How does Brain Balance recognize revenue from coaching fees?
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, coaching fee revenue represents fees earned for additional coaching and training requested by franchisees. Brain Balance recognizes this revenue over time as the coaching is provided. This means that Brain Balance does not recognize the entire coaching fee as revenue immediately upon receiving payment. Instead, they recognize it gradually as they deliver the coaching services.
For a prospective franchisee, this accounting practice has implications for understanding Brain Balance's financial statements. The revenue figures reported for a specific period reflect the coaching services actually delivered during that period, not necessarily the total amount of coaching fees collected. This approach aligns with standard accounting principles, which aim to match revenue recognition with the actual delivery of services.
In 2024, 2023, and 2022, Brain Balance recognized $1,333,317, $1,274,825, and $1,611,326 in coaching, enrollment kit, and other revenue, respectively. It is important to note that this figure combines coaching revenue with revenue from enrollment kits and other sources, so the exact amount attributable solely to coaching fees is not specified. A prospective franchisee should consider this when analyzing Brain Balance's revenue streams and profitability.