Must the offer submitted by a Brain Balance franchisee for a potential transfer be limited to the Franchise Agreement and the Franchised Business?
Brain_Balance Franchise · 2025 FDDAnswer from 2025 FDD Document
under and sends written notice of its assignment so attesting to FRANCHISEE, the assignment shall operate to release COMPANY from all its obligations to FRANCHISEE under this Agreement from and after the date of such assignment.
16.02. If FRANCHISEE is also transferring its rights in the Standard BB Center to the same assignee, FRANCHISEE may assign or transfer this Agreement, pursuant to the terms of this Section 16. FRANCHISEE may not assign or transfer this Agreement or any rights or interests herein or in the Franchised Business or any assets of the Franchised Business other than in the ordinary course of business or a partnership interest therein, or if FRANCHISEE is a corporation or an LLC, all or part of the equity of the corporation or LLC, except upon COMPANY's prior written consent, which will not be unreasonably withheld. FRANCHISEE must first obtain a bona fide, signed, unconditional, and firm written offer from a responsible and fully identified purchaser and shall submit a complete copy of such offer to COMPANY together with COMPANY's current application for franchise completed by the prospective purchaser. Such offer must be limited to this Agreement and the Franchised Business and may not include the purchase of any other property. Prior to any such assignment or transfer, a right of first refusal to acquire the entire right or interest of FRANCHISEE in the Franchised Business proposed to be assigned or transferred shall be offered by FRANCHISEE to COMPANY on the same terms and conditions offered to the proposed assignee or transferee provided that COMPANY may substitute cash for any form of payment proposed in such offer and provided that COMPANY's credit shall be deemed equal to the credit of any proposed purchaser, and COMPANY shall have not less than thirty (30) days
from the exercise of its option to consummate the transaction. COMPANY shall have not less than thirty (30) nor more than one-hundred and twenty (120) days following the receipt of such offer to exercise its right to purchase.
16.03. If COMPANY does not exercise this right of first refusal, FRANCHISEE may complete the sale to such purchaser pursuant to and on the terms of said offer, subject to COMPANY's prior written approval of the purchaser as provided herein. However, if the sale to such purchaser is not completed within one hundred twenty (120) days after delivery of such offer to COMPANY, or upon substantially the same terms of the sale as specified in such offer, COMPANY shall again have the right of first refusal as herein provided.
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 intends to transfer their franchise, any offer presented to Brain Balance for approval must be strictly limited to the existing Franchise Agreement and the Franchised Business itself. The offer cannot include the purchase of any other property or assets beyond the scope of the franchise. This ensures that Brain Balance maintains control over who enters the franchise system and that the transfer focuses solely on the established Brain Balance business.
This requirement is in place to allow Brain Balance to properly evaluate the potential transfer without being influenced by extraneous factors. By limiting the offer to the Franchise Agreement and Franchised Business, Brain Balance can assess the suitability of the proposed purchaser based on their ability to operate the Brain Balance center according to the brand's standards and guidelines. This also protects the integrity of the Brain Balance brand and ensures consistency across all franchise locations.
Furthermore, Brain Balance retains the right of first refusal, meaning they have the option to purchase the franchise on the same terms offered to the proposed assignee. This provision allows Brain Balance to strategically manage its franchise network and maintain control over the growth and development of the brand. The company can substitute cash for any proposed form of payment and their credit is deemed equal to any proposed purchaser. This right must be exercised between 30 and 120 days after receiving the offer.
If Brain Balance declines to exercise its right of first refusal, the franchisee may proceed with the sale to the proposed purchaser, subject to Brain Balance's final approval. However, the sale must be completed within 120 days of the original offer and on substantially the same terms. If these conditions are not met, Brain Balance's right of first refusal is reinstated, ensuring that the company retains control over any subsequent transfer attempts.