Does the Best Brains Promissory Note allow for release of liability?
Best_Brains Franchise · 2025 FDDAnswer from 2025 FDD Document
Each Obligor agrees that Holder may take any one or more of the following actions, on one or more occasions, whether before or after the maturity of this Note, without any notice to such Obligor, without any further consent to such actions, and without releasing or discharging such Obligor from liability on the Note: (a) any extension or extensions of the time of payment of any principal, interest or other amount due and payable under this Note; (b) any renewal 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.
Source: Item 23 — RECEIPTS (FDD pages 42–190)
What This Means (2025 FDD)
According to the 2025 Best Brains Franchise Disclosure Document, the Promissory Note does allow for the release or discharge from liability under certain conditions. Specifically, the document states that the 'Holder' of the note (Best Brains, Inc.) can take several actions without releasing or discharging the 'Obligor' (the franchisee) from liability. These actions include extending payment timelines, renewing the note, releasing other obligors, waiving defaults, or changing the interest rate or other terms of the note.
This means that Best Brains retains considerable flexibility in managing the Promissory Note without automatically forfeiting its right to collect the debt from the franchisee. For a prospective franchisee, this indicates that even if Best Brains modifies the terms of the note, such as by granting an extension on payments, the franchisee remains liable for the debt. This clause protects Best Brains's interests by ensuring that minor adjustments to the loan terms do not inadvertently nullify the entire agreement.
However, the clause also states that the 'Holder' can provide a 'full or partial release or discharge from liability under this Note of any other Obligor.' This implies that Best Brains has the option to release an obligor from the note. A potential franchisee should seek clarification from Best Brains regarding the circumstances under which such a release might be granted, and what specific conditions would need to be met. Understanding these conditions is crucial for assessing the overall risk and obligations associated with the Promissory Note.