For what purposes are the fees collected from Pump It Up franchisees used?

-house marketing department may prepare or work with advertising agencies to prepare the advertising materials for the Brand Fund.

You may be required to participate in advertising, marketing, social media, promotions, research and public relations programs and national cause marketing partner program events instituted by us or the Brand Fund. Among the programs, concepts, and expenditures for which we may utilize the Brand Fund monies are: (a) creative development and production of print ads, electronic media, commercials, point of purchase materials, direct mail pieces, door hangers, and other advertising and promotional materials; (b) creative development, preparation, production and placement of video, audio, and written materials and electronic media; (c) media placement and buying, including all associated expenses and fees; (d) administering regional and multi-regional marketing and advertising programs; (e) market research and customer satisfaction surveys, including the use of secret shoppers; (f) the development and production of premium items, giveaways, promotions, contests, public relations events, and charitable or nonprofit events; (g) creative development of new program offerings for Pump It Up Businesses; (h) creative development of signage, posters, and individual Pump It Up Business décor items including wall graphics; (i) recognition and awards events and programs; (j) System recognition events, including periodic national and regional conventions and meetings; (k) website, extranet and/or intranet development and maintenance; (l) development, implementation, and maintenance of an electronic commerce website and reservation system

and/or related strategies; (m) retention and payment of advertising and promotional agencies and other outside advisors including retainer and management fees; (n) social media platform development and management; (o) public relations and community involvement activities and programs; (p) expenses of the Franchise Advisory Council (defined below) program; and (q) any other purposes deemed beneficial to the Pump It Up System by Us. All advertising and promotional materials developed by the Brand Fund will be made available to you. We will not use the Brand Fund for the direct solicitation of franchisees, however, advertising and promotional materials may state that information regarding owning a Franchise is available through our website or toll-free telephone number.

We will account for the Brand Fund separately from our other funds; however, we are not required to segregate any Brand Fund monies from our other monies. We will not use the Brand Fund monies for any of our general operating expenses. We and our affiliates may be reimbursed by the Brand Fund for administrative expenses directly related to the Brand Fund's marketing programs, including without limitation, conducting market research, preparing advertising and marketing materials, and collecting and accounting for contributions to the Brand Fund. We may use the Brand Fund to pay the administrative costs of the Brand Fund including managing the advertising, marketing, and promotional programs and payment of outside vendors utilized by the Brand Fund, and we may use the Brand Fund to pay the reasonable salaries and benefits of personnel (including our personnel and our affiliates' personnel) who manage and administer the Brand Fund. We may use the Brand Fund to pay for other administrative costs, travel expenses of personnel while they are on Brand Fund business, meeting costs, overhead relating to Brand Fund business, and other expenses that we incur in activities reasonably related to administering or directing the Brand Fund and its programs.

The Brand Fund is not our asset. Although the Brand Fund is not a trust, we will hold all Brand Fund contributions for the benefit of the System and use contributions only for the purposes described in the Franchise Agreement. We do not have any fiduciary obligation to you for administering the Brand Fund or for any other reason. In any fiscal year, the Brand Fund may spend more or less than the total Brand Fund contributions in that year, borrow from us or others (paying reasonable interest) to cover deficits, or invest any surplus for future use. We will use all interest earned on Brand Fund contributions (if any) to pay for the administrative costs of the Brand Fund before using the Brand Fund's other assets.

We will prepare an annual, unaudited statement of the Brand Fund's collections and expenses within 90 days after our fiscal year end. The financial statement of the Brand Fund is available for your review upon written request. We may have the Brand Fund audited annually, at the Brand Fund's expense, by an independent certified public accountant. We may incorporate the Brand Fund or operate it through a separate entity whenever we deem appropriate.

We intend to use the Brand Fund to maximize and enhance public, franchisee, and employee recognition of the System and the Marks.

Source: Item 23 — RECEIPTS (FDD pages 60–225)