Does the Brain Balance franchisee waive any claims related to the loss of the Marks if Brain Balance sells them?
Brain_Balance Franchise · 2025 FDDAnswer from 2025 FDD Document
20.01. Except as provided in Section 20.02 below, COMPANY and FRANCHISEE agree that any and all disputes between them, and any claim by either party that cannot be amicably settled (including tort as well as contract claims, claims based upon any federal, state, or local statute, law, order, ordinance, or regulations, and claims arising from any relationship prior to, at the time of entering, during the term of, or upon or after expiration or termination of this Agreement) except for claims relating to the Marks or other service marks or commercial symbols of COMPANY, shall be determined solely and exclusively by arbitration under the Federal Arbitration Act, as amended, and in accordance with the rules then obtaining of the American Arbitration Association or any successor at its office located in San Francisco, ou, unless the parties otherwise agree in writing. COMPANY and FRANCHISEE consent to personal jurisdiction and hereby waive all objections to personal jurisdiction or venue for the purpose of carrying out the purposes of this Paragraph 20.01. The arbitrator(s) may not under any circumstance: (i) stay the effectiveness of any pending termination; (ii) assess punitive, speculative, or exemplary damages; or (iii) make any award that extends, modifies, or suspends any lawful term of this Agreement or any reasonable standard of business performance set by COMPANY in good faith. The arbitrator(s) shall be limited to the issues in dispute between COMPANY and FRANCHISEE and a dispute between any other franchisee and COMPANY shall not be considered in the same arbitration proceeding or by the same arbitrator(s). The parties shall each bear their own expense, including but not limited to all fees and expenses of the arbitrator(s), the American Arbitration Association, attorneys, and accountants. Judgment upon any award of the arbitrator(s) shall be conclusive and binding and shall be entered in a court of competent jurisdiction.
Source: Item 22 — CONTRACTS (FDD pages 70–72)
What This Means (2025 FDD)
According to the 2025 Brain Balance Franchise Disclosure Document, franchisees and Brain Balance agree to resolve disputes through arbitration, with some exceptions. Specifically, claims relating to the Marks or other service marks or commercial symbols of Brain Balance are excluded from mandatory arbitration. This means that disputes over trademarks can be pursued in court rather than being subject to arbitration.
This exception to arbitration has important implications for a Brain Balance franchisee. If a dispute arises specifically about the Marks, such as trademark infringement or misuse, the franchisee retains the right to take legal action in court. This is significant because the Marks are central to the Brain Balance brand and the franchisee's business.
However, the FDD does not explicitly state whether a franchisee waives claims related to the loss of the Marks if Brain Balance sells them. The document outlines the arbitration and remedies available but does not directly address the scenario where the Marks are sold and how that impacts a franchisee's potential claims.
Therefore, a prospective Brain Balance franchisee should seek clarification from Brain Balance regarding their rights and potential claims if Brain Balance decides to sell the Marks. Understanding the implications of such a sale is crucial for assessing the risks and benefits of investing in a Brain Balance franchise.