Is the Basecamp Fitness agreement considered a 'true lease'?
Basecamp_Fitness Franchise · 2025 FDDAnswer from 2025 FDD Document
Provided no events of default have occurred, Owner will allow Customer to pay off the Agreement early for an amount equal to the sum of all remaining unpaid rental payments, discounted to a net present value at a rate up to five percent (5%), plus the purchase option price.
OWNERSHIP OF EQUIPMENT: Owner has purchased the Equipment at the direction of Customer. Owner shall at all times have sole ownership and title to the Equipment. Customer warrants that the Equipment shall at all times remain personal property; the Equipment is removable from and is not essential to any premise upon which it is located regardless of attachment to realty, and Customer agrees to take such action at its expense as may be necessary to prevent any third party from acquiring any interest in the Equipment. This Agreement is a "true lease" and not a loan or installment sale. If this Agreement is held by a court not to be a "true lease" to the realty of the rent or other payments hereunder shall be deemed interest and such interest exceeds the highest rate permitted by applicable law, such excess interest shall be applied to your obligations to us or refunded if no obligations remain. Customer hereby authorizes Owner for file UCC financing statements as We deem necessary to protect Our interest, and Owner may charge a fee to cover related costs or at Owner's discretion a non-filing protection fee. The parties further agree that this Agreement is a "finance lease" under Article 2A of the Uriform Commercial Code ("UCC") and notwithstanding any determination to the contrary. Owner will have the rights and remedies of a lessor as if the Agreement were a "finance lease" under Article 2A of the UCC. To the extent permitted by applicable law, Customer hereby waives any and all rights conferred upon a lessee under UCC Article 2A-508 through 336.2A-522 whether o
Source: Item 23 — RECEIPTS (FDD pages 62–248)
What This Means (2025 FDD)
According to the 2025 Basecamp Fitness Franchise Disclosure Document, the agreement outlined is considered a 'true lease' and not a loan or installment sale. The agreement specifies that the Owner purchases the equipment at the direction of the Customer, but retains sole ownership and title to the equipment at all times. The customer warrants that the equipment remains personal property and is removable from any premises, regardless of attachment to realty.
This distinction is important because if a court determines the agreement is not a 'true lease', any rent or payments could be deemed as interest. If this interest exceeds the highest rate permitted by law, the excess interest would be applied to the customer's obligations or refunded if no obligations remain. The Owner is authorized to file UCC financing statements to protect their interest and may charge a fee for related costs or a non-filing protection fee.
The document further clarifies that the agreement is a 'finance lease' under Article 2A of the Uniform Commercial Code (UCC), granting the Owner the rights and remedies of a lessor as if the agreement were a 'finance lease' under Article 2A of the UCC. The customer waives any rights conferred upon a lessee under UCC Article 2A-508 through 336.2A-522, to the extent permitted by applicable law.
Prospective Basecamp Fitness franchisees should carefully review the implications of this 'true lease' agreement, particularly concerning ownership of equipment, payment obligations, and potential interest rate considerations. It is also important to understand the waivers of rights under the UCC and the limitations of liability for the Owner regarding the equipment's installation, performance, or support.