Can the relationship between the franchisee and franchisor for Brain Balance be terminated, and if so, under what conditions?
Brain_Balance Franchise · 2025 FDDAnswer from 2025 FDD Document
- The following language replaces the "Summary" section of Item 17(d) titled "Termination by franchisee":
The Franchisee may terminate the agreement on any grounds available by law.
When a franchise agreement is terminated voluntarily by the franchisee or due to the default of the franchisee, the Company recognizes the remaining initial franchise fee as revenue earned, as no further performance obligations need to be satisfied, and the initial franchise fee is not refundable per the franchise agreement.
RCW 19.100.180 may supersede provisions in the franchise agreement or related agreements concerning your relationship with the franchisor, including in the areas of termination and renewal of your franchise.
A release or waiver of rights in the franchise agreement or related agreements purporting to bind the franchisee to waive compliance with any provision under the Washington Franchise Investment Protection Act or any rules or orders thereunder is void except when executed pursuant to a negotiated settlement after the agreement is in effect and where the parties are represented by independent counsel, in accordance with RCW 19.100.220(2).
Source: Item 23 — RECEIPTS (FDD pages 72–292)
What This Means (2025 FDD)
According to the 2025 Franchise Disclosure Document, a Brain Balance franchisee can terminate the franchise agreement on any grounds available by law, as stated in the New York addendum. This is specific to franchisees operating in New York, ensuring their rights under the General Business Law of the State of New York are protected, specifically referencing sections 687.4 and 687.5 regarding non-waiver provisions. This addendum modifies Item 17(d) of the standard franchise agreement, which typically outlines the conditions under which a franchisee can terminate the agreement.
Additionally, the FDD mentions that when a Brain Balance franchise agreement is terminated either voluntarily by the franchisee or due to the franchisee's default, BB Franchising LLC recognizes the remaining initial franchise fee as revenue earned. This is because, upon termination, Brain Balance has no further performance obligations to satisfy, and the initial franchise fee is non-refundable according to the franchise agreement. This policy clarifies the financial implications of termination, particularly regarding the initial franchise fee.
For franchisees in Washington, the Washington Addendum indicates that RCW 19.100.180 may supersede provisions in the franchise agreement concerning termination. This means that Washington state law takes precedence over the franchise agreement in matters of termination and renewal. Furthermore, any release or waiver of rights by the franchisee under the Washington Franchise Investment Protection Act is void unless executed under specific conditions, such as a negotiated settlement with independent counsel, as per RCW 19.100.220(2).