What is the purpose of the Brain Balance national advertising fund?
Brain_Balance Franchise · 2025 FDDAnswer from 2025 FDD Document
charged for the annual conference and settlements from terminated franchisees. Annual conference revenue is recognized over time as the conference occurs. Revenue from settlements is recognized at a point in time when the settlement is reached. For the years ended December 31, 2024, 2023, and 2022, revenue recognized at a point in time was $1,255,867, $1,198,850, and $1,470,031, respectively.
The Company has created a national advertising fund. An advertising fee is due monthly from each franchisee pursuant to the franchise agreement. Advertising and marketing expenses are incurred to promote brand awareness and include, but are not limited to, market and consumer research, media relations, advertising, and promotional marketing materials. Advertising fees are collected on a monthly basis, primarily based upon a percentage of franchisee gross sales. The Company recognizes these sales-based advertising fees from franchisees when the underlying franchisee sales occur. The Company records the related advertising expenses as incurred. When revenue of the advertising fund exceeds the related
Source: Item 23 — RECEIPTS (FDD pages 72–292)
What This Means (2025 FDD)
According to the 2025 Brain Balance Franchise Disclosure Document, the national advertising fund is used to promote brand awareness through various marketing and advertising efforts. These efforts include market and consumer research, media relations, advertising, and promotional marketing materials. Franchisees contribute to the fund through a monthly advertising fee, typically calculated as a percentage of their gross sales. These advertising fees are recognized as revenue when the underlying franchisee sales occur.
Brain Balance records advertising expenses as they are incurred. If the revenue of the advertising fund exceeds the expenses, the excess revenue is accrued to cover advertising expenses in the subsequent year. As of December 31, 2024, $77,535 was included in advertising fund accrued expenses. The amount of cash restricted for advertising fund expenses at December 31, 2024 was $83,542.
For a prospective Brain Balance franchisee, this means a portion of their monthly revenue will be allocated to a national fund managed by the franchisor. This fund aims to enhance the overall brand recognition and attract more customers to the Brain Balance centers. The accrual of excess funds for future use suggests a commitment to sustained marketing efforts, which could benefit franchisees by providing ongoing support for attracting and retaining clients.