Is Bft restricted from opening studios at 'Non-Traditional Sites' within a franchisee's Designated Territory?
Bft Franchise · 2025 FDDAnswer from 2025 FDD Document
We and our parents/affiliates reserve the exclusive right to conduct the following activities under the Franchise Agreement and/or Multi-Unit Agreement (as appropriate): (i) establish and operate, and license any third party the right to establish and operate, other Studios and Studios using the Marks and System at any location outside of your Designated Territory(ies) and, if applicable, Development Area; (ii) market, offer and sell products and services that are similar to the products and services offered by the Studio under a different trademark or trademarks at any location, within or outside the Designated Territory(ies) and, if applicable, the Development Area; (iii) use the Marks and System, as well as other such marks we designate, to distribute any Approved Products and/or Approved Services in any alternative channel of distribution, within or outside the Designated Territory(ies) and Development Area (including the Internet and other e-commerce channels and streaming platforms; wholesale
stores, retail stores, catalog sales, etc.) as further described below; (iv) to acquire, merge with, or otherwise affiliate with, and after that own and operate, and franchise or license others to own and operate, any business of any kind, including, without limitation, any business that offers products or services the same as or similar to the Approved Products and Approved Services (but under different marks), within or outside your Designated Territory(ies) and, if applicable, Development Area; (v) use the Marks and System, and license others to use the Marks and System, to engage in any other activities not expressly prohibited in your Franchise Agreement and, if applicable, your Multi-Unit Agreement; and (vi) open and operate, or license third parties the right to open or operate, Studios at "Non-Traditional Sites" both within and outside the Designated Territory and, if applicable, Development Area. "Non-Traditional Site" means any location that is situated within or as part of a larger venue or facility and, as a result, is likely to draw the predominance of its customers from those persons who are using or attending events in the larger venue or facility (for example, "big box" gyms and/or fitness facilities, cruise ships, military bases, shopping malls, airports, sports facilities and stadiums, industrial or office complexes, hotels, train stations and other transportation facilities, travel plazas, casinos, hospitals, theme parks, convention centers, colleges/universities, multi-unit residential properties, and other similar captive market locations).
Source: Item 12 — TERRITORY (FDD pages 50–54)
What This Means (2025 FDD)
According to Bft's 2025 Franchise Disclosure Document, Bft retains the right to open studios at "Non-Traditional Sites" within a franchisee's designated territory. A "Non-Traditional Site" is defined as a location within a larger venue or facility that draws customers primarily from that venue, such as gyms, cruise ships, military bases, shopping malls, airports, sports facilities, industrial complexes, hotels, train stations, casinos, hospitals, theme parks, convention centers, colleges, residential properties, and similar locations. This means that even though a franchisee has a designated territory, Bft can still establish studios in these types of locations within that territory.
This reservation of rights has significant implications for prospective Bft franchisees. It means that Bft can directly compete with its own franchisees within their designated territories by opening studios in non-traditional locations. While the franchisee may have some protection against traditional studios opening nearby, this protection does not extend to these non-traditional sites. This could potentially impact the franchisee's revenue and market share.
Prospective franchisees should carefully consider this aspect of the franchise agreement and evaluate the potential impact of Bft opening studios in non-traditional sites within their territory. It would be prudent to discuss this issue with Bft during the due diligence process to understand their plans for non-traditional sites and how they might affect the franchisee's business. Understanding Bft's strategy and potential for internal competition is crucial for making an informed investment decision.