When does the monthly royalty payment obligation begin for a Brain Balance franchise?
Brain_Balance Franchise · 2025 FDDAnswer from 2025 FDD Document
). The Initial Franchise Fee is payable by wired funds transferred on the same day as the signing of this Agreement, receipt of which is hereby acknowledged.
6. OTHER PAYMENTS BY FRANCHISEE
6.01. Royalty
(a) Commencing the month FRANCHISEE's Center opens, FRANCHISEE shall pay to COMPANY, in addition to the Initial Franchise Fee as payment for
the continuing right to use the Marks and the System, a continuing non-refundable royalty fee (the "Royalty"). If the Center is not opened within nine (9) months following the date of the Franchise Agreement, FRANCHISEE will be required to pay to COMPANY the minimum Royalty beginning with the first of the month the following calendar month.
The Royalty shall be an amount equal to eight percent (8%) of FRANCHISEE's Gross Revenue (as defined below) ("GR") in the operation of the Franchised Business, with a minimum of $1,000 due and payable each month. If the thirtieth day falls on a day other than the first day of the month, the minimum royalty amount will be prorated for the number of days the Center was open in that month. Said minimum monthly Royalty of $1,000 shall be increased each January 1st by the same percentage that the Consumer Price Index, issued by the U.S. Department of Labor, Bureau of
Source: Item 22 — CONTRACTS (FDD pages 70–72)
What This Means (2025 FDD)
According to Brain Balance's 2025 Franchise Disclosure Document, franchisees are obligated to pay royalties starting the month their center opens. The royalty is 8% of the franchisee's gross revenue, with a minimum of $1,000 due monthly. This minimum royalty payment may be prorated if the center is not open for the entire month.
However, if a Brain Balance center does not open within nine months following the date of the Franchise Agreement, the franchisee is required to begin paying the minimum royalty starting on the first day of the month following that nine-month period. This means that even if the center isn't generating revenue, the franchisee must still pay the minimum royalty fee.
The minimum monthly royalty of $1,000 is subject to an annual increase each January 1st, based on the percentage increase in the Consumer Price Index (CPI) for the N.Y.–Northeastern N.J. region. This adjustment ensures that the royalty payments keep pace with inflation. Therefore, a prospective franchisee should factor in these royalty payment obligations and potential CPI-based increases when assessing the financial viability of a Brain Balance franchise.