How are Brain Balance transfer fees recognized?

According to Brain Balance's 2025 Franchise Disclosure Document, transfer fees are recognized over time. Specifically, Brain Balance recognizes transfer fees as training is provided to the transferees at the time of the transfer.

This means that Brain Balance does not recognize the entire transfer fee as revenue immediately upon the completion of the transfer. Instead, the revenue recognition is tied to the delivery of training to the new franchisee or transferee. This approach aligns the revenue recognition with the provision of services, which is a common accounting practice.

It is also noted that the transfer fee is typically less than the stand-alone selling price of the training provided at the time of transfer. This suggests that the transfer fee is not solely based on the cost of training but may also include other factors such as the value of the franchise rights being transferred. A prospective franchisee should inquire about the specific training involved in a transfer and how the transfer fee is determined.