For Brain Balance, what is the effect of the Assignor defaulting under the Agreement on the Assignee's options?
Brain_Balance Franchise · 2025 FDDAnswer from 2025 FDD Document
(15) days after the expiration of the period in which Assignor may cure the default, if Assignor fails to do so. Notwithstanding any action by Assignee to cure Assignor's default under the Lease, Assignor shall be deemed to be in default under the Lease for purposes of this Assignment.
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- In the event of (i) a default under the Lease by Assignor, (ii) a default under the Agreement by Assignor, or (iii) the expiration and termination of the Agreement for any reason whatsoever, Assignee shall have the option to accept this Assignment and replace Assignor as tenant under the Lease pursuant to the terms set forth herein by providing an Assignment Notice (as defined in Section 6) to Landlord.
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- If the Assignee elects to exercise its option to accept the assignment of the Lease and replace Assignor as tenant under the Lease pursuant to the terms set forth in this Assignment, it shall provide written notice of such acceptance to the Landlord (the "Assignment Notice"). Upon
Assignee's providing the Assignment Notice, Assignee shall become the tenant of the leased Premises and shall become liable for all obligations under the Lease arising after the date of the Assignment Notice. Landlord shall recognize Assignee as the tenant of the leased Premises effective as of the date of the Assignment Notice. If the Assignee elects to exercise its option to accept the assignment of the Lease, it agrees that the obligations assumed shall benefit the Landlord named in the Lease.
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- Landlord consents to Assignor's conditional assignment of the Lease hereunder.
Source: Item 23 — RECEIPTS (FDD pages 72–292)
What This Means (2025 FDD)
According to Brain Balance's 2025 Franchise Disclosure Document, if the Assignor (the franchisee) defaults under the Franchise Agreement, the Assignee (Brain Balance) has the option to accept the assignment of the lease and replace the franchisee as the tenant.
To exercise this option, Brain Balance must provide written notice, known as the "Assignment Notice," to the Landlord. Upon providing this notice, Brain Balance becomes the tenant of the leased premises and assumes liability for all obligations under the lease arising after the date of the Assignment Notice. The landlord will then recognize Brain Balance as the tenant, effective from the date of the Assignment Notice.
By electing to accept the assignment of the lease, Brain Balance agrees that the obligations assumed will benefit the Landlord named in the lease. This conditional assignment does not release the franchisee (Assignor) or any guarantors from any liabilities under the lease, ensuring the landlord's interests are protected even if Brain Balance takes over the lease.