What was the royalty expense for Body Brain Center in 2023?
Body_Brain_Center Franchise · 2025 FDDAnswer from 2025 FDD Document
dy & Brain Centers pursuant to the terms of franchise agreements within the authorized region.
Under the terms of this agreement, the Company pays 20% on the total of the initial franchise fee, franchise renewal fee, training fee and transfer fee and 50% of royalties earned from franchisees by the Company. Furthermore, concerning the income derived from memberships and private lessons offered by the Direct Center, a contractual royalty rate has been in effect since 2022. In 2023, a royalty rate of 3%, computed based on the operating margin rate preceding the inclusion of Direct Center's royalty payments, was applied, resulting in a payment of $2,301.
License expenses under this agreement totaled $105,963 and $142,586 for the years ended December 31, 2023 and 2022, respectively.
Source: Item 23 — RECEIPT (FDD pages 43–178)
What This Means (2025 FDD)
According to the 2025 Body Brain Center FDD, the company's license expenses totaled $105,963 for the year ended December 31, 2023. This expense is related to a licensing agreement Body Brain Center has with BR Consulting, Inc., which owns the intellectual property rights associated with the Brain Education programs and the operation of Body Brain Center.
Under the licensing agreement, Body Brain Center pays BR Consulting, Inc. 20% of initial franchise fees, franchise renewal fees, training fees, and transfer fees. Additionally, Body Brain Center pays 50% of the royalties earned from franchisees. For income derived from memberships and private lessons offered by the Direct Center, a 3% royalty rate was applied in 2023, resulting in a payment of $2,301.
Prospective franchisees should understand that these licensing expenses are a significant part of Body Brain Center's financial obligations. The royalty structure, especially the percentage of royalties earned from franchisees, could impact the overall profitability of Body Brain Center, which in turn could affect the support and services provided to franchisees. It is important to note that the FDD does not specify the exact breakdown of how the $105,963 was allocated among the different types of fees and royalties.