What agreement must a Brain Balance franchisee make regarding security interests when transferring the franchise?

According to Brain Balance's 2025 Franchise Disclosure Document, a franchisee transferring their franchise must agree not to retain a security interest in the franchise or any subsequent franchise granted to the purchaser. This means the franchisee cannot use the franchise itself as collateral for any financing they provide to the buyer.

Additionally, the franchisee must agree that all financial obligations of the purchaser to the franchisee, such as payments on promissory notes, are subordinate to the purchaser's obligations to pay any monies owed to Brain Balance. In other words, Brain Balance gets paid first if the new franchisee runs into financial difficulties.

This requirement protects Brain Balance's financial interests by ensuring that its fees and royalties take priority over any debts the new franchisee owes to the selling franchisee. It also simplifies the transfer process by preventing potential disputes over security interests that could complicate the relationship between Brain Balance, the transferring franchisee, and the new franchisee. This is a fairly standard practice in franchising, as franchisors typically want to ensure their revenue stream is protected during and after a franchise transfer.