Under the Best Brains franchise agreement, what constitutes a cross default?
Best_Brains Franchise · 2025 FDDAnswer from 2025 FDD Document
- C. Cross Default. Any default by you of any other agreement between us and you shall be deemed a default under this Agreement, and any default by you of this Agreement shall be deemed a default under any and all other agreements between us and you. If the nature of such default under any other agreement would have permitted us to terminate this Agreement had the default occurred under this Agreement, we have the right to terminate this Agreement as if the default did in fact occur under this Agreement. For purposes of this Section, an agreement between the us or an affiliate of ours and you or your owners shall be deemed an agreement between us and you.
Source: Item 23 — RECEIPTS (FDD pages 42–190)
What This Means (2025 FDD)
According to Best Brains' 2025 Franchise Disclosure Document, a cross default occurs when a franchisee defaults on any agreement they have with Best Brains. This means that if a franchisee violates the terms of one agreement, it is considered a default under all agreements between the franchisee and Best Brains.
Specifically, if the nature of the default under any other agreement would have permitted Best Brains to terminate the Franchise Agreement had the default occurred under the Franchise Agreement itself, then Best Brains has the right to terminate the Franchise Agreement. This provision extends to agreements between the franchisee's owners and Best Brains or its affiliates, meaning a default by the owner can also trigger a cross-default.
This clause is significant for prospective Best Brains franchisees as it broadens the scope of what constitutes a default and increases the risk of termination. A franchisee must ensure compliance with all agreements, not just the Franchise Agreement, to avoid triggering a cross-default. This also means that any financial or operational issues in other ventures with Best Brains could jeopardize the franchise.