Section 7.4 MEDIA FUND

• (a) Creation. We have created a special fund called the "Stretch Zone Media Fund" (the "Media Fund"), into which we will deposit the Advertising Contributions described in Subsection 3.1(e) for the benefit of all Franchised Units and Company-Owned Units who contribute to the Media Fund.
• (b) Administration. We will administer the Media Fund. We use the funds in the Media Fund to pay for the costs of creating various advertising, marketing, and promotional materials that we deem beneficial to the Business System. We also use the funds in the Media Fund to pay the costs of conducting regional and/or national advertising and promotional activities (including the cost of producing advertising campaigns and marketing materials, conducting test marketing and marketing surveys, and public relations activities) that we deem beneficial to the Business System. We can charge the Media Fund for our costs for services we provide, in lieu of engaging third party agencies to provide these services. We will not use any of the funds to offer or sell Stretch Zone Franchises to prospective franchisees. We assume no other direct or indirect liability or obligation to you for the maintenance, direction or administration of the Media Fund, except as expressly provided in this ARTICLE 7.
• (c) Expenditures. All expenditures are at our sole discretion. We may spend in any calendar year more or less than the total Advertising Contributions to the Media Fund in that year. We may loan to the Media Fund or borrow from other lenders for the Media Fund to cover deficits of the Media Fund or cause the Media Fund to invest any surplus for future use by the Media Fund. We will carry any monies not spent by the Media Fund in any particular year to fund production expenses in the next year.
• (d) Contents and Concepts. We retain sole discretion over all advertising, marketing and public relations programs and activities financed by the Media Fund, including the creative

concepts, materials and endorsements used and the geographic market, media placement and allocation. You agree that the Media Fund may be used to pay the costs of preparing and producing associated materials and programs that we determine, including video, audio and written advertising materials employing advertising agencies; sponsorship of sporting, charitable or similar events, administering regional and multi-regional advertising programs including purchasing direct mail and other media advertising, social media programs, and employing advertising agencies to assist with marketing efforts; and supporting public relations, market research and other advertising, promotional and marketing activities.

• (e) Advertising Contributions by Us. Company-Owned Units are required to contribute to the Media Fund on the same basis that Franchised Units are required to contribute.
• (f) Termination of Expenditures. We maintain the right to terminate the collection and disbursement of the Advertising Contributions and the Media Fund. Upon termination, we will disburse the remaining funds to existing Franchised Units and Company-Owned Units on a pro-rata basis based on their relative amount of contributions.
• (g) Media Placement. The advertising funded by the Media Fund is anticipated to be placed, based on our decisions, in regional and/or national markets and it is anticipated to be placed with television, radio, periodicals, newspapers and/or direct mail campaigns. We do not have to spend any of your contributions to the Media Fund in your Limited Protected Territory.
• (h) Creation of Materials. It is anticipated that most marketing materials will be prepared by our advertising department and/or a national or regional advertising agency.
• (i) Annual Report. We will prepare an annual report of the receipts and expenditures of the Media Fund and send a copy of the report to you and all other Franchisees within 150 days after the end of each fiscal year. We will not audit this report.

Source: Item 8 — Receipts. Any sale made must be in compliance with § 683(8) of the Franchise Sale Act (N.Y. Gen. Bus. L. § 680 et seq.), which describes the time period a Franchise Disclosure Document (offering prospectus) must be provided to a prospective franchisee before a sale may be made. New York law requires a franchisor to provide the Franchise Disclosure Document at the earliest of the first personal meeting or ten (10) business days before the execution of the franchise or other agreement or the payment of any consideration that relates to the franchise relationship. (FDD pages 99–263)