What is the requirement for Brain Balance to file a material modification application with the California Department of Corporations?
Brain_Balance Franchise · 2025 FDDAnswer from 2025 FDD Document
Before the franchisor can ask you to materially modify your existing franchise agreement, Section 31125 of the California Corporations Code requires the franchisor to file a material modification application with the Department that includes a disclosure document showing the existing terms and the proposed new terms of your franchise agreement.
Once the application is registered, the franchisor must provide you with that disclosure document with an explanation that the changes are voluntary.
Source: Item 23 — RECEIPTS (FDD pages 72–292)
What This Means (2025 FDD)
According to Brain Balance's 2025 Franchise Disclosure Document, Section 31125 of the California Corporations Code mandates that Brain Balance must file a material modification application with the California Department of Financial Protection and Innovation before requesting a franchisee to materially modify their existing franchise agreement. This application must include a disclosure document that outlines both the current terms and the proposed new terms of the franchise agreement.
Once the application is registered, Brain Balance is obligated to provide the franchisee with the disclosure document. This document must include a clear explanation that the proposed changes to the franchise agreement are voluntary. This requirement ensures that franchisees are fully informed about the nature and implications of any proposed modifications to their franchise agreements.
This regulation protects California franchisees by ensuring transparency and providing them with the opportunity to make informed decisions regarding modifications to their franchise agreements. It also prevents Brain Balance from unilaterally imposing changes without proper disclosure and franchisee consent. Prospective franchisees should be aware of this protection and carefully review any proposed modifications to their franchise agreements.