Under what financial threshold is an underpayment of Royalty and Advertising Fund contributions considered a breach of the Brain Balance agreement?

According to Brain Balance's 2025 Franchise Disclosure Document, an underpayment of Royalty and Advertising Fund contributions is considered a breach of the franchise agreement if it equals or exceeds five percent of the total Royalty and Advertising Fund contributions due during the audited period.

This means that if Brain Balance conducts an audit and finds that a franchisee has underpaid their Royalty and Advertising Fund contributions by 5% or more of what was owed during the period being examined, the franchisee will be considered in breach of contract. In addition to paying the underpaid amount plus interest, the franchisee is also responsible for covering all fees, expenses, and other costs associated with the audit itself.

This policy incentivizes franchisees to ensure accurate and timely payments of royalties and advertising fees. Franchisees should maintain meticulous records and accounting practices to avoid unintentional underpayments that could trigger a breach of contract and associated financial penalties. The audit can be triggered by Brain Balance, so franchisees should be prepared to demonstrate compliance with the payment terms outlined in their franchise agreement.