For cross-default purposes, what entities are considered 'agreements between us and you' under the Best Brains franchise agreement?
Best_Brains Franchise · 2025 FDDAnswer from 2025 FDD Document
- C. Cross Default. Any default by you of any other agreement between us and you shall be deemed a default under this Agreement, and any default by you of this Agreement shall be deemed a default under any and all other agreements between us and you. If the nature of such default under any other agreement would have permitted us to terminate this Agreement had the default occurred under this Agreement, we have the right to terminate this Agreement as if the default did in fact occur under this Agreement. For purposes of this Section, an agreement between the us or an affiliate of ours and you or your owners shall be deemed an agreement between us and you.
Source: Item 23 — RECEIPTS (FDD pages 42–190)
What This Means (2025 FDD)
According to Best Brains' 2025 Franchise Disclosure Document, a default by a franchisee under any agreement with Best Brains can trigger a default under the franchise agreement itself, and vice versa. This is known as a cross-default provision. For the purposes of cross-default, any agreement between the franchisee or their owners and Best Brains or its affiliates is considered an agreement between Best Brains and the franchisee.
This means that if a Best Brains franchisee has multiple agreements with the franchisor, such as a loan agreement or a separate vendor agreement, a default on any of those agreements could lead to a default on the franchise agreement. Similarly, a default on the franchise agreement could trigger defaults on other agreements the franchisee has with Best Brains or its affiliates. This provision gives Best Brains a broad right to terminate the franchise agreement if the franchisee fails to meet their obligations under any agreement with them or their affiliates.
For a prospective franchisee, this cross-default provision highlights the importance of carefully reviewing all agreements with Best Brains and its affiliates. It is crucial to understand the obligations under each agreement and the potential consequences of default. Franchisees should ensure they have the financial capacity to meet all their obligations to avoid triggering a cross-default and potential termination of their franchise agreement. It is advisable to seek legal counsel to fully understand the implications of this provision and all related agreements.