What obligations does Brain Balance assume if it takes over the lease of the Center premises?
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)
According to Brain Balance's 2025 Franchise Disclosure Document, if a franchisee leases office space, the lease must have a conditional assignment clause. This clause allows Brain Balance or its affiliates to take over the lease obligations if the Franchise Agreement expires or terminates early. Brain Balance has 30 days after the expiration or termination to exercise this option. They can then replace the franchisee and take possession of the property, or assign the lease to someone else.
Essentially, the franchisee must sign a Conditional Assignment of Lease, giving Brain Balance all rights to the lease. Brain Balance can then freely assign this lease to another party, such as someone who might operate a Brain Balance business at that location or within the same territory.
This protects Brain Balance by ensuring they have control over the location of the franchise, even if the franchisee leaves. It allows for a smooth transition if the franchise is transferred to a new owner or if Brain Balance decides to operate the center themselves. The franchisee gives up control of the lease upon termination of the agreement, which could impact their ability to continue a similar business at the same location under a different brand.