What happens when Brain Balance provides an Assignment Notice to the landlord?
Brain_Balance Franchise · 2025 FDDAnswer from 2025 FDD Document
expiration and termination of the Agreement for any reason whatsoever, Assignee shall have the option to accept this Assignment and replace Assignor as tenant under the Lease pursuant to the terms set forth herein by providing an Assignment Notice (as defined in Section 6) to Landlord.
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- If the Assignee elects to exercise its option to accept the assignment of the Lease and replace Assignor as tenant under the Lease pursuant to the terms set forth in this Assignment, it shall provide written notice of such acceptance to the Landlord (the "Assignment Notice"). Upon
Assignee's providing the Assignment Notice, Assignee shall become the tenant of the leased Premises and shall become liable for all obligations under the Lease arising after the date of the Assignment Notice.
Source: Item 23 — RECEIPTS (FDD pages 72–292)
What This Means (2025 FDD)
According to Brain Balance's 2025 Franchise Disclosure Document, when the Assignee (Brain Balance) provides the Assignment Notice to the landlord, the Assignee becomes the tenant of the leased premises. The Assignee also becomes liable for all obligations under the lease arising after the date of the Assignment Notice. The landlord is then required to recognize the Assignee as the tenant of the leased premises, effective from the date of the Assignment Notice. The obligations assumed by the Assignee will benefit the landlord named in the lease.
This assignment of lease typically occurs if the franchisee (Assignor) defaults on the lease, defaults under the Franchise Agreement, or if the Franchise Agreement expires or terminates for any reason. In any of these cases, Brain Balance has the option to step in and take over the lease by providing the Assignment Notice to the landlord.
However, it is important to note that even with this assignment, the original franchisee (Assignor) and any guarantors remain liable under the lease. This means that even if Brain Balance takes over the lease, the landlord can still pursue the original franchisee for any outstanding obligations. This arrangement provides additional security to the landlord while giving Brain Balance the flexibility to maintain control over the location if a franchisee fails.
This clause ensures that Brain Balance can continue operating a location even if the original franchisee is unable to do so, protecting the brand's presence and customer base in that area. Prospective franchisees should understand the conditions under which this assignment can occur and the implications for their own liabilities under the lease agreement.