How much was the advance to related party by Brain Balance in 2022?
Brain_Balance Franchise · 2025 FDDAnswer from 2025 FDD Document
Agreement*
The Company has an administrative services agreement with the Parent. The Company agreed to reimburse the Parent for the Parent's actual costs incurred in providing administrative support services on behalf of the Company. For the years ended December 31, 2024, 2023, and 2022, administrative services fees were approximately $2,894,000, $2,694,000, and $2,197,000, respectively.
Related Party Advances
In the ordinary course
Source: Item 23 — RECEIPTS (FDD pages 72–292)
What This Means (2025 FDD)
According to Brain Balance's 2025 Franchise Disclosure Document, in 2022, $422,848 was advanced to the Parent company and was later deemed a distribution. This means that Brain Balance provided funds to its parent company, Brain Balance Holdings, Inc., but did not expect the amount to be repaid. Instead, it was treated as a distribution of equity.
This type of related-party transaction is not uncommon when a franchise is a subsidiary of a larger holding company. The FDD emphasizes that Brain Balance's operating results could vary significantly if it operated independently of its parent company. This highlights the interconnectedness of the two entities and the potential impact of the parent company's financial decisions on the franchise system.
For a prospective Brain Balance franchisee, this information is relevant because it provides insight into the financial relationship between the franchise system and its parent company. It's important to understand how these related-party transactions could affect the financial stability and operations of the franchise. It would be prudent for a potential franchisee to inquire about the nature and frequency of these transactions and how they might impact the franchisee's business.