Does the Brain Balance franchisee acknowledge that the company may sell the Marks to a third party?
Brain_Balance Franchise · 2025 FDDAnswer from 2025 FDD Document
- 3.05. In the event FRANCHISEE leases office space for the Franchised Business, such lease shall contain a conditional assignment clause, substantially similar to the template provided in Exhibit 5, that shall provide that upon the expiration or sooner termination of this Agreement, for any reason contained herein, the FRANCHISOR or its Affiliates shall have the option, exercisable within thirty (30) days after said expiration or termination, to assume the obligations of the lease, to replace FRANCHISEE and enter into possession under said lease or at any time prior thereto or thereafter to assign or reassign the lease to a third party. In connection therewith, FRANCHISEE shall execute a Conditional Assignment of Lease in the form attached hereto as Exhibit 5 (the "Assignment") pursuant to which Assignment FRANCHISEE has assigned to FRANCHISOR all its right, title, and interest in the lease for the Franchised Business. FRANCHISEE acknowledges that such Assignment is freely assignable by FRANCHISOR to any other person or entity, including any person or entity that may acquire the right to operate a Brain Balance® business in and from said office location or otherwise within the Territory.
Source: Item 22 — CONTRACTS (FDD pages 70–72)
What This Means (2025 FDD)
Based on the 2025 Brain Balance Franchise Disclosure Document, the franchisee acknowledges that the franchisor can assign the lease for the franchised business to a third party. Specifically, if the franchisee leases office space, the lease must contain a clause allowing Brain Balance, upon termination of the franchise agreement, to assume the lease or assign it to a third party.
This means that if the franchise agreement ends, Brain Balance has the option to take over the franchisee's lease. They can then either operate a Brain Balance center at that location themselves or assign the lease to someone else who wants to run a Brain Balance business there.
For a prospective franchisee, this clause has significant implications. It means that upon termination of the franchise agreement, Brain Balance has considerable control over the location of the business. The franchisee could lose their location to the franchisor or another franchisee. This could impact the resale value of the business or the franchisee's ability to continue in a similar business at the same location after the franchise agreement ends. The franchisee acknowledges that such Assignment is freely assignable by FRANCHISOR to any other person or entity, including any person or entity that may acquire the right to operate a Brain Balance® business in and from said office location or otherwise within the Territory.