What is the purpose of the Conditional Assignment of Lease for a Brain Balance franchise?
Brain_Balance Franchise · 2025 FDDAnswer from 2025 FDD Document
This Conditional Assignment of Lease (this "Assignment") is made pursuant to the terms of that certain Franchise Agreement of even date herewith (hereinafter called the "Agreement") by and among FRANCHISOR (hereinafter "Assignee"), FRANCHISEE (hereinafter "Assignor") and Landlord, with respect to the Lease for the Premises used by FRANCHISEE in the operation of the Franchise in the Franchised Territory covered by the Agreement.
Nothing in this Assignment shall be deemed to make Landlord a party to the Agreement.
Assignor conditionally assigns to the Assignee all the Assignor's right, title, and interest in (a) the Lease and (b) the security deposit, if any, stated in the Lease, all subject to the terms hereof.
As long as the conditions set forth in Section 5 are not met, Assignor shall have all rights, privileges and obligations as the tenant under the Lease.
Landlord shall provide Assignee with (i) fifteen (15) days' written notice prior to any modification, amendment or cancellation of the Lease, and (ii) copies of any written notices of default given to Assignor under the Lease within three (3) days of Landlord's giving such notice to Assignor.
Landlord grants to Assignee, at Assignee's option, the right (but not the obligation) to cure any default under the Lease within fifteen (15) days after the expiration of the period in which Assignor may cure the default, if Assignor fails to do so.
Notwithstanding any action by Assignee to cure Assignor's default under the Lease, Assignor shall be deemed to be in default under the Lease for purposes of this Assignment.
In the event of (i) a default under the Lease by Assignor, (ii) a default under the Agreement by Assignor, or (iii) the 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.
Source: Item 23 — RECEIPTS (FDD pages 72–292)
What This Means (2025 FDD)
According to the 2025 Brain Balance Franchise Disclosure Document, the Conditional Assignment of Lease outlines the conditions under which Brain Balance, as the franchisor, can take over the lease of a franchisee's premises. This agreement involves Brain Balance (referred to as "Assignee"), the franchisee ("Assignor"), and the Landlord. The agreement ensures that the franchisee retains all rights and obligations under the lease as long as certain conditions are not met.
Specifically, the Conditional Assignment of Lease allows Brain Balance to step in as the tenant if the franchisee defaults on the lease, defaults on the Franchise Agreement, or if the Franchise Agreement expires or terminates for any reason. In such cases, Brain Balance has the option to accept the assignment and replace the franchisee as the tenant by providing an Assignment Notice to the Landlord. The landlord is obligated to provide Brain Balance with a 15-day written notice prior to any lease modification, amendment, or cancellation, and copies of any default notices given to the franchisee within three days of notifying the franchisee.
This arrangement protects Brain Balance's interest in maintaining a location within the franchised territory. It also grants Brain Balance the right, but not the obligation, to cure any default under the lease if the franchisee fails to do so, providing an additional layer of security for the continuity of the Brain Balance center. However, any action taken by Brain Balance to cure a default does not absolve the franchisee of being deemed in default under the lease for the purposes of the assignment.
For a prospective Brain Balance franchisee, this means that the franchisor has a mechanism to ensure the continued operation of the center, even if the franchisee faces difficulties. While the franchisee maintains control of the lease under normal circumstances, the conditional assignment provides Brain Balance with a safety net to preserve the location and potentially transfer it to another operator if necessary. Franchisees should understand the conditions that trigger the assignment and the implications for their rights and obligations under the lease and Franchise Agreement.