What is the fair market value based on when Body20 purchases the assets?
Body20 Franchise · 2025 FDDAnswer from 2025 FDD Document
The purchase price for the Purchased Assets will be their fair market value for use in the operation of a non-franchised Competitive Business (and not a Studio).
However, the purchase price will not include any value for any rights granted by this Agreement, goodwill attributable to the Marks, our brand image, any Proprietary Information or our other intellectual property rights, or participation in the network of Studios.
For purposes of determining the fair market value of all equipment (including the exercise equipment and Technology System) used in operating the Studio, the equipment's useful life shall be determined to be no more than three years.
If we and you cannot agree on fair market value for the Purchased Assets, we will select an independent appraiser after consultation with you, and his or her determination of fair market value will be the final and binding purchase price.
Source: Item 23 — RECEIPT (FDD pages 74–251)
What This Means (2025 FDD)
According to Body20's 2025 Franchise Disclosure Document, when Body20 purchases a franchisee's assets, the purchase price will be based on the fair market value of those assets, considering their use in a non-franchised competitive business, not as an operating Body20 studio. This valuation specifically excludes any value associated with the franchise rights, goodwill tied to the Body20 marks, brand image, proprietary information, or other intellectual property.
To determine the fair market value of the equipment, including exercise equipment and the Technology System, Body20 will depreciate the equipment's useful life to no more than three years. If Body20 and the franchisee cannot agree on the fair market value, an independent appraiser will be selected after consulting with the franchisee. The appraiser's determination will then be the final and binding purchase price.
This valuation method benefits Body20, as it does not have to pay a premium for the established Body20 business. The franchisee may receive less than the perceived value of the business if it were sold as an ongoing Body20 franchise. It is important for prospective franchisees to understand this valuation method, as it will impact the proceeds they receive if Body20 decides to purchase the assets upon termination or expiration of the franchise agreement.