Is the annual maintenance fee for the Application License Agreement with Brain Balance subject to any adjustments?
Brain_Balance Franchise · 2025 FDDAnswer from 2025 FDD Document
3. Charges and Fees.
- (a) License Fee for Software. Licensee shall pay to Licensor upon execution hereof and thereafter on each anniversary of the Effective Date the annual license fee specified in Exhibit B.
- (b) Maintenance Fees. Commencing upon execution hereof and until such time as the License granted hereunder is terminated , Licensee shall pay to Licensor the annual maintenance fees (the "Maintenance Fees") and the monthly third party platform hosting fees (the "Third Party Platform Fees") specified in Exhibit B.The Maintenance Fees may be increased by Licensor from time to time following the initial twelve (12) month period in accordance with the terms specified in Exhibit B. No increase in Maintenance Fees shall exceed the CPI (as defined below) increase with respect to the year prior to such increase. "CPI" means the Consumer Price Index issued by the U.S. Department of Labor, Bureau of Labor Statistics, N.Y.–Northeastern N.J. region for the immediately preceding December 31st . The Third Party Platform Fees may be increased on thirty (30) days' prior notice in the event that the third party hosting company increases fees charged to Licensor, and in the amount by which Licensor's costs increase.
Source: Item 22 — CONTRACTS (FDD pages 70–72)
What This Means (2025 FDD)
According to Brain Balance's 2025 Franchise Disclosure Document, the annual maintenance fees associated with the Application License Agreement are subject to potential adjustments. Specifically, Brain Balance has the right to increase these fees following the initial 12-month period. However, any increase is capped by the increase in the Consumer Price Index (CPI) for the N.Y.–Northeastern N.J. region, as reported by the U.S. Department of Labor, Bureau of Labor Statistics, for the preceding December 31st.
In practical terms, this means that while Brain Balance franchisees should anticipate possible increases in their annual maintenance fees, these increases are tied to a recognized measure of inflation. This provides some predictability and limits the extent to which Brain Balance can raise the fees. The CPI limitation protects franchisees from arbitrary or excessive fee hikes, ensuring that increases are in line with broader economic trends.
Additionally, franchisees should be aware of potential increases in the monthly third-party platform hosting fees. These fees can be adjusted with a 30-day notice if the third-party hosting company raises its rates to Brain Balance. The increase passed on to the franchisee will be equivalent to the increase in Brain Balance's costs. This pass-through arrangement means that Brain Balance does not profit from these specific fee adjustments but is simply reflecting changes in the costs they incur from their hosting provider.