What happens if a Brain Balance franchisee fails to have employees sign a Confidentiality Agreement?
Brain_Balance Franchise · 2025 FDDAnswer from 2025 FDD Document
All of your employees, including your Center Director and Program Director, if any, and all officers and directors or members who are not Franchisees, are required to execute a Confidentiality Agreement as provided in the Operations Manual and a signed copy must be filed in a secure location in your Center and provided to us if we request it.
FRANCHISEE acknowledges that its franchise is one of a number of Brain Balance® Centers using COMPANY's service marks and style of conduct and that the failure on the part of FRANCHISEE to comply with any of the terms of this Agreement could cause irreparable damage to some or all of the other offices franchised or operated by COMPANY and to COMPANY's business. Therefore, and notwithstanding the provisions contained in Paragraph 20.01 above, FRANCHISEE agrees that upon the happening of any Non-Curable Default or Event of Default set forth in Section 17.01 or 17.02, or in the event of a threatened breach by FRANCHISEE of any of the terms of this Agreement, COMPANY shall have the immediate right to secure a court order enjoining any such default or threatened breach.
Source: Item 15 — OBLIGATION TO PARTICIPATE IN THE ACTUAL OPERATION OF THE FRANCHISED BUSINESS (FDD page 53)
What This Means (2025 FDD)
According to Brain Balance's 2025 Franchise Disclosure Document, franchisees are required to have all permanent staff, including the Center Director and Program Director, sign a Confidentiality, Non-Solicitation, and Non-Compete Agreement (Exhibit 3). This agreement, outlined in the Operations Manual, aims to protect Brain Balance's trade secrets and confidential information. Franchisees must keep a signed copy of each agreement in a secure location at their center and provide copies to Brain Balance upon request.
The FDD states that a franchisee's failure to comply with the terms of the Franchise Agreement could cause irreparable damage to Brain Balance and its other franchisees. While the document does not explicitly state the consequences of failing to have employees sign the Confidentiality Agreement, it does state that Brain Balance has the right to seek a court order to prevent any threatened breach of the agreement. This suggests that Brain Balance takes the confidentiality agreement seriously and will take legal action to enforce it.
It is important to note that the Franchise Agreement can be terminated if a franchisee fails to comply with its terms. While the FDD does not specifically list the failure to obtain signed confidentiality agreements as grounds for termination, it is possible that Brain Balance could argue that such a failure constitutes a breach of the agreement, especially if it leads to the disclosure of confidential information. Prospective franchisees should clarify with Brain Balance what specific actions or omissions would be considered a breach of contract leading to termination.