In a Body20 Control Transfer, what happens if the transferee is not an individual?
Body20 Franchise · 2025 FDDAnswer from 2025 FDD Document
(j) Your proposed transferee (and, if the transferee is not an individual, such owners of a legal or beneficial interest in the transferee as we may request) must (i) enter into a written assignment, in a form satisfactory to us, assuming and agreeing to discharge and guarantee all of your obligations under this Agreement and (ii) must execute our then-current form of personal guarantee;
(k) Your proposed transferee (and, if the transferee is not an individual, such owners of a legal or beneficial interest in the transferee as we may request) must execute, for a term ending on the last day of the existing Term and with such Successor Term as is provided by this Agreement, our then-current franchise agreement for new franchisees and such other agreements as we may require, which agreements will supersede this Agreement in all respects.
The terms of the new franchise agreement may differ significantly from the terms of this Agreement, including different fees.
The prospective transferee will not be required to pay any initial Franchise Fee;
Source: Item 23 — RECEIPT (FDD pages 74–251)
What This Means (2025 FDD)
According to Body20's 2025 Franchise Disclosure Document, if the proposed transferee in a Control Transfer is not an individual, certain requirements must still be met. Specifically, the owners of a legal or beneficial interest in the transferee may be required to fulfill certain obligations. These obligations include entering into a written assignment, in a form satisfactory to Body20, where they assume, agree to discharge, and guarantee all of the franchisee's obligations under the Franchise Agreement. They must also execute Body20's then-current form of personal guarantee.
Furthermore, these owners may be required to execute Body20's then-current franchise agreement for new franchisees, with a term ending on the last day of the existing term and with such Successor Term as provided by the agreement. This new agreement will supersede the original agreement in all respects and may include significantly different terms, including different fees. However, the prospective transferee will not be required to pay any initial Franchise Fee.
In essence, Body20 ensures that even if the franchise is transferred to a business entity rather than an individual, the key individuals behind that entity are bound by the same obligations and guarantees as an individual franchisee. This protects Body20's interests and ensures that the new entity is fully committed to upholding the terms of the franchise agreement. This is a fairly standard practice in franchising, as franchisors typically want to ensure that all franchisees, regardless of their business structure, are fully accountable for the performance of the franchise.