Is the annual maintenance fee specified in the Application License Agreement for a Brain Balance franchise subject to an annual CPI adjustment?
Brain_Balance Franchise · 2025 FDDAnswer from 2025 FDD Document
- (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 that a licensee pays to the licensor under the Application License Agreement are subject to potential increases. After the initial twelve-month period, Brain Balance may increase these fees. However, any increase is capped, and cannot exceed 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. The CPI used for calculation is based on the immediately preceding December 31st.
In addition to the maintenance fees, licensees also pay monthly third-party platform hosting fees. These fees can be increased with 30 days' notice if the third-party hosting company raises its rates to Brain Balance. The increase passed on to the licensee will only be the amount of the increase in Brain Balance's costs.
This CPI-linked adjustment provides some predictability for Brain Balance franchisees, as it ties fee increases to a widely recognized measure of inflation. However, franchisees should still budget for potential increases in both maintenance and third-party platform fees, understanding that the latter could fluctuate more frequently based on the hosting company's pricing decisions.