalent to payments to the Advertising Fund by franchisees operating in that geographic area, or that any Business will benefit directly or in proportion to the Advertising Fees paid for the development of advertising and marketing materials or the placement of advertising. While we do not anticipate that any part of Advertising Fund contributions will be used for advertising which is principally a solicitation for franchisees, we reserve the right to use the Advertising Fund for public relations or recognition of our brand, for the creation and maintenance of a portion of our Website to be used to explain the franchise offering and solicit potential franchisees, and to include a notation in any advertisement indicating "Franchises Available."

We may periodically assist franchises to maintain high quality standards through customer surveys, customer interviews, and other similar initiatives ("Surveys"). The cost of these programs will be paid by the Advertising Fund; however, the cost of these programs may be charged directly to you if your results of a Survey fall below System established minimum standards for Surveys. Any fees charged to and paid by you will be contributed to the Advertising Fund.

We have the right to reimburse ourselves out of the Fund for the total costs (including indirect costs) of developing, producing and distributing any advertising materials and collecting the Advertising Fee (including attorneys', auditors' and accountants' fees and other expenses incurred in connection with collecting any Advertising Fee).

Businesses owned by us or our affiliates will contribute to the Fund on the same basis as you. The Fund will be kept separate and distinct and will be accounted for separately from our other funds. These funds will not be used to defray any of our general operating expenses, except as described in the paragraph above. Any sums paid to the Fund that are not spent in the year they are collected will carry over to the following year. We will prepare, and furnish to you upon written request, an annual, unaudited statement of funds collected and costs incurred. The Advertising Fund is not audited.

Source: Item 11 — FRANCHISOR'S ASSISTANCE, ADVERTISING, COMPUTER SYSTEMS AND TRAINING (FDD pages 19–25)