What happens if the Basecamp Fitness agreement is deemed not to be a 'true lease' by a court?
Basecamp_Fitness Franchise · 2025 FDDAnswer from 2025 FDD Document
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.
Source: Item 23 — RECEIPTS (FDD pages 62–248)
What This Means (2025 FDD)
According to the 2025 Basecamp Fitness Franchise Disclosure Document, the agreement between the Owner and Customer is intended to be a 'true lease' and not a loan or installment sale. However, if a court determines that the agreement is not a 'true lease,' the document outlines specific financial adjustments.
Specifically, if the agreement is deemed not to be a 'true lease' and the rent or other payments are considered interest exceeding the highest rate permitted by law, the excess interest will be applied to the franchisee's obligations to Basecamp Fitness. If there are no remaining obligations, the excess interest will be refunded to the franchisee.
This clause protects the franchisee from potentially usurious interest rates by ensuring that any excess interest is either credited towards their outstanding debts or returned to them. This provision aims to comply with applicable laws regarding interest rates and provides a mechanism for adjusting payments if the lease is reclassified.