Under what conditions will Body Brain Center recognize deferred revenue as earned revenue?

According to Body Brain Center's 2025 Franchise Disclosure Document, deferred revenue includes franchise fees that have been paid but not yet earned. Body Brain Center will recognize these revenues as earned when all material services or conditions relating to the franchise agreement have been substantially performed until the center is opened. This means Body Brain Center holds the initial franchise fee as deferred revenue until it has fulfilled its obligations to help the franchisee get their center up and running.

Deferred revenue also includes advance payments for owner training programs that have not yet taken place. Body Brain Center will recognize training revenue when the training is provided to the participants. This indicates that Body Brain Center recognizes the revenue from training only after the training service has been rendered.

In simpler terms, Body Brain Center does not count the money from franchise fees or training programs as earned income until they have actually provided the services or fulfilled the conditions associated with those fees. This accounting practice ensures that Body Brain Center's financial statements accurately reflect when they have earned the revenue by delivering the promised services.