What happens if a Bft franchisee fails to comply with material obligations?
Bft Franchise · 2025 FDDAnswer from 2025 FDD Document
anchisee to Franchisor under this Agreement;
(8) Franchisee's (i) disclosure, utilization, or duplication of any portion of the System, the Learning Management System or other proprietary or Confidential Information relating to the Studio that is contrary to the provisions of this Agreement; or (ii) use of the Marks in any manner not expressly authorized by Franchisor;
(9) Franchisee violates any health or safety law, ordinance or regulation or operates the Studio in a manner that presents a health or safety hazard to its members or to the public;
(10) Franchisee fails to execute a written premises lease accepted by Franchisor for the operation of the Studio at the Authorized Location by the Lease Execution Deadline, unless Franchisor agrees to otherwise in writing;
(11) Franchisee fails to conduct the Studio's Soft Opening by the Opening Deadline with Franchisor's approval, unless Franchisor agrees to otherwise in writing;
(12) Franchisee defaults under the lease agreement or otherwise loses the right to possess the premises at the location at which the Studio is located;
(13) Franchisee fails to comply with the covenants not to compete as required in Article 13 herein;
(14) Franchisee permits the offer or sale of products and services other than the Approved Services at the Studio in violation of the terms of this Agreement on two (2) or more occasions in any 24-month period, regardless of whether Franchisee subsequently cured the prior default(s);
- (15) Franchisee fails to comply with its obligations under Section 17.6 herein;
(16) Franchisee, after curing a default pursuant to Section 15.1.B herein, commits the same act of default again within any six (6)-month period whether or not such default is cured after notice thereof is delivered to Franchisee; or
(17) Franchisee (or any of its owners) fails on three (3) or more separate occasions within any twelve (12) consecutive month period to comply with any provision of this Agreement, whether or not Franchisor notifies Franchisee of the failures, and if Franchisor does notify Franchisee of the failures, whether or not Franchisee corrects the failures after Franchisor's delivery of notice to Franchisee.
B. Termination with Notice. In addition to the provisions of Section 15.1.A, if Franchisee shall be in default under the terms of this Agreement and the default shall not be cured or remedied (to Franchisor's satisfaction) within thirty (30) days after receipt of written notice from Franchisor (or 10 days' prior notice in the event of a default that is described in Subsections (6), (7) or (8) below), in addition to all other remedies available to Franchisor at law or in equity, Franchisor may immediately terminate this Agreement on written notice to Franchisee. Franchisee shall be in default, and each of the following shall constitute good cause for termination under this Section:
(1) Failure, refusal or neglect by Franchisee to obtain Franchisor's prior written acceptance, approval or consent any time such acceptance, approval, or consent is required by this Agreement;
(2) Franchisee's failure to comply with any provision of this Agreement that does not otherwise provide for immediate termination, or Franchisee's bad faith in carrying out the terms of this Agreement;
(3) Failure by Franchisee to maintain books and financial records for the Studio suitable for proper financial audit or failure by Franchisee to permit Franchisor to carry out its rights to conduct an inspection or audit as provided in this Agreement or failure by Franchisee to submit as required by this Agreement all reports, records and information of the Studio;
(4) Franchisee, or if Franchisee has elected not to directly supervise "on-premises" the day-to-day Studio operations, then Franchisee's management employee, fails to complete, to Franchisor's satisfaction, the Initial Training Program as provided in this Agreement;
(5) Franchisee fails to pay when due any amount owing to Franchisor or its affiliates under this Agreement or any other agreement, or is unable to obtain adequate financing to cover all costs of developing, opening and operating the Studio;
(6) Franchisee fails to pay when due any amounts owing to any person or entity in connection with the construction, leasing, financing, operation or supply of the Studio;
(7) Franchisee closes any bank account without completing all of the following after such closing (i) immediately notifying Franchisor in writing, (ii) immediately establishing another bank account, and (iii) executing and delivering to Franchisor all documents necessary for Franchisor to begin and continue making withdrawals from such bank account by electronic funds transfer;
(8) Franchisee fails to maintain or suffers cancellation of any insurance coverage required under this Agreement or Applicable Laws;
(9) Franchisee allows (a) classes to be taught or training to be conducted by instructors who have not successfully completed the Pre-Opening Instructor Training, including the Fundamentals Training Program, or (b) the Pre-Opening Instructor Training to be taught by anyone other than a Head Coach that has been approved by Franchisor to provide that Program;
(10) Franchisee offers in conjunction with the operation of the Studio products or services that have not been approved by Franchisor;
Source: Item 23 — RECEIPTS (FDD pages 79–265)
What This Means (2025 FDD)
According to the 2025 Bft Franchise Disclosure Document, there are specific consequences if a franchisee fails to meet their obligations. Bft can terminate the franchise agreement if the franchisee does not cure a default within 30 days of written notice from Bft. However, for defaults related to Subsections (6), (7), or (8), the cure period is reduced to 10 days. The termination is in addition to any other legal or equitable remedies Bft might pursue.
Several actions or inactions can trigger a default. These include failing to obtain Bft's prior written approval when required by the agreement, defaulting on the lease for the studio location, not complying with non-compete covenants, or offering unapproved products/services at the studio on two or more occasions within a 24-month period. Other defaults include failing to meet obligations under Section 17.6 of the agreement, repeating a previously cured default within six months, or failing to comply with any agreement provision on three or more occasions within a 12-month period.
Upon termination or expiration of the franchise agreement, all rights granted to the franchisee by Bft immediately cease. The franchisee must stop operating the studio, remove all signs and materials linking them to Bft, and discontinue using Bft's trademarks, confidential information, and system. They must also terminate all advertising indicating they are a Bft franchisee and cancel any assumed name registrations containing Bft's marks, providing evidence of compliance to Bft within five days. The franchisee is prohibited from using any imitation of Bft's marks and must pay all outstanding amounts to Bft and its suppliers. If the termination is due to the franchisee's default, these sums include all damages, costs, and legal fees incurred by Bft as a result of the default. The franchisee must also adhere to the non-compete covenants outlined in Articles 12 and 13 of the agreement.
Bft also has a cross-default clause, meaning that a default by the franchisee (or their affiliates/owners) under any agreement with Bft or its affiliates constitutes a default under the franchise agreement. This gives Bft the option to declare a default across all agreements. Franchisees should be aware of these potential consequences and ensure they understand and comply with all terms of the franchise agreement to avoid default and potential termination.