What happens to the services and benefits provided to a Brain Balance franchisee if they are in default?
Brain_Balance Franchise · 2025 FDDAnswer from 2025 FDD Document
17.03. (a) Upon the occurrence of an Event of Default, COMPANY, at its option, may terminate this Agreement on five (5) days' written notice (or a notice for a longer period of time as may be required by the law of the jurisdiction in which FRANCHISEE's Center is located) without a right to cure, and this Agreement, together with the Franchise granted hereunder, shall thereupon expire.
(b) Upon the occurrence of an Event of Default that continues for thirty (30) or more days of COMPANY giving FRANCHISE notice of such default, COMPANY shall have the absolute right without additional notice, to cease providing or making available any or all services and benefits provided for hereunder to FRANCHISEE until FRANCHISEE is current in the payment of fees and the filing of reports and has cured all other defaults.
COMPANY's exercise of such right shall not diminish FRANCHISEE's continuing obligations under this Agreement or constitute an actual or constructive termination of this Agreement.
Source: Item 22 — CONTRACTS (FDD pages 70–72)
What This Means (2025 FDD)
According to Brain Balance's 2025 Franchise Disclosure Document, if a franchisee is in default, Brain Balance has the right to cease providing services and benefits. Specifically, if an Event of Default continues for 30 or more days after Brain Balance provides notice, the company can stop providing any or all services and benefits until the franchisee is current with payments and reports, and has corrected all other defaults. This action does not relieve the franchisee of their obligations under the agreement, nor does it constitute a termination of the agreement.
This means that a Brain Balance franchisee who falls behind on payments, fails to file required reports, or otherwise breaches the franchise agreement could find themselves without the support and resources normally provided by the franchisor. This could include training, marketing assistance, and access to proprietary systems or materials, which could severely impact the franchisee's ability to operate the center effectively. The franchisee is still obligated to meet the requirements of the franchise agreement during this time.
It is important to note that Brain Balance's decision to withhold services and benefits does not automatically terminate the franchise agreement. The franchisee remains bound by the agreement's terms and conditions, even without the franchisor's support. This could create a challenging situation for a franchisee trying to remedy the default while simultaneously running the business without the usual assistance from Brain Balance. Franchisees should carefully review the default provisions in their franchise agreement and seek legal counsel if they are unsure of their rights and obligations.