Does the Best Brains FDD specify if the revenue from operations includes franchise fees?

According to the 2025 Best Brains FDD, the document addresses how franchise fees are handled for accounting purposes. Specifically, initial franchise fees collected upfront are amortized over the life of the franchise agreement, which is generally five years. This means that Best Brains recognizes the revenue from these fees gradually over that five-year period rather than all at once when the fee is initially received.

Furthermore, the Best Brains FDD states that the corporation adopted the new accounting standard updated 2020-05 effective January 1, 2019, retrospectively. Revenue from sales of an individual franchise is recognized as the performance obligations are satisfied. This indicates that Best Brains recognizes revenue when it has fulfilled its obligations to the franchisee, aligning with standard accounting practices for revenue recognition.

In terms of accounts receivable, the Best Brains FDD mentions that these consist primarily of open accounts with franchisees for franchise fees and royalties. This suggests that franchise fees and royalties are significant components of the company's receivables. However, the FDD does not explicitly state whether the revenue from operations includes franchise fees. To gain a clearer understanding, a prospective franchisee should inquire with Best Brains about how franchise fees are classified and reported within their overall revenue figures.