What are the consequences if a Brain Balance franchisee files for bankruptcy or becomes insolvent?
Brain_Balance Franchise · 2025 FDDAnswer from 2025 FDD Document
ments with supplier(s) designated by COMPANY for purchase of equipment, advertising materials, services or other supplies, products, and materials required for the operation of the Franchised Business.
- 17.03. (a) Upon the occurrence of an Event of Default, COMPANY, at its option, may terminate this Agreement on five (5) days' written notice (or a notice for a longer period of time as may be required by the law of the jurisdiction in which FRANCHISEE's Center is located) without a right to cure, and this Agreement, together with the Franchise granted hereunder, shall thereupon expire.
- (b) Upon the occurrence of an Event of Default that continues for thirty (30) or more days of COMPANY giving FRANCHISE notice of such default, COMPANY shall have the absolute right without additional notice, to cease providing or making available any or all services and benefits provided for hereunder to FRANCHISEE until FRANCHISEE is current in the payment of fees and the filing of reports and has cured all other defaults. COMPANY's exercise of such right shall not diminish FRANCHISEE's continuing obligations under this Agreement or constitute an actual or constructive termination of this Agreement.
- 17.04. Upon the termination of this Agreement, whether as a result of an Event of Default or for any other reason, FRANCHISEE shall:
- (a) Cease to be a FRANCHISEE, cease to operate the Franchised Business, and refrain and desist from using the names and Marks and all other marks, trade names, trademarks, or logos of COMPANY, or such names or logos similar thereto, in any manner whatsoever, including, without limitation, together with other words such as "formerly known as."
- (b) Promptly change FRANCHISEE's name to a name that does not include the words "Brain Balance®" or "BBF" or any of the Marks or any words similar thereto.
Source: Item 22 — CONTRACTS (FDD pages 70–72)
What This Means (2025 FDD)
Based on the 2025 Franchise Disclosure Document, if a Brain Balance franchisee experiences an event of default, Brain Balance has the option to terminate the franchise agreement with only five days' written notice. This termination can occur without the franchisee having an opportunity to correct the issue, leading to the immediate expiration of the agreement and the granted franchise.
If the event of default continues for 30 or more days after Brain Balance notifies the franchisee, Brain Balance has the right to stop providing services and benefits until the franchisee resolves all outstanding payments, reports, and other defaults. However, Brain Balance's decision to withhold services does not relieve the franchisee of their ongoing obligations under the agreement, nor does it constitute a termination of the agreement.
Upon termination of the Franchise Agreement, the Brain Balance franchisee must cease operating the franchised business and discontinue using Brain Balance's names, marks, trade names, trademarks, or logos. The franchisee is also required to change their business name to exclude any reference to "Brain Balance" or similar marks. Additionally, the franchisee must promptly pay all outstanding debts to Brain Balance, including any unpaid royalty and advertising fund contributions.