What do the Brain Balance License Fees cover?
Brain_Balance Franchise · 2025 FDDAnswer from 2025 FDD Document
g fees, enrollment kits, virtual program kits, software fees, coaching, and other. The Company franchises the right to operate Brain Balance Achievement Centers. The initial term of the franchise agreement is typically 10 years, with an option to renew for a fee or transfer the franchise agreement to a new or existing franchisee, at which point a transfer or renewal fee is typically paid.
The Company has obligations to provide franchisees with the franchise rights to operate Brain Balance Achievement Centers, training, and other assistance to launch their center, as well as to provide software and technology services and brand marketing and advertising support, for which fees are charged. The Company has concluded that certain training is a separate performance obligation due to the nature of the training being non-brand specific and capable of being used by trainees in other businesses. Therefore, initial franchise fees for each agreement are allocated to certain training as described above and the franchise right for each individual franchise. The training revenue is recognized over the term of the training. The franchise right revenue is recognized over the term of the respective franchise agreement beginning on the date the location is opened. Renewal fees are recognized over time, as training and renewal services are provided at the time of the renewal. Transfer fees are recognized over time, as training is provided to the transferees at the time of transfer. Typically the fee is less than the stand-alone selling price of the training provided at the time of transfer. Income for royalties, software fees, and advertising fees is recognized over the term of the respective franchise agreement as the underlying sales occur.
When a franchise agreement is terminated voluntarily by the franchisee or due to the default of the franchisee, the Company recognizes the remaining initial franchise fee as revenue earned, as no further performance obligations need to be satisfied, and the initial franchise fee is not refundable per the franchise agreement.
Source: Item 23 — RECEIPTS (FDD pages 72–292)
What This Means (2025 FDD)
According to the 2025 Brain Balance Franchise Disclosure Document, the company charges fees in exchange for providing franchisees with the rights to operate Brain Balance Achievement Centers. These fees cover training, assistance in launching the center, software and technology services, and brand marketing and advertising support.
The initial franchise fees are allocated to specific training programs and the franchise right itself. The revenue from training is recognized over the training term, while the franchise right revenue is recognized over the franchise agreement term, starting when the location opens. Renewal fees are recognized as training and renewal services are provided. Transfer fees are recognized as training is provided to transferees, typically at a lower price than the standalone training cost.
Royalties, software fees, and advertising fees are recognized over the franchise agreement term as sales occur. If a franchisee terminates the agreement, Brain Balance recognizes the remaining initial franchise fee as earned revenue, provided no further obligations need to be satisfied, and the fee is non-refundable, as per the franchise agreement. This means that franchisees who terminate early may not receive a refund for the initial franchise fee.
Brain Balance allocates consideration to training, center opening, and grand opening services based on the standalone selling price of similar third-party training services. The remaining consideration is allocated to the franchise right. This allocation affects how Brain Balance recognizes revenue over time, aligning it with the delivery of services and rights granted to the franchisee.