CLASS R DISTRIBUTION PLAN
I. Investment Company: FRANKLIN CUSTODIAN FUNDS
II. Fund: FRANKLIN DYNATECH FUND - CLASS R
III. Maximum Per Annum Rule 12b-1 Fees for Class R Shares
(as a percentage of average daily net assets of the class):
0.50%
PREAMBLE TO CLASS R DISTRIBUTION PLAN
The following Distribution Plan (the "Plan") has been
adopted pursuant to Rule 12b-1 under the Investment Company Act
of 1940, as amended (the "Act") by the Investment Company named
above ("Investment Company") for the Class R shares (the "Class")
of the Fund named above ("Fund"), which Plan shall take effect as
of the date shares of the Class are first offered (the "Effective
Date of the Plan"). The Plan has been approved by a majority of
the Board of Trustees of the Investment Company (the "Board"),
including a majority of the Board members who are not interested
persons of the Investment Company and who have no direct, or
indirect financial interest in the operation of the Plan (the
"independent Board members"), cast in person at a meeting called
for the purpose of voting on such Plan.
In reviewing the Plan, the Board considered the schedule and
nature of payments and terms of the Investment Management
Agreement between the Investment Company and Franklin Advisers,
Inc. ("Advisers") and the terms of the Distribution Agreement
between the Investment Company and Franklin/Templeton
Distributors, Inc. ("Distributors"). The Board concluded that
the compensation of Advisers, under the Investment Management
Agreement, and of Distributors, under the Distribution Agreement,
was fair and not excessive. The approval of the Plan included a
determination that in the exercise of their reasonable business
judgment and in light of their fiduciary duties, there is a
reasonable likelihood that the Plan will benefit the Fund and its
shareholders.
DISTRIBUTION PLAN
1. The Fund shall pay to Distributors as compensation for
its services or for payment by Distributors to dealers or others,
or the Fund shall pay directly to others, a quarterly fee not to
exceed the above-stated maximum fee per annum of the Class'
average daily net assets represented by shares of the Class, as
may be determined by the Investment Company's Board from time to
time, as distribution and/or service fees pursuant to
distribution and servicing agreements which have been approved
from time to time by the Board, including the independent Board
members.
2. (a) The monies paid to Distributors pursuant to
Paragraph 1 above may be treated as compensation for
Distributors' distribution-related services including compensation
for amounts advanced to securities dealers or their firms or
others (including retirement plan recordkeepers) selling shares
of the Class who have executed an agreement with the Investment
Company, Distributors or its affiliates, which form of agreement
has been approved from time to time by the Board, including the
independent Board members, with respect to the sale of Class
shares. In addition, Distributors may use such monies paid to it
pursuant to Paragraph 1 above to assist in the distribution and
promotion of shares of the Class. Such payments made to
Distributors under the Plan may be used for, among other things,
the printing of prospectuses and reports used for sales purposes,
expenses of preparing and distributing sales literature and
related expenses, advertisements, and other distribution-related
expenses, including a pro-rated portion of Distributors' overhead
expenses attributable to the distribution of Class shares, as
well as for additional distribution fees paid to securities
dealers or their firms or others (including retirement plan
recordkeepers) who have executed agreements with the Investment
Company, Distributors or its affiliates, or for certain
promotional distribution charges paid to broker-dealer firms or
others, or for participation in certain distribution channels.
(b) The monies paid to Distributors or others pursuant
to paragraph 1 above may also be used to pay Distributors,
dealers or others (including retirement plan recordkeepers) for,
among other things, furnishing personal services and maintaining
shareholder or beneficial owner accounts, which services include,
among other things, assisting in establishing and maintaining
customer accounts and records; assisting with purchase and
redemption requests; arranging for bank wires; monitoring
dividend payments from the Fund on behalf of customers;
forwarding certain shareholder communications from the Fund to
customers; receiving and answering correspondence; and aiding in
maintaining the investment of their respective customers in the
Class. Any amounts paid under this paragraph 2(b) shall be paid
pursuant to a servicing or other agreement, which form of
agreement has been approved from time to time by the Board.
3. In addition to the payments which the Fund is
authorized to make pursuant to paragraphs 1 and 2 hereof, to the
extent that the Fund, Advisers, Distributors or other parties on
behalf of the Fund, Advisers or Distributors make payments that
are deemed to be payments by the Fund for the financing of any
activity primarily intended to result in the sale of Class shares
issued by the Fund within the context of Rule 12b-1 under the
Act, then such payments shall be deemed to have been made
pursuant to the Plan.
In no event shall the aggregate payments specified in
paragraphs 1 and 2, plus any other payments deemed to be made
pursuant to the Plan under this paragraph, exceed the amount
permitted to be paid pursuant to Rule 2830(d) of the Conduct
Rules of the Financial Industry Regulatory Authority, Inc.
("FINRA")
4. Distributors shall furnish to the Board, for its
review, on a quarterly basis, a written report of the monies paid
to it and to others under the Plan, and shall furnish the Board
with such other information as the Board may reasonably request
in connection with the payments made under the Plan in order to
enable the Board to make an informed determination of whether the
Plan should be continued.
5. The Plan shall continue in effect for a period of more
than one year only so long as such continuance is specifically
approved at least annually by the Board, including the
independent Board members, cast in person at a meeting called for
the purpose of voting on the Plan. In determining whether there
is a reasonable likelihood that the continuation of the Plan will
benefit the Fund and its shareholders, the Board may, but is not
obligated to, consider that Distributors has incurred substantial
costs and has entered into an arrangement with a third party
which third party has agreed to purchase from Distributors the
entitlement of Distributors to receive the payments described in
Paragraph 1(a) above, which purchase will generate the cash flow
needed to pay for the distribution activities for the Class.
6. The Plan, and any agreements entered into pursuant to
this Plan, may be terminated with respect to the shares of the
Class at any time, without penalty, by vote of a majority of the
outstanding voting securities of such Class or by vote of a
majority of the independent Board members of the Investment
Company, on not more than sixty (60) days' written notice, and
shall terminate automatically in the event of any act that
constitutes an assignment of the Investment Management Agreements
between the Fund and the Advisers. Upon termination of this Plan
with respect to the Class, the obligation of the Fund to make
payments pursuant to this Plan with respect to such Class shall
terminate, and the Fund shall not be required to make payments
hereunder beyond such termination date with respect to expenses
incurred in connection with Class shares sold prior to such
termination date.
7. The Plan, and any agreements entered into pursuant to
this Plan, may not be amended to increase materially the amount
to be spent for distribution pursuant to Paragraph 1 hereof
without approval by a majority of the outstanding voting
securities of the Class of the Fund.
8. All material amendments to the Plan, or any agreements
entered into pursuant to this Plan, shall be approved by the
independent Board members cast in person at a meeting called for
the purpose of voting on any such amendment.
9. So long as the Plan is in effect, the selection and
nomination of the Fund's independent Board members shall be
committed to the discretion of such independent Board members.
This Plan and the terms and provisions thereof are hereby
accepted and agreed to by the Investment Company and Distributors
as evidenced by their execution hereof.
Date: DECEMBER 1, 2008
FRANKLIN CUSTODIAN FUNDS
By: /s/ KAREN L. SKIDMORE
Karen L. Skidmore
Title: Vice President & Secretary
FRANKLIN/TEMPLETON DISTRIBUTORS, INC.
By: /s/ PETER D. JONES
Peter D. Jones
Title: President