Under what circumstances is Brain Balance not considered in default for delayed or failed performance?
Brain_Balance Franchise · 2025 FDDAnswer from 2025 FDD Document
17.03. (a) Upon the occurrence of an Event of Default, COMPANY, at its option, may terminate this Agreement on five (5) days' written notice (or a notice for a longer period of time as may be required by the law of the jurisdiction in which FRANCHISEE's Center is located) without a right to cure, and this Agreement, together with the Franchise granted hereunder, shall thereupon expire.
(b) Upon the occurrence of an Event of Default that continues for thirty (30) or more days of COMPANY giving FRANCHISE notice of such default, COMPANY shall have the absolute right without additional notice, to cease providing or making available any or all services and benefits provided for hereunder to FRANCHISEE until FRANCHISEE is current in the payment of fees and the filing of reports and has cured all other defaults.
COMPANY's exercise of such right shall not diminish FRANCHISEE's continuing obligations under this Agreement or constitute an actual or constructive termination of this Agreement.
Source: Item 22 — CONTRACTS (FDD pages 70–72)
What This Means (2025 FDD)
Based on the 2025 Franchise Disclosure Document, Brain Balance outlines specific scenarios where a franchisee's actions or inactions can lead to a default of the franchise agreement. According to section 17.03, if a franchisee commits an Event of Default, Brain Balance has the option to terminate the agreement with only five days' written notice, without providing an opportunity to correct the issue.
However, section 17.03 also states that if an Event of Default continues for 30 or more days after Brain Balance provides notice, the company has the right to cease providing services and benefits to the franchisee until the franchisee becomes current with payments, files required reports, and corrects all other defaults. Importantly, Brain Balance's decision to withhold services does not relieve the franchisee of their ongoing obligations under the agreement, nor does it constitute a termination of the agreement.
These provisions highlight the importance of franchisees adhering to the terms of the franchise agreement to avoid potential default and subsequent actions by Brain Balance. Franchisees should carefully review the default provisions in Section 17.02 to fully understand their obligations and the potential consequences of non-compliance.