Under what conditions can the Brain Balance franchise agreement be terminated if a payment is missed?
Brain_Balance Franchise · 2025 FDDAnswer from 2025 FDD Document
ns for local advertising described in Section 6.07 of this Agreement. Advertising Co-ops are independently established and operated by franchisees in a DMA and not controlled or governed by FRANCHISOR.
6.03. Late Payment
- (a) If FRANCHISEE shall fail to pay to COMPANY when due any Royalty, Advertising Fund contribution, or any other payment required to be made pursuant to this Agreement, interest shall accrue on the unpaid amount commencing fifteen (15) days after the due date, at a rate of two percent (2%) per month compounded or the highest rate permitted under applicable law, whichever is less.
- (b) If FRANCHISEE shall fail to pay to COMPANY when due any Royalty, Advertising Fund contribution, or any other payment due hereunder, or fails to file any
report required to be filed with COMPANY, and such failure continues for a period of thirty (30) days after COMPANY has provided FRANCHISEE with a written demand for performance, in addition to all of its other rights and remedies hereunder, COMPANY may suspend all services required to be performed by COMPANY on behalf of FRANCHISEE hereunder, until such time as FRANCHISEE has made payment of all amounts due to COMPANY and has filed all reports with COMPANY required to be filed by FRANCHISEE.
6.04. Application License Fees
- (a) FRANCHISEE shall enter into an Application License Agreement annexed hereto as Exhibit 1 and pay an initial license fee in the amount of $10,000 and annual maintenance fees as specified in the Application License Agreement and the Operations Manual.
Source: Item 22 — CONTRACTS (FDD pages 70–72)
What This Means (2025 FDD)
According to Brain Balance's 2025 Franchise Disclosure Document, if a franchisee fails to make payments such as royalties, advertising fund contributions, or any other required payment, the company can take certain actions. Initially, interest will accrue on the unpaid amount starting fifteen days after the due date, at a rate of 2% per month compounded, or the highest rate permitted by law, whichever is less. This late payment penalty is a standard practice in franchising, designed to incentivize timely payments.
Furthermore, if the franchisee's failure to pay or file required reports continues for 30 days after Brain Balance provides a written demand for performance, Brain Balance may suspend all services it is required to perform on behalf of the franchisee. This suspension will remain in effect until the franchisee makes all outstanding payments and files all required reports. This clause allows Brain Balance to withhold support and services, which can significantly impact the franchisee's ability to operate effectively.
In the event of default, Brain Balance can terminate the agreement with only five days' written notice without granting an opportunity to cure the default. This termination clause underscores the importance of adhering to the payment terms outlined in the franchise agreement. The franchisee should be aware that consistent and timely payments are crucial to maintaining a good standing with Brain Balance and avoiding potential termination of the franchise agreement.