Where can I find the specific penalties that Brain Balance may apply for violations of the franchise agreement?
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. 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.
- (c) Promptly pay to COMPANY all debts, including any outstanding Royalty and Advertising Fund contribution, arising from FRANCHISEE's obligations under this Agreement, which shall upon termination for any default by FRANCHISEE include all damages, costs, and expenses, including reasonable attorney's fees, incurred by COMPANY in obtaining injunctive relief for the enforcement of any provision of this Agreement as a result of the default and all Royalty and Advertising Fund contributions for the entire unperformed term of this Agreement.
- (d) Promptly endeavor to collect all accounts receivable and file reports with respect thereto that derive from services provided by FRANCHISEE pursuant to this Agreement whether before or after termination of this Agreement and pay COMPANY any Royalty or Advertising Fund contribution due thereon in the amount and manner required by this Agreement.
- (e) Deliver to COMPANY (electronically, if so requested by COMPANY) within ten (10) days of termination: (i) all files and records in respect to client services, research and development data provided to, or maintained by, FRANCHISEE through the System; (ii) all records, lists, and information concerning or relating to client accounts and prospective clients, and employees of FRANCHISEE; (iii) all other information maintained by FRANCHISEE, whether in written or electronic form, with respect to said clients, prospective clients, and employees; and (iv) all copies of COMPANY's Operations Manual, video tapes, and all other materials bearing the Marks or otherwise belonging to COMPANY.
Source: Item 22 — CONTRACTS (FDD pages 70–72)
What This Means (2025 FDD)
According to the 2025 Brain Balance Franchise Disclosure Document, Item 22 details the contracts and outlines various obligations and potential defaults that can occur under the franchise agreement. Specifically, section 17.03(a) states that Brain Balance may terminate the agreement with only five days' written notice upon the occurrence of an Event of Default, without providing an opportunity to cure the default (unless a longer notice period is required by local law). Section 17.03(b) further specifies that if an Event of Default continues for 30 or more days after Brain Balance provides notice, Brain Balance has the right to cease providing services and benefits to the franchisee until the franchisee rectifies the payment of fees, filing of reports, and cures all other defaults.
In addition to termination and cessation of services, section 20.02 indicates that Brain Balance has the right to seek a court order to prevent any default or threatened breach of the agreement. This includes preventing the franchisee from continuing to operate the franchised center if the agreement has been terminated. Section 14.02 states that if a franchisee fails to commence operations within nine months of the agreement date, Brain Balance can either grant a one-time, 90-day extension or terminate the agreement and retain all monies paid.
These provisions highlight the importance of franchisees adhering to the terms of the franchise agreement. Failure to comply can result in serious penalties, including termination of the agreement, loss of services, and legal action. Prospective franchisees should carefully review these sections to understand their obligations and the potential consequences of non-compliance. It is also important to note that section 20.03 states that each right or remedy granted to Brain Balance by the agreement is cumulative of all other rights or remedies given by the agreement or by law or equity.