Under what circumstances can the Brain Balance licensor assign the franchise agreement?
Brain_Balance Franchise · 2025 FDDAnswer from 2025 FDD Document
3.05. In the event FRANCHISEE leases office space for the Franchised Business, such lease shall contain a conditional assignment clause, substantially similar to the template provided in Exhibit 5, that shall provide that upon the expiration or sooner termination of this Agreement, for any reason contained herein, the FRANCHISOR or its Affiliates shall have the option, exercisable within thirty (30) days after said expiration or termination, to assume the obligations of the lease, to replace FRANCHISEE and enter into possession under said lease or at any time prior thereto or thereafter to assign or reassign the lease to a third party. In connection therewith, FRANCHISEE shall execute a Conditional Assignment of Lease in the form attached hereto as Exhibit 5 (the "Assignment") pursuant to which Assignment FRANCHISEE has assigned to FRANCHISOR all its right, title, and interest in the lease for the Franchised Business. FRANCHISEE acknowledges that such Assignment is freely assignable by FRANCHISOR to any other person or entity, including any person or entity that may acquire the right to operate a Brain Balance® business in and from said office location or otherwise within the Territory.
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 assign the franchisee's lease under specific conditions. If a franchisee leases office space for their Brain Balance center, the lease must include a clause that allows Brain Balance or its affiliates to assume the lease obligations if the franchise agreement expires or terminates early. This option is exercisable within 30 days of the expiration or termination.
As part of the franchise agreement, the franchisee must execute a Conditional Assignment of Lease, giving Brain Balance all rights to the lease. Brain Balance can then freely assign this lease to another party. This could include someone who acquires the right to operate a Brain Balance business at that location or within the territory.
This clause ensures that Brain Balance maintains control over the location of its franchises, even if a franchisee leaves the system. It allows for a smooth transition to a new franchisee or other use of the space, which is a common practice in franchising to protect brand presence and continuity. Prospective franchisees should carefully review Exhibit 5, referenced in the FDD, to fully understand the terms of the Conditional Assignment of Lease.