Who bears the liability for accounts payable, obligations, and contracts related to the Studio during the interim operation period for a Bft franchise?
Bft Franchise · 2025 FDDAnswer from 2025 FDD Document
Franchisee agrees that Franchisor or its designee must exercise only a reasonable degree of care in operating the Studio and is under no duty to take extraordinary measures or, in any way, fund the operations to ensure the Studio's success or continued operations during or after such period. Franchisee agrees that it continues to bear the sole liability for any and all accounts payable, obligations, and/or contracts, including all obligations under the Studio lease and all obligations to its vendors and employees and contractors, unless and until Franchisor expressly assumes them in connection with the purchase of the Studio under Section 15.3.I above. Franchisor may elect to cease such interim operations of the Studio at any time with notice to Franchisee. Franchisor (or its designee) will not be liable to Franchisee or its owners for any debts, losses, or obligations the Studio incurs, or to any of Franchisee's creditors.
Source: Item 23 — RECEIPTS (FDD pages 79–265)
What This Means (2025 FDD)
According to Bft's 2025 Franchise Disclosure Document, the franchisee retains sole liability for all accounts payable, obligations, and contracts related to the Studio during any interim operation period, unless Bft expressly assumes these obligations in connection with purchasing the Studio. This includes all obligations under the Studio lease, as well as obligations to vendors, employees, and contractors.
This means that even if Bft or its designee is operating the Studio temporarily, the franchisee remains responsible for all financial obligations. This is a significant risk for the franchisee, as they could be held liable for debts incurred during a period when they are not in control of the Studio's operations.
Bft only exercises a reasonable degree of care when operating the Studio during the interim period and is not obligated to take extraordinary measures to ensure the Studio's success. Furthermore, Bft can cease interim operations at any time with notice to the franchisee and will not be liable for any debts, losses, or obligations the Studio incurs during this period, nor to any of the franchisee's creditors. Franchisees should carefully consider this liability and seek legal counsel to understand the full extent of their obligations during any interim operation period.