Does Bft offer indirect financing to franchisees?
Bft Franchise · 2025 FDDAnswer from 2025 FDD Document
From January 2022 through March 2023, franchises for BFT-branded studios ("Studios") were offered by Predecessor. To facilitate the possibility of future funding and financing opportunities (each a "Financing Opportunity") for our parent entities, in March 2023, we and our affiliates engaged in an internal reorganization (the "Reorganization"), pursuant to which we acquired from Predecessor, and currently own, the Marks (defined below) and other intellectual property related to the development and operation of Studios and the BFT System. We began selling franchises for Studios as of April 4, 2023. The Franchise Agreements, area development agreements, and certain other agreements related to Studios that were signed by Predecessor before the Reorganization were assigned to us as of December 31, 2023.
Parents and Potential Financing Opportunity
As part of the Reorganization, our direct parent, XPOF Assetco, LLC ("Assetco"), was created. As described in Item 21 of this Disclosure Document, Assetco guarantees our obligations as franchisor. Assetco's current direct parent is Xponential Fitness, LLC ("Xponential"). Xponential, via an intermediate holding company, is controlled by Xponential Fitness, Inc. ("XFI"), which is a publicly traded company listed on the New York Stock Exchange under the symbol "XPOF." We anticipate that, if a Financing Opportunity occurs, it would be conducted by newly created indirect parents (immediately upstream of Assetco) and that our and Assetco's only involvement in the Financing Opportunity would be to guarantee the obligations of our newly created indirect parents who are involved in the transaction. We expect that guarantee would cause the leverage ratio of debt to "Adjusted EBITDA" of Xponential and its subsidiaries (including us) to increase in an amount not determinable unless and until the details of the Financing Opportunity are determined. "Adjusted EBITDA" means EBITDA (net income/loss before
interest, taxes, depreciation and amortization), adjusted for the impact of certain non-cash and other items that we do not consider in our evaluation of ongoing operating performance.
Source: Item 10 — FINANCING (FDD page 37)
What This Means (2025 FDD)
Based on the 2025 Franchise Disclosure Document, Bft does not directly offer financing to franchisees. However, the FDD mentions the possibility of future funding and financing opportunities for its parent entities. Specifically, it states that an internal reorganization occurred in March 2023 to facilitate potential financing opportunities for Bft's parent entities.
According to the FDD, if a financing opportunity occurs, it would likely be conducted by newly created indirect parents of Assetco (Bft's direct parent). Bft and Assetco's involvement would be limited to guaranteeing the obligations of these newly created indirect parents. The FDD anticipates that such a guarantee could increase the leverage ratio of debt to Adjusted EBITDA of Xponential and its subsidiaries, including Bft. The exact amount of the increase is not determinable until the details of the financing opportunity are finalized.
Prospective franchisees should note that while Bft itself doesn't provide financing, its parent company's financial activities could indirectly impact the franchise system. It would be prudent for potential franchisees to inquire about the details of any past or planned financing activities, and how these activities might affect the financial stability and operations of Bft franchises.