Must the owners of the entity agree to be personally bound by the Best Brains franchise agreement?
Best_Brains Franchise · 2025 FDDAnswer from 2025 FDD Document
C. Assignment to Entity. If you are in full compliance with this Agreement, we shall not unreasonably withhold our consent to a transfer of this Agreement and the assets of the Franchised Business to an entity, provided:
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- the entity name does not include the word "BEST" or "BRAIN" or "BRAINS" and its activities are confined exclusively to operating your Franchised Business;
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- Franchisee owns and controls all of the ownership interest and the entity assumes all of Franchisee's obligations hereunder and the owners agree to be personally bound jointly and severally by all the provisions of this Agreement and assume and guarantee all of Franchisee's obligations hereunder and all other agreements;
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- any subsequent transfer of ownership interest in the entity shall be subject to our consent;
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- the ownership shares indicate that any transfer of interests is restricted and may be transferred subject to our consent only in accordance with the terms of this Agreement; and
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- You shall pay to us all legal expenses and other charges we incur in connection with such transfer.
Source: Item 23 — RECEIPTS (FDD pages 42–190)
What This Means (2025 FDD)
According to Best Brains' 2025 Franchise Disclosure Document, if a franchisee wishes to assign their franchise agreement and the assets of their franchised business to an entity, the owners of that entity must agree to be personally bound by all the provisions of the franchise agreement. This means that the owners of the entity assume and guarantee all of the franchisee's obligations under the agreement and all other related agreements.
This requirement ensures that Best Brains has recourse to the personal assets of the entity owners, providing an additional layer of security for the franchisor. It is a fairly common practice in franchising to ensure the commitment and financial responsibility of those operating the franchise, even if the franchise is owned by a corporate entity.
However, the entity name cannot include the words "BEST," "BRAIN," or "BRAINS," and its activities must be confined exclusively to operating the franchised Best Brains business. Additionally, any subsequent transfer of ownership interest in the entity is subject to Best Brains' consent, and the ownership shares must indicate that any transfer of interests is restricted and may be transferred subject to their consent only in accordance with the terms of the agreement. The franchisee is also responsible for paying all legal expenses and other charges incurred by Best Brains in connection with such a transfer.