After termination of the Brain Balance franchise agreement, what must the franchisee do regarding accounts receivable and royalty/advertising fund contributions?
Brain_Balance Franchise · 2025 FDDAnswer from 2025 FDD Document
(c) Promptly pay to COMPANY all debts, including any outstanding Royalty and Advertising Fund contribution, arising from FRANCHISEE's obligations under this Agreement, which shall upon termination for any default by FRANCHISEE include all damages, costs, and expenses, including reasonable attorney's fees, incurred by COMPANY in obtaining injunctive relief for the enforcement of any provision of this Agreement as a result of the default and all Royalty and Advertising Fund contributions for the entire unperformed term of this Agreement.
(d) Promptly endeavor to collect all accounts receivable and file reports with respect thereto that derive from services provided by FRANCHISEE pursuant to this Agreement whether before or after termination of this Agreement and pay COMPANY any Royalty or Advertising Fund contribution due thereon in the amount and manner required by this Agreement.
Source: Item 22 — CONTRACTS (FDD pages 70–72)
What This Means (2025 FDD)
According to Brain Balance's 2025 Franchise Disclosure Document, after the termination of the franchise agreement, the franchisee has specific obligations regarding accounts receivable and contributions. The franchisee must promptly try to collect all outstanding accounts receivable that are a result of services they provided, both before and after the termination date. They also need to provide reports regarding these receivables. Any royalty or advertising fund contributions due on these accounts receivable must be paid to Brain Balance in the amount and manner specified in the franchise agreement.
In addition to collecting accounts receivable, the franchisee is responsible for paying Brain Balance all outstanding debts. This includes any unpaid royalty and advertising fund contributions that arose from the franchisee's obligations under the agreement. If the termination was due to the franchisee's default, the franchisee is liable for all damages, costs, and expenses incurred by Brain Balance in obtaining injunctive relief to enforce any provision of the agreement. This also includes all royalty and advertising fund contributions for the entire unperformed term of the agreement.
These stipulations ensure that Brain Balance continues to receive the financial benefits it is entitled to, even after the franchise agreement has ended. It also protects Brain Balance's interests by requiring the franchisee to actively pursue outstanding payments and fulfill their financial obligations. Prospective franchisees should be aware of these post-termination responsibilities and factor them into their financial planning.