In the event of liquidation of the Body20 company, how will the net assets be distributed to the Member?
Body20 Franchise · 2025 FDDAnswer from 2025 FDD Document
Sequel Brands Holdings, LLC Notes to Financial Statements
Note 1 – Organization and Description of Business
Sequel Brands Holdings, LLC (the Company), a Delaware limited liability company (LLC), was formed on April 8, 2025 (Inception) and is a wholly owned subsidiary of Sequel Brands, LLC (the Member). The Company was formed to facilitate the Member's growth of its wholly-owned subsidiaries that are franchisors in the fitness industry and provide a guarantee of performance to the Member's franchise entities. On April 30, 2025, the Company received an initial equity contribution consisting of $1,000,000 in cash. There were no operations of the Company prior to April 30, 2025.
| CURRENT ASSETS Cash | $ 1,000,000 |
|---|---|
| Total assets | $ 1,000,000 |
| LIABILITIES AND MEMBER'S EQUITY | |
| TOTAL LIABILITIES | $ - |
| Current liabilities | |
| Total liabilities | - |
| MEMBER'S EQUITY | $ 1,000,000 |
| Total liabilities and member's equity | $ 1,000,000 |
Income taxes – The Company is an LLC and is classified as a partnership for income tax purposes. The Company's taxable income or loss is reportable by the Member on its income tax return. Accordingly, no taxes payable or deferred tax assets or liabilities are reflected in these financial statements.
Source: Item 23 — RECEIPT (FDD pages 74–251)
What This Means (2025 FDD)
According to the 2025 Body20 Franchise Disclosure Document, Sequel Brands Holdings, LLC (the Company) was formed on April 8, 2025, and is a wholly-owned subsidiary of Sequel Brands, LLC (the Member). The company was created to support the Member's growth of its fitness franchisors and provide a performance guarantee to the Member's franchise entities. On April 30, 2025, the Company received an initial equity contribution of $1,000,000 in cash.
As an LLC classified as a partnership for income tax purposes, the Company's taxable income or loss is reportable by the Member on its income tax return. Therefore, no taxes payable or deferred tax assets or liabilities are reflected in the financial statements. This means that the Member, Sequel Brands, LLC, is directly responsible for the income tax implications of Sequel Brands Holdings, LLC.
Regarding the distribution of net assets upon liquidation, the provided excerpts do not specify the exact procedure or order of distribution. However, the balance sheet indicates that the member's equity is valued at $1,000,000, matching the total assets. In the event of liquidation, the net assets would likely be distributed to the Member after settling any liabilities. Since total liabilities are listed as zero, the Member would potentially receive the remaining assets, up to the amount of their equity.
Because the FDD excerpts do not provide explicit details on the distribution of assets upon liquidation, it is important for a prospective franchisee to seek clarification from Body20 regarding the specific procedures and potential implications for the Member in such a scenario. Understanding the order of priority for asset distribution and any potential claims against the assets would be crucial for assessing the financial stability and risk associated with the Body20 franchise.