How does Brain Balance recognize revenue from the annual conference?
Brain_Balance Franchise · 2025 FDDAnswer from 2025 FDD Document
y 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.
December 31, 2024, 2023, and 2022
Note 2 - Significant Accounting Policies (Continued)
Enrollment and virtual program kit revenue represents the fees earned by the Company from the enrollment kits that are purchased by franchisees from a third-party supplier and the Company, respectively. These kits are given to students as part of their enrollment in the center, and revenue is recognized at the time of purchase. The Company has determined that it is acting as principal in these transactions, as the Company assumes the inventory and has responsibility to provide goods based on its specifications. Coaching fee revenue represents fees earned by the Company for additional coaching and trainings requested by the franchisees. Revenue is recognized over time as the coaching is provided. Other revenue consists of fees
Source: Item 23 — RECEIPTS (FDD pages 72–292)
What This Means (2025 FDD)
According to Brain Balance's 2025 Franchise Disclosure Document, revenue from the annual conference is recognized over time as the conference takes place. This means that Brain Balance doesn't record all the revenue when franchisees initially pay for the conference. Instead, they spread the recognition of that revenue throughout the duration of the event. This approach aligns with accounting standards that match revenue recognition with the actual delivery of the service or event.
For a prospective Brain Balance franchisee, this detail might not directly impact their day-to-day operations. However, it provides insight into how Brain Balance manages its finances and ensures accurate reporting. It demonstrates that Brain Balance follows standard accounting practices by recognizing revenue when the service is provided, rather than simply when payment is received.
In 2024, 2023, and 2022, Brain Balance recognized $1,255,867, $1,198,850, and $1,470,031 in revenue at a point in time, respectively. This revenue includes fees charged for the annual conference and settlements from terminated franchisees. Franchisees typically prepay annual conference fees upon registering, and settlement fees are due upon signing the settlement agreement.