By what day of the month must the Best Brains Royalty Fee be paid?
Best_Brains Franchise · 2025 FDDAnswer from 2025 FDD Document
Note 1- Royalty Fees*. You must pay to us a "Royalty Fee" of 14% of Regular Gross Sales by the 19th of each month, or more frequently as the Company may designate, subject to a $750/month minimum:
- (1) "Regular Gross Sales" means all sales or revenues (other than Additional Program Sales and Add-On Program Gross Sales), derived directly or indirectly from the Franchised Business, including on and off premises (e.g., E-Learning). Regular Gross Sales also includes registration fees for any program and business interruption insurance proceeds. Regular Gross Sales does not include:
- (i) sales taxes collected from customers and paid to the appropriate taxing authority, and
- (ii) the amount of all coupons redeemed at the Franchised Business (but only if the coupons have been previously approved by the Company as provided in this Agreement and only if such coupons have been included in Regular Gross Sales)
- (2) Additional Program Sales. You shall pay us 14% of Additional Program Sales throughout the term of this Agreement. Additional Programs include but are not limited to: all programs offered by Best Brains such as Public Speaking, Baby Genius+, and Test Prep; revenue from events organized by the Franchised Business, including on and off premises; revenue from programs offered by the by the Franchised Business which have been previously approved by the Company as provided in the Franchise Agreement.
- (3) Add-on Programs Sales. You shall pay us 7% of Regular Gross Sales earned by providing aftercare services and/or camp services.
- (4) 6-12 months after enrolling the first student, and at any time thereafter, the franchise will be audited. Upon a poor review, royalty fees will increase to 18% and the franchised location will enter a Probationary Period for up to 6 months. Upon subsequent audits, conducted at random, if the franchise has a poor review, the royalty will remain at 18% and reestablish a Probationary Period. The additional 4% added to the royalty will be used toward Brand Development Fund. Upon a successful re-audit, the additional royalty fee may be removed and the franchised location will no longer be under a probationary period.
- Note 2 All fees are uniformly imposed by, collected by and payable to us via EFT and are non-refundable. You must complete the ACH Authorization Form attached as Schedule 3 to the Franchise Agreement when you enter into the Franchise Agreement with us.
- Note 3 All specified fees, contributions and dollar amounts referred to in the franchise agreement may be increased from time to time by us, but in no event more than once during any fiscal year of ours, to reflect increases in the Metropolitan Area Consumer Price Index for Urban Consumers - All Items (1982-1984 = 100) ("Consumer Price Index") from the date of the franchise agreement, as published by the U.S.
Source: Item 6 — OTHER FEES (FDD pages 11–15)
What This Means (2025 FDD)
According to Best Brains's 2025 Franchise Disclosure Document, franchisees are required to pay a Royalty Fee, which is 14% of Regular Gross Sales, by the 19th of each month. This payment schedule is subject to a minimum of $750 per month. The franchisor may also designate a more frequent payment schedule. Regular Gross Sales include all revenues from the franchised business, including on and off-premises sales, such as E-Learning, and registration fees for any program and business interruption insurance proceeds. However, Regular Gross Sales do not include sales taxes collected from customers and remitted to the appropriate taxing authority, or the amount of approved coupons redeemed at the franchised business.
In addition to the standard royalty fee, Best Brains franchisees must also pay 14% of Additional Program Sales and 7% of Regular Gross Sales earned from aftercare and camp services, referred to as Add-on Programs Sales. The FDD also states that if a Best Brains franchise receives a poor review during an audit, the royalty fees will increase to 18%, and the franchised location will enter a Probationary Period for up to 6 months. The additional 4% will be used toward the Brand Development Fund. Upon a successful re-audit, the additional royalty fee may be removed, and the franchised location will no longer be under a probationary period.
It is important to note that all fees are uniformly imposed, collected, and payable to Best Brains via EFT (Electronic Funds Transfer) and are non-refundable. Franchisees must complete an ACH Authorization Form when entering into the Franchise Agreement. The FDD also indicates that Best Brains normally collects fees from clients on behalf of the franchisee and then disburses the appropriate funds, less any Royalty Fees, Brand Development Fund contributions, or other amounts owed to Best Brains. This collection and disbursement process could simplify financial management for franchisees, but it also means franchisees need to understand how Best Brains handles these transactions.