What is the effect of an event of default on the unpaid balance of the Best Brains Promissory Note?
Best_Brains Franchise · 2025 FDDAnswer from 2025 FDD Document
l of this Note, in whole or in part; (c) any full or partial release or discharge from liability under this Note of any other Obligor; (d) any waiver of any default under this Note or other agreement between the Lender and any Obligor relating to the indebtedness evidenced by this Note; or (e) any agreement with the Maker changing the rate of interest or any other term or condition of this Note.
TIME IS OF THE ESSENCE with regard to the payment of any amounts due under this Note and the performance of the covenants, terms and conditions of this Note.
Any one or more of the following shall constitute an event of default under this Note: (a) any default in the payment of any installment or payment of principal, interest, or other amounts due and payable under this Note; (b) the death, dissolution, merger, consolidation or termination of existence of any Obligor; (c) any default by Obligor in the performance of, or compliance with, any provision in this Note or other agreement, document or instrument to which any Obligor and Holder are parties; (d) any Obligor is unable to pay debts as they become due, or is or becomes insolvent or makes an assignment for the benefit of creditors; (e) any Obligor files or becomes the subject of any petition or other pleading for relief under the Federal bankruptcy laws or any state insolvency statute; or (f) a receiver is appointed for,
or a writ or order of attachment, levy or garnishment is issued against, any Obligor or the property, assets or income of any Obligor.
Source: Item 23 — RECEIPTS (FDD pages 42–190)
What This Means (2025 FDD)
According to Best Brains' 2025 Franchise Disclosure Document, if an event of default occurs, the entire unpaid balance of the promissory note, along with all accrued interest, becomes immediately due and payable. This acceleration of the debt is at the discretion of the Holder (Best Brains, Inc.) and can be enforced without notice or demand to the Obligor (the franchisee).
An event of default includes several scenarios. These include failing to make timely payments of principal, interest, or other amounts due under the note. It also includes the death, dissolution, merger, consolidation, or termination of existence of the franchisee. Other events of default are the franchisee's inability to pay debts, insolvency, assignment for the benefit of creditors, filing for bankruptcy, or the appointment of a receiver or issuance of an attachment against the franchisee's assets or income.
The FDD specifies that the remedies available to Best Brains upon default are cumulative. This means Best Brains can pursue any and all remedies available under the promissory note, any other agreements, or under the law. This provides Best Brains with broad latitude in how they choose to respond to a default, increasing the risk for the franchisee in such a situation. Prospective franchisees should carefully consider these default conditions and ensure they have a clear understanding of their obligations and the potential consequences of failing to meet them.