What were the royalty fees for Big Blue Swim School in 2022?
Big_Blue_Swim_School Franchise · 2025 FDDAnswer from 2025 FDD Document
ine basis over the life of the respective franchise agreement.
Royalties
Royalties are earned as a percentage of franchisee gross revenues over the term of the franchise agreement, as defined in each respective franchise agreement. Franchise royalties represent sales-based royalties that are related entirely to the use of the Company's intellectual property and are recognized as franchisee sales occur and the royalty is deemed collectible.
Brand fund
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.
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 75)
What This Means (2025 FDD)
According to the 2025 Big Blue Swim School FDD, royalty fees are earned as a percentage of franchisee gross revenues over the term of the franchise agreement. These royalties represent sales-based royalties related to the use of Big Blue Swim School's intellectual property. The FDD states that these royalties are recognized as franchisee sales occur and are deemed collectible.
Additionally, Big Blue Swim School maintains a brand fund, which collects fees from franchisees based on a percentage of their gross revenues, payable monthly. These funds are used for advertising, marketing, research and development, public relations, social media management, and customer relationship management programs. The FDD indicates that the company considers its right to access intellectual property and the administration of the brand fund as highly interrelated, accounting for them as a single performance obligation. As a result, revenues from the brand fund are also treated as sales-based royalties related to the right to access Big Blue Swim School's intellectual property, recognized as franchisee sales occur.
The 2025 FDD does not specifically state the exact percentage charged for royalty fees in 2022. However, it does state that the company has the right to charge its franchisees a brand fee of up to 3% of gross revenues, but has agreed to charge 2% of gross revenues. The FDD also mentions a market introduction program with a maximum fixed fee, which began in 2022, but does not specify the exact amount franchisees paid in royalty fees during that year. A prospective franchisee should inquire directly with Big Blue Swim School about the specific royalty fee percentage charged in 2022.