Under what circumstances does Brain Balance have the right to terminate the franchise agreement without allowing the franchisee an opportunity to cure the default?
Brain_Balance Franchise · 2025 FDDAnswer from 2025 FDD Document
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;
- (b) FRANCHISEE or any of its members, shareholders, officers, or FRANCHISEE's spouse use or disclose any of the Operations Manual, trade secrets, or confidential information in violation of this Agreement or any ancillary agreement signed in connection with this Agreement;
- (c) FRANCHISEE files a petition in bankruptcy or a petition in bankruptcy is filed against FRANCHISEE, which is not vacated after prompt and diligent effort to do so, or if FRANCHISEE files a petition for any relief under the United States Bankruptcy Act, or any state statute for protection against creditors, or FRANCHISEE becomes bankrupt or insolvent, or makes an assignment for the benefit of its creditors, or FRANCHISEE discontinues the Franchised Business, or a receiver is appointed over the operation of the Franchised Business and is not removed after prompt and diligent efforts to do so;
- (d) FRANCHISEE maintains false books, records, or financial or operating statements;
- (e) FRANCHISEE or any officer, director, partner, member, or principal shareholder of FRANCHISEE is convicted of a felony or the conversion or embezzlement of any property or funds, whether belonging to COMPANY or any other party, or a crime involving moral turpitude;
- (f) FRANCHISEE receives from COMPANY three (3) or more notices to cure defaults or violations of this Agreement within a twelve (12) month period;
Source: Item 22 — CONTRACTS (FDD pages 70–72)
What This Means (2025 FDD)
According to Brain Balance's 2025 Franchise Disclosure Document, Brain Balance has the right to terminate the franchise agreement without allowing the franchisee an opportunity to cure the default under certain Non-Curable Defaults. These defaults allow Brain Balance to terminate the agreement immediately upon notice.
Specifically, Brain Balance can terminate the agreement without an opportunity to cure if the franchisee fails to complete the initial Training Program prior to opening the Center. Termination without cure is also permitted if the franchisee or related parties misuse the Operations Manual, trade secrets, or confidential information. Furthermore, if the franchisee files for bankruptcy, maintains false records, is convicted of a felony, or receives three or more notices to cure defaults within a 12-month period, Brain Balance can terminate the agreement immediately.
This is a critical aspect for prospective franchisees to consider. The "no cure" provisions mean that certain missteps can lead to immediate termination of the franchise agreement, potentially resulting in a significant loss of investment and business opportunity. Franchisees should ensure they fully understand and comply with all terms of the agreement to avoid these situations.