Brain Balance’s Initial Franchise Fee, Royalty Fee + 20 Other Fees

Detailed Information on Brain Balance’s Initial Franchise Fee, Royalty Fee + 20 Other Fees (Items 5 and 6, 2021 FDD)

1.  Initial Franchise Fee:  $45,000 for a Standard Brain Balance Center; $25,000 for a Brain Balance Satellite Center

• The initial uniform franchise fee for a Standard Brain Balance Center is $45,000 and is payable in a lump sum at the time you sign the Franchise Agreement.

• A satellite center concept (“Brain Balance Satellite Center”) is available to franchisees who currently own at least one franchise location for a minimum of 12 months, are in good standing with no Franchise Agreement defaults, and have a minimum of $400,000 in revenue per franchise location during the prior 12-month period. A satellite location can only be located within the franchisee’s existing market.

• Brain Balance Satellite Centers are facilities that only deliver programming and do not handle lead intake or assessment of prospective enrolling families, post-Program assessments, or administrative functions, so they are smaller and have fewer features.

• The initial franchise fee for a Brain Balance Satellite Center is $25,000.

2.  Software Fees:  $15,000 for the Software license for a Standard Brain Balance Center ($5,000 for the Software License for a Brain Balance Satellite Center) and a prorated amount of the $1,596 annual software maintenance fee for the balance of the first year of operation at the time the Software is activated

• You are also required to license the proprietary software (“Software”) from Brain Balance pursuant to the Application License Agreement, pay Brain Balance $15,000 for the Software license for a Standard Brain Balance Center ($5,000 for the Software License for a Brain Balance Satellite Center), and pay Brain Balance a prorated amount of the $1,596 annual software maintenance fee for the balance of the first year of operation at the time the Software is activated.

3.  Royalty:  8% of Gross Revenue, with a minimum of $1,000 per calendar month

• Due Date:  Payable monthly on or about the 7th day of the month.

4.  Local Advertising:  9% of anticipated Gross Revenue, not to fall below a minimum of $5,000 per calendar month, allocated among various marketing channels and using approved vendors for all advertising placement

• Due Date:  As incurred.

• Your minimum expenditure per calendar month is to be spent on local media, and you are encouraged to spend more as you see fit per the particularities of your market.

5.  National Advertising Fund:  2% of Gross Revenue, with a minimum of $200 per calendar month

• Due Date:  Payable monthly on or about the 7th day of each month.

6.  Additional Training Fee:  if:  (1) requested by franchisee, (2) required by Brain Balance in the event you fail to master the principles and objectives of the Licensed Technology, (3) System development results in new principles or protocols, or (4) you replace either your Center Director or Program Director, additional consultation services at your center will be charged at a half-day rate of $500 (less than 4 hours of training) and full-day rate of $1,000, plus airfare, lodging, and travel expenses

• Advanced Training is required for all franchisees related to enrollment enhancement, Sensory Motor, and academic administration and marketing, up to two times per year (known as Regional trainings), for a period of between 1 and 5 days, with attendance mandatory for either the Center Director or Program Director, at a cost of $150 per day, plus travel expenses, if Brain Balance offers it.

• Due Date:  Due 1 week prior to the start of consultation/training.

• These fees are debited via ACH.

7.  Email and Other Collaboration:  first 3 users are free of charge; additional users are charged at the then-current rate (currently $72/year)

• Due Date:  Payable annually, prorated by start date in your first year.

• Gmail and Google applications. Fees are debited via ACH.

8.  Accounting Software:  amount varies based on if you purchase the software or use an online license. Prices can range from $10-$25/month or $300-$500 for software purchase depending on your package.

• Due Date:  One-time purchase or monthly depending on what package you choose.

• You may elect to purchase additional software features.

9.  Taxes:  will vary

• Due Date:  As required by law.

• These are payable to Brain Balance if it is required to pay any taxes (other than income tax) on any fees that you pay to it.

10.  Software License Fee:  $15,000 for each Standard Brain Balance Center; $5,000 for each Brain Balance Satellite Center

• Due Date:  Paid at the same time as the Franchise Fee.

• Payable to Brain Balance pursuant to the Application License Agreement.

11.  Software Maintenance Fee:  $1,200 per year for each Center

• Due Date:  Payable annually, prorated by start month in the first year.

• Payable to Brain Balance pursuant to the Application License Agreement and debited via ACH.

12.  Brain Balance Program CRM Third-Party Platform License:  each Center license will cost $396 annually

• Due Date:  Payable January 1, prorated by start month in the first year.

• These fees are debited via ACH and payable to Brain Balance.

13.  Audit:  cost of audit, plus out-of-pocket disbursements; amount can vary from $750 to $10,000 based on the work required to complete the audit

• Due Date:  Upon completion of audit.

• Payable if an audit shows an understatement equal to or greater than 5% of either the royalty or advertising fund contributions, which should have been debited via ACH for the audited period.

• Amount unpaid plus compounded interest will also be due upon completion of the audit.

14.  Annual Convention:  $495 for franchisee; $350 for staff; $350 for guest; $200 for 4th (or more) staff

• Due Date:  At the point of registration, prior to Convention date.

• This cost is subject to increase. This is the current cost for Brain Balance’s Annual Convention. Travel, lodging, and food expenses will be in addition to the registration fee, some of which will be discounted or subsidized by Brain Balance.

15.  Interest:  2% per month compounded

• Due Date:  Upon demand.

• Payable on all payments that are 15 or more days overdue.

16.  Costs and Attorneys’ Fees:  will vary under circumstances

• Due Date:  As incurred.

• Payable upon termination of the Franchise Agreement, in an action to collect unpaid amounts owed to Brain Balance and if it needs to enforce the Franchise Agreement by injunctive relief.

17.  Relocation Fee:  then-current fee

• Due Date:  As incurred.

• Brain Balance must approve any relocation of your Center and you must pay Brain Balance its then-current relocation fee.

• As of the date of the current Disclosure Document, the relocation fee is $3,000.

18.  Indemnification:  will vary under circumstances

• Due Date:  As incurred.

• You must reimburse Brain Balance if it is held liable for claims arising from your operations and under certain circumstances set forth in the Application License Agreement.

19.  Insufficient Funds:  $35 charge per incident

• Due Date:  As incurred.

• Payable to Brain Balance if an ACH transaction cannot be completed for any reason.

20.  Renewal Fee:  $10,000

• Due Date:  Upon approval of renewal by Brain Balance each time you renew.

21.  Soft Opening Date Change Expenses:  will vary under circumstances

• Due Date:  Payable as soon as franchisee’s change to Soft Opening date results in nonrefundable expenses.

• Payable to Brain Balance when it incurs non-refundable expenses due to franchisee changing Soft Opening date.

22.  Transfer Fee by Transferee:  $10,000

• Due Date:  Upon completion of transfer.

• Payable to Brain Balance when franchise is transferred; there is no charge if transfer is to your spouse or adult child.