What is the dependency between the Franchise Agreement and the Conditional Assignment of Lease for a Brain Balance franchise?
Brain_Balance Franchise · 2025 FDDAnswer from 2025 FDD Document
NG LLC | | | By: | | | Margaret Ford, CEO | | | FRANCHISEE | | | By: | | | |
By:
EXHIBIT 5 SECTION 3.05 CONDITIONAL ASSIGNMENT OF LEASE
The lease that is assigned herein (the "Lease") is identified as follows:
| As of Date: | 2/28/2025 |
|---|---|
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- This Conditional Assignment of Lease (this "Assignment") is made pursuant to the terms of that certain Franchise Agreement of even date herewith (hereinafter called the "Agreement") by and among FRANCHISOR (hereinafter "Assignee"), FRANCHISEE (hereinafter "Assignor") and Landlord, with respect to the Lease for the Premises used by FRANCHISEE in the operation of the Franchise in the Franchised Territory covered by the Agreement. Nothing in this Assignment shall be deemed to make Landlord a party to the Agreement.
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- Assignor conditionally assigns to the Assignee all the Assignor's right, title, and interest in (a) the Lease and (b) the security deposit, if any, stated in the Lease, all subject to the terms hereof.
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- As long as the conditions set forth in Section 5 are not met, Assignor shall have all rights, privileges and obligations as the tenant under the Lease.
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- Landlord shall provide Assignee with (i) fifteen (15) days' written notice prior to any modification, amendment or cancellation of the Lease, and (ii) copies of any written notices of default given to Assignor under the Lease within three (3) days of Landlord's giving such notice to Assignor. Landlord grants to Assignee, at Assignee's option, the right (but not the obligation) to cure any default under the Lease within fifteen (15) days after the expiration of the period in which Assignor may cure the default, if Assignor fails to do so.
Source: Item 23 — RECEIPTS (FDD pages 72–292)
What This Means (2025 FDD)
According to Brain Balance's 2025 Franchise Disclosure Document, the Conditional Assignment of Lease is directly tied to the Franchise Agreement. The Assignment is executed as part of the Franchise Agreement, with the franchisee (Assignor) conditionally assigning their rights and interest in the lease to Brain Balance (Assignee). This assignment is specific to the premises used for operating the Brain Balance franchise within the franchised territory. The landlord is not considered a party to the Franchise Agreement through this Assignment.
As long as the conditions outlined in Section 5 of the Assignment are not met, the franchisee retains all rights, privileges, and obligations as the tenant under the lease. The landlord is obligated to provide Brain Balance with a 15-day written notice before any modifications, amendments, or cancellation of the lease. Additionally, the landlord must provide Brain Balance with copies of any default notices issued to the franchisee within three days of notifying the franchisee.
Brain Balance has the option, but not the obligation, to cure any default under the lease if the franchisee fails to do so, within fifteen days after the franchisee's cure period expires. However, any action taken by Brain Balance to cure the franchisee's default does not absolve the franchisee from being deemed in default under the lease for the purposes of the Assignment. In the event of a default under the lease by the franchisee, a default under the Franchise Agreement by the franchisee, or the expiration/termination of the Franchise Agreement for any reason, Brain Balance has the option to accept the Assignment and replace the franchisee as the tenant under the lease. This is done by providing an Assignment Notice to the landlord, as defined in Section 6 of the Assignment.