What constitutes an 'Event of Default' for a Brain Balance franchise?
Brain_Balance Franchise · 2025 FDDAnswer from 2025 FDD Document
nspect, examine, or audit the Center in accordance with this Agreement;
- (i) An audit of FRANCHISEE'S books and records reflects an understatement of GR as reported to COMPANY of five percent (5%) or more for any calendar year;
- (j) FRANCHISEE is in breach of any of the terms or conditions of the Software Agreement;
- (k) FRANCHISEE is in breach of any of the agreements 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; or
- (l) FRANCHISEE abandons, fails to renew, or otherwise loses the right to operate or stops operating the Standard Brain Balance Center and fails to convert the Franchised Business into a standard Brain Balance Center within a period of 30 days from the date of non-operation of the Standard Brain Balance Center.
- 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.
Source: Item 22 — CONTRACTS (FDD pages 70–72)
What This Means (2025 FDD)
According to Brain Balance's 2025 Franchise Disclosure Document, several actions or inactions can trigger an 'Event of Default' under the Franchise Agreement. These events allow Brain Balance to terminate the agreement, potentially without an opportunity for the franchisee to correct the issue.
Specifically, an Event of Default occurs if a Brain Balance franchisee breaches the terms and conditions of the Software Agreement or breaches any agreements with designated suppliers for equipment, advertising materials, services, or other required supplies. Additionally, an Event of Default occurs if the franchisee abandons, fails to renew, or otherwise loses the right to operate or stops operating the Standard Brain Balance Center and fails to convert the Franchised Business into a standard Brain Balance Center within 30 days from the date of non-operation of the Standard Brain Balance Center.
Upon the occurrence of an Event of Default, Brain Balance has the option to terminate the agreement with only five days' written notice, although the notice period may be longer depending on local jurisdiction laws. If the default continues for 30 or more days after Brain Balance provides notice, Brain Balance can cease providing services and benefits to the franchisee until the franchisee rectifies the payment of fees, files required reports, and cures all other defaults. It is important to note that 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.