Does the Best Brains Promissory Note allow for waiver of default?
Best_Brains Franchise · 2025 FDDAnswer from 2025 FDD Document
Each person liable on this Note in any capacity, whether as maker, endorser, surety, guarantor or otherwise, and any holder (collectively hereafter "Obligor"), waives the benefit of the homestead exemption and of all other exemptions available to him and also waives presentment, demand, protest, notice of dishonor and all other notices of every kind and nature to which he would otherwise be entitled under the applicable law. 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.
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.
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 waiver of default. The document states that the 'Obligor' (which includes anyone liable on the note) agrees that the 'Holder' (Best Brains, Inc.) may waive any default under the note or other agreements between the lender and any obligor relating to the debt. This waiver can occur on one or more occasions, before or after the maturity of the note, without notice to the obligor, without further consent, and without releasing the obligor from liability. This provision gives Best Brains flexibility in managing the loan and allows them to work with franchisees who may be experiencing temporary financial difficulties.
This clause is significant for a prospective Best Brains franchisee because it outlines the conditions under which Best Brains can choose to be lenient regarding defaults on the promissory note. While it doesn't guarantee that Best Brains will waive a default, it provides the option for them to do so. This could be beneficial in situations where a franchisee is facing short-term financial challenges but is otherwise committed to the success of their Best Brains center.
However, franchisees should not rely on the expectation of a waiver. The clause also emphasizes that 'TIME IS OF THE ESSENCE' with regard to payments and performance, and lists several events that constitute default, such as failure to make payments, insolvency, or bankruptcy. If a default occurs, Best Brains has the right to demand immediate payment of the entire unpaid balance and accrued interest. The availability of remedies upon default are cumulative, meaning Best Brains can pursue multiple avenues for recovering the debt. Therefore, while the possibility of a waiver exists, franchisees must prioritize fulfilling their obligations under the promissory note to avoid potential default and its consequences.