What are the Body20 franchisee's obligations in Item 9 regarding approved suppliers in Item 8, and what are the consequences of not adhering to these obligations?
Body20 Franchise · 2025 FDDAnswer from 2025 FDD Document
d more detailed information about your obligations in the Franchise Agreement, Development Agreement, and in other items of this Disclosure Document.**
| The Development Agreement does not require you to buy or | |
|---|---|
| ease from us (or our affiliates), our designees, or approved suppliers, or according to our | |
| pecifications, any goods, services, supplies, fixtures, equipment, inventory, computer hardware | |
| nd software, or comparable items related to establishing or operating your business under the | |
| Development Agreement. However, each proposed site for a Studio must satisfy our site- | |
| election criteria and is subject to our written acceptance. Additionally, as otherwise provided in | |
| his Disclosure Document, our form of Franchise Agreement covers these items. | Obligation |
| o. | Advertising |
| p. | Indemnification |
| q. | Owner's participation/ management/staffing |
| r. | Records and reports |
| s. | Inspections and audits |
| t. | Transfer |
| u. | Renewal |
| v. | Post-termination obligations |
| w. | Non-competition covenants |
| x. | Dispute resolution |
ITEM 10 FINANCING
We and our affiliates do not offer direct or indirect financing arrangements for any purpose in establishing or operating your Studio. We and our affiliates do not guarantee your promissory note, lease, or any other obligations you may make to others.
ITEM 11 FRANCHISOR'S ASSISTANCE, ADVERTISING, COMPUTER SYSTEMS, AND TRAINING
Except as listed below, we are not required to provide you with any assistance.
Our Pre-Opening Obligations
For all Franchise Agreements, whether executed pursuant to a Development Agreement or otherwise, before you begin operating your Studio:
- 1. Designate Areas. We will designate your Site Selection Area. (Franchise Agreement - Section 1.1)
- 2. Site Selection. If you identify a site in the Site Selection Area that is reasonably suited for the conduct of the Studio and is consistent with any site selection guidelines that we may provide, before entering into any lease or purchase agreement for the site, you must submit a site proposal package describing details about the proposed site and provide any other information that we reasonably require. We will review each site that you identify and determine whether to accept it using our proprietary site selection assistance criteria, which may include evaluations of the proposed site by third-party site selection assistance software.
What This Means (2025 FDD)
According to the 2025 Body20 Franchise Disclosure Document, Item 9 generally outlines a franchisee's obligations. However, it does not specifically address obligations related to approved suppliers mentioned in Item 8, nor does it detail the consequences of not adhering to those obligations. Item 9 lists general obligations such as advertising, indemnification, owner's participation, record keeping, inspections, transfer, renewal, post-termination obligations, non-competition covenants, and dispute resolution.
Item 8 discusses restrictions on sources of products and services, noting that Body20 and its affiliates may derive revenue from franchisee purchases, including rebates from designated suppliers. These rebates can range from 5% to 30% of a franchisee's total purchases for certain items. Body20 also reserves the right to re-inspect and revoke approval of any supplier if they fail to meet current criteria. If a previously approved product is disapproved, franchisees must discontinue offering the service immediately and may only sell existing inventory for up to 30 days, or a shorter period if Body20 deems continued sale detrimental to its reputation.
While Item 8 specifies that Body20 will publish supplier requirements in its manuals and can change these specifications, the FDD excerpts do not explicitly state the franchisee's obligations to use approved suppliers or the repercussions for non-compliance. The FDD estimates that 75% to 90% of the initial costs to establish a studio and 30% to 45% of the costs to operate a studio involve purchases or leases from Body20, affiliates, or designated suppliers.
To fully understand a franchisee's obligations regarding approved suppliers and the consequences of non-compliance, a prospective Body20 franchisee should consult the franchise agreement and ask the franchisor for clarification on these points. Specifically, they should inquire about mandatory versus recommended suppliers, the process for supplier approval, and the potential penalties for using unapproved suppliers.