vertising funds that are or may hereafter be established pursuant to this Section, and shall have sole discretion over the concepts, materials, media, type, nature, scope, frequency, place, form, copy, layout, and content of all national, regional, and local advertising, and accordingly agree as follows:

B.National Advertising Contributions

Franchisee shall make National Advertising Contributions in the amount of 2% of Gross Revenues payable every month to such national advertising fund ("National Advertising Fund") as Franchisor may establish

for advertising for the System.

• 1. The National Advertising Fund shall be maintained and administered by Franchisor as follows*:*
• 2. Franchisee agrees and acknowledges that the National Advertising Fund is intended to maximize general public recognition and acceptance of the Marks for the benefit of all franchisees within the System or within a region, as the case may be, and that Franchisor is not obligated to administer the National Advertising Fund to make expenditures for Franchisee that are equivalent or proportionate to Franchisee's contribution or to ensure that any particular franchise benefits directly or pro-rata from the placement of advertising.
• 3. The National Advertising Fund, all contributions thereto, and any earnings thereon shall be used exclusively to meet any and all costs of maintaining, administering, researching, directing, and preparing advertising and/or promotional activities, including, without limitation, the costs of preparing and conducting advertising campaigns in various media; direct mail and outdoor billboard advertising; marketing surveys and other public relations activities; employing advertising agencies to assist therein; product development; and developing and providing promotional and other marketing materials for franchisees in the System.
• 4. Franchisor shall, for each of its company-owned locations (if any), make contributions to the National Advertising Fund on the same basis as assessments required of comparable franchisees within the System.
• 5. Franchisee shall contribute to the National Advertising Fund separately via transaction payable to the Punch King Fitness National Advertising Fund or such other designation as Franchisor may, from time to time, prescribe. Such sums shall not be used to defray any of Franchisor's expenses except for such reasonable salaries, overhead, and administrative, accounting, legal (including, without limitation, the defense of any claims against Franchisor and/or Franchisor's designee regarding the management of the National Advertising Fund) and other costs, if any, as Franchisor may incur in activities reasonably related to the administration or direction of the National Advertising Fund or advertising programs for franchisees and the System, including the costs of enforcing contributions to the National Advertising Fund required under this Agreement and the costs of preparing a statement of operations. The National Advertising Fund and its earnings shall not otherwise inure to the benefit of Franchisor.
• 6. It is anticipated that all contributions to and earnings of the National Advertising Fund shall be expended for advertising and/or promotional purposes during the taxable year within which the contributions are made.

Source: Item 22 — CONTRACTS (FDD pages 56–215)