What does the disclosure document that Brain Balance must provide to franchisees in California when proposing material modifications to the franchise agreement include?
Brain_Balance Franchise · 2025 FDDAnswer from 2025 FDD Document
Before the franchisor can ask you to materially modify your existing franchise agreement, Section 31125 of the California Corporations Code requires the franchisor to file a material modification application with the Department that includes a disclosure document showing the existing terms and the proposed new terms of your franchise agreement.
Once the application is registered, the franchisor must provide you with that disclosure document with an explanation that the changes are voluntary.
Source: Item 23 — RECEIPTS (FDD pages 72–292)
What This Means (2025 FDD)
According to Brain Balance's 2025 Franchise Disclosure Document, California Corporations Code Section 31125 requires Brain Balance to file a material modification application with the Department of Financial Protection and Innovation before asking a franchisee to materially modify their existing franchise agreement. This application must include a disclosure document that shows both the existing terms and the proposed new terms of the franchise agreement.
Once the application is registered, Brain Balance must provide the franchisee with this disclosure document. This document must also include an explanation that the changes to the franchise agreement are voluntary. This ensures that franchisees are fully informed about the changes and understand that they are not obligated to accept them.
This requirement aims to protect franchisees in California by ensuring they have complete information about any proposed changes to their franchise agreement and that they are aware that agreeing to these changes is optional. It allows franchisees to make informed decisions and seek legal counsel if needed before committing to the modifications.