Under what circumstances must a Best Brains franchisee pay liquidated damages?

According to Best Brains's 2025 Franchise Disclosure Document, a franchisee may be required to pay liquidated damages of $30,000 under specific circumstances related to the termination of the franchise agreement.

The liquidated damages become due if the franchisee terminates the franchise agreement in a manner not in accordance with Section 7.A of the agreement. Additionally, Best Brains can impose the liquidated damages if they terminate the franchise agreement according to the terms outlined in Section 7.B. In either of these termination scenarios, the franchisee is obligated to pay the $30,000 by the effective date of termination.

This clause is a significant consideration for prospective franchisees. It highlights the financial implications of prematurely ending the franchise agreement, whether initiated by the franchisee or by Best Brains due to a breach of contract. Franchisees should carefully review Sections 7.A and 7.B of the franchise agreement to fully understand the conditions under which termination could occur and the resulting financial obligations.

The inclusion of liquidated damages is a common practice in franchising to protect the franchisor from losses incurred due to early termination. However, the specific amount and the conditions triggering the damages can vary widely among different franchise systems. Therefore, prospective Best Brains franchisees should seek legal counsel to fully understand the implications of this clause before signing the franchise agreement.