What financial obligations does a Best Brains franchisee have upon termination or expiration of the agreement?
Best_Brains Franchise · 2025 FDDAnswer from 2025 FDD Document
Pay all amounts owing to us or our affiliates,
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- If you terminate this Agreement other than in accordance with the terms of Section 7.A., or we terminate this Agreement pursuant to the terms of Section 7.B., then you shall pay to us, by the effective date of such termination, $30,000 as liquidated damages.
- **F.
Option to Purchase Assets.** Upon the termination or expiration of this Agreement, we have a 90 day option to purchase from you some or all of the equipment, supplies, inventory, advertising materials and any items with our Marks for cash at fair market value.
If you and we do not agree upon the amount of the fair market value, then a business appraiser selected by us shall determine the fair market value. The cost of the business appraiser shall be borne equally by us and you.
We have an unrestricted right to assign this option to a third party.
- G. Continuing Obligations. All obligations of yours which expressly or by their nature survive the expiration or termination of this Agreement shall continue in full force and effect subsequent to and notwithstanding the expiration or termination of this Agreement and until they are satisfied in full or by their nature expire.
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Transfer some, or all, of the students to another BEST BRAINS learning center, refund some or all of the tuition paid by the students for subjects which have not yet been completed, and take such other actions as we may direct to ensure the orderly transition of such students.
Source: Item 23 — RECEIPTS (FDD pages 42–190)
What This Means (2025 FDD)
According to the 2025 Best Brains Franchise Disclosure Document, a franchisee has several financial obligations upon termination or expiration of the franchise agreement. The franchisee must pay all amounts owed to Best Brains or its affiliates. If the franchisee terminates the agreement outside the terms of Section 7.A, or Best Brains terminates the agreement per Section 7.B, the franchisee must pay $30,000 as liquidated damages. This amount is acknowledged as fair compensation for early termination and loss of revenue.
Additionally, Best Brains has the option to purchase some or all of the franchisee's equipment, supplies, inventory, advertising materials, and items with Best Brains' marks for cash at fair market value. This option is available to Best Brains for 90 days following the termination or expiration of the agreement. If the franchisee and Best Brains cannot agree on the fair market value, a business appraiser selected by Best Brains will determine the value, and the cost will be split equally between both parties. Best Brains can assign this purchase option to a third party.
Furthermore, all obligations that naturally survive the termination or expiration of the agreement remain in full effect until they are completely satisfied or naturally expire. This includes adherence to post-term covenants not to compete or solicit. The franchisee is also obligated to transfer some or all students to another Best Brains center and refund tuition for uncompleted subjects, as directed by Best Brains, to ensure a smooth transition for the students.