How are brand fund fees collected from Big Blue Swim School franchisees?
Big_Blue_Swim_School Franchise · 2025 FDDAnswer from 2025 FDD Document
The Company maintains a brand fund established to collect and administer funds contributed for use in advertising, marketing, research and development, public relations, social media management and customer relationship management programs and materials for the benefit of franchise units. Brand fund fees are collected from franchisees based on a percentage of franchisee gross revenues and are payable monthly. The Company has determined that it acts as a principal in the collection and administration of the brand fund and therefore will recognize the revenues and expenses related to the brand fund on a gross basis. The Company has determined that the right to access its intellectual property and administration of the brand fund are highly interrelated and therefore are accounted for as a single performance obligation. As a result, revenues from the brand fund represent sales-based royalties related to the right to access the Company's intellectual property, which are recognized as franchisee sales occur. When brand fund fees collected exceed the related brand fund expenses in a reporting period, advertising costs are accrued up to the amount of brand fund revenues recognized.
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 75)
What This Means (2025 FDD)
According to the 2025 Big Blue Swim School FDD, brand fund fees are collected from franchisees based on a percentage of their gross revenues and are payable monthly. The brand fund is used for advertising, marketing, research and development, public relations, social media management, and customer relationship management programs and materials, all intended to benefit the franchise units.
Big Blue Swim School has the right to charge franchisees a brand fee of up to 3% of gross revenues, but currently charges 2%. The company acts as the principal in collecting and administering the brand fund, recognizing the related revenues and expenses on a gross basis.
For a prospective franchisee, this means that a portion of their monthly gross revenue will be allocated to the brand fund, which Big Blue Swim School manages. These funds are intended to support marketing and promotional activities that benefit all franchisees. It's worth noting that the FDD indicates the company does not segregate and restrict monies collected on behalf of the brand fund.