How are royalties and advertising fund fees recognized by Body Brain Center?

According to Body Brain Center's 2025 Franchise Disclosure Document, both royalties and advertising fund fees are recognized on a monthly basis. These fees are calculated as an agreed-upon percentage of each franchisee's program sales, as defined in the franchise agreement. This means that Body Brain Center recognizes the revenue from these fees in the same month that the franchisee generates the sales upon which the fees are based.

The advertising fund fees collected by Body Brain Center are specifically restricted for marketing, sales promotion, and promotional materials. This restriction ensures that the funds are used for their intended purpose, which benefits both the franchisor and the franchisees by supporting brand awareness and driving customer traffic. These restricted advertising funds are also included as restricted cash on the company's balance sheets, indicating that they are earmarked for specific advertising-related expenditures.

For a prospective Body Brain Center franchisee, this accounting practice means that the royalty and advertising fees they pay each month directly contribute to the company's recognized revenue for that period. The franchisee can expect that the advertising fees they contribute will be used solely for marketing and promotional activities, as these funds are tracked separately and restricted for that purpose. This provides a level of transparency and assurance that the fees are being used to support the Body Brain Center brand and network.