What happens to Brain Balance's obligations if it assigns the agreement?
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 Franchise Disclosure Document, the Brain Balance franchise agreement includes a clause regarding the assignment of the franchisee's lease. Specifically, if a franchisee leases office space, the lease must contain a conditional assignment clause. This clause allows Brain Balance, or its affiliates, the option to assume the lease obligations if the franchise agreement expires or terminates.
Brain Balance has 30 days after the expiration or termination of the agreement to exercise this option. They can then replace the franchisee and take possession of the leased space. Alternatively, Brain Balance can assign or reassign the lease to a third party at any point.
As part of this process, the franchisee is required to execute a Conditional Assignment of Lease, which assigns all rights and interests in the lease to Brain Balance. The FDD states that this assignment is freely assignable by Brain Balance to any other person or entity, including those who may acquire the right to operate a Brain Balance business at that location or within the territory. This means that if Brain Balance assigns the lease, they are no longer responsible for the obligations of the lease.