How are contributions to the Brain Balance Advertising Fund managed by the company?
Brain_Balance Franchise · 2025 FDDAnswer from 2025 FDD Document
Agreement") in the form annexed hereto as Exhibit 2, which will allow FRANCHISOR to debit FRANCHISEE's bank account during the term of this Agreement for the royalties due.
6.02. Advertising Fund
- (a) FRANCHISEE shall participate and contribute to the advertising fund ("Advertising Fund") that has been established by COMPANY for the benefit of all BBF franchisees and Company-operated Centers.
- (b) FRANCHISEE's non-refundable contribution to the Advertising Fund shall be in an amount equal to two percent (2%) of Gross Revenue as defined in 6.01, with a minimum of $200 due monthly hereunder, and the contribution is due and payable in the same manner and at the same time as the Royalty. If the Center is not opened by the tenth (10th) month following the date of the Franchise Agreement, FRANCHISEE will be required to pay to COMPANY the contribution to the Advertising Fund beginning that month.
- (c) Contributions to the Advertising Fund from FRANCHISEE and all other franchisees shall be maintained by COMPANY in a single segregated account designated for that purpose. The proceeds of the Advertising Fund shall be expended at the discretion of
COMPANY for national and/or regional advertising, public relations, dissemination of research results achieved through approved research facilities, the Brain Balance® Foundation and other charitable activities, Web site and other electronic media development, and/or promotion of the Center businesses conducted under the Marks and publications relating to the Brain Balance Program®, and the payment of fees, costs, and other charges pertaining to such activities, including but not limited to COMPANY's administrative expenses associated with the foregoing.
- FRANCHISEE acknowledges that proceeds of the Advertising Fund are intended to be used to maximize general public awareness of the Brain Balance Program® for the benefit of the System as a whole. No representation is made by COMPANY, and FRANCHISEE acknowledges that expenditures from the Advertising Fund may not result in a proportionate or any advertising effort in a particular geographical area, including FRANCHISEE's Territory, or that FRANCHISEE will benefit directly from any expenditures from the Advertising Fund. FRANCHISEE acknowledges and agrees that neither FRANCHISEE nor any other franchise owners of COMPANY who shall be obligated to contribute to the Advertising Fund shall be deemed a third-party beneficiary with respect to said Advertising Fund or have any right to enforce any obligation to contribute thereto. Expenditures from the Advertising Fund shall be made at the sole discretion of COMPANY and may be for the benefit of any one or more of the Marks. COMPANY shall not be required to expend the entire Advertising Fund during any calendar year. COMPANY shall have the right to determine the nature, scope, and content of advertising and promotion programs; the territory in which they are to appear; the form thereof; the media and the budget therefore; and all other relevant decisions regarding the implementation of such advertising and promotion programs.
- (e) FRANCHISEE shall spend a minimum of $6,000 per calendar month or nine percent (9.0%) of its Gross Revenue, whichever is greater, for local advertising in accordance with COMPANY's direction as to allocation among various marketing channels.
Source: Item 22 — CONTRACTS (FDD pages 70–72)
What This Means (2025 FDD)
According to Brain Balance's 2025 Franchise Disclosure Document, franchisee contributions to the Advertising Fund are managed by Brain Balance through a segregated account. Franchisees must contribute 2% of their gross revenue, with a minimum of $200 due monthly, payable in the same manner and at the same time as royalty payments. Even if a center isn't open by the tenth month following the franchise agreement date, the franchisee is still required to contribute to the Advertising Fund starting that month.
The funds collected are used at Brain Balance's discretion for national and regional advertising, public relations, dissemination of research results, charitable activities through the Brain Balance® Foundation, website and electronic media development, promotion of center businesses, and payment of fees and administrative expenses related to these activities. Brain Balance intends to use these funds to maximize general public awareness of the Brain Balance Program® for the benefit of the entire system.
However, Brain Balance makes no guarantee that advertising expenditures will proportionally benefit any specific geographical area, including the franchisee's territory, or that franchisees will directly benefit from these expenditures. Franchisees are also not considered third-party beneficiaries of the Advertising Fund and have no right to enforce contribution obligations. Brain Balance also requires franchisees to spend a minimum of $6,000 per calendar month or 9% of their gross revenue, whichever is greater, on local advertising, following the company's directions for marketing channel allocation. If an Advertising Cooperative is recommended and established in the franchisee's designated marketing area, the franchisee must join and contribute as set forth in the agreement, with these payments counting towards the local advertising obligations.