Can Brain Balance terminate the agreement if a franchisee's spouse discloses trade secrets?
Brain_Balance Franchise · 2025 FDDAnswer from 2025 FDD Document
has been made and rejected, the six (6) months permitted in this Section 16.08 (b) to sell, assign, transfer, or convey shall be computed from the date of such rejection).
17. DEFAULT; TERMINATION
- 17.01. COMPANY shall have the absolute right, at its option, to terminate this Agreement and all rights granted hereunder, upon any of the following Non-Curable Defaults by FRANCHISEE, without giving an opportunity to cure the default and without prejudice to any other rights or remedies of COMPANY provided by law or this Agreement, effective immediately upon the provision of notice to FRANCHISEE or at such later time as indicated in such notice if:
- (a) FRANCHISEE fails to complete the initial Training Program prior to opening of the Center;
Source: Item 22 — CONTRACTS (FDD pages 70–72)
What This Means (2025 FDD)
According to the 2025 Brain Balance Franchise Disclosure Document, Brain Balance has the right to terminate the franchise agreement if the franchisee or the franchisee's spouse discloses trade secrets or confidential information in violation of the agreement. This is considered a non-curable default, meaning Brain Balance can terminate the agreement immediately upon providing notice, without giving the franchisee an opportunity to correct the issue.
This provision highlights the importance Brain Balance places on protecting its proprietary information. The definition of 'confidential information' would be detailed in the agreement and operations manual. Franchisees must ensure that they and their spouses understand these confidentiality obligations to avoid potential termination.
This type of clause is not uncommon in franchise agreements, as franchisors need to protect their business methods and trade secrets. However, the immediate termination without a chance to cure is a stricter term than some franchises, which might allow a period to rectify the breach of contract. Prospective Brain Balance franchisees should carefully review the definition of trade secrets and confidential information in the franchise agreement and understand the implications of this clause.