What happens if a Body20 franchisee is in default of the franchise agreement when requesting a transfer?
Body20 Franchise · 2025 FDDAnswer from 2025 FDD Document
st the transferor, nor is it a waiver of our right to demand exact compliance with the terms of this Agreement.
13.4 Control Transfer. For a proposed Control Transfer, in addition to any other conditions that we reasonably specify, the following conditions apply (unless waived by us):
- (a) You or your transferee must pay us the Transfer Fee;
(b) All of your accrued monetary obligations and all other outstanding obligations to us, our Affiliates, and approved suppliers shall be up to date, fully paid, and satisfied;
(c) You and your Affiliates must not be in default if any provision of this Agreement and any Related Agreements as of (i) the date of the request for our approval of the Transfer (or you must make arrangements satisfactorily to us to come into compliance by the date of the Transfer) and (ii) the date of the Transfer;
(d) You and your Owners must execute a general release, in a form that we prescribe, of any and all claims (to the extent permitted by Applicable Laws) against us, our Affiliates, and our and our Affiliates' past, present, and future officers, directors, mangers, members, equity holders, agents, and employees, including claims arising under Applicable Laws;
(e) You and your Owners must agree to remain liable for all of the obligations to us in connection with the Studio arising before the effective date of the Transfer and execute any and all instruments that we reasonably request to evidence such liability;
(f) You and your Owners must continue to be bound by the provisions of Sections 9 (Intellectual Property), 10 (Proprietary Information), 11 (Indemnification), and 12 (Noncompete Covenants) as if they were the Franchisee and this Agreement had expired or terminated as of the effective date of the Transfer;
(g) You must provide us with written notice from your landlord indicating that your landlord has agreed to transfer the Site Lease to your transferee;
Source: Item 23 — RECEIPT (FDD pages 74–251)
What This Means (2025 FDD)
According to Body20's 2025 Franchise Disclosure Document, a franchisee cannot transfer their franchise if they are in default of any provision of the Franchise Agreement or any Related Agreements. To gain approval for a transfer, the franchisee must not be in default at the time of the transfer request or on the date of the actual transfer. However, Body20 may allow a franchisee to make arrangements to come into compliance by the date of the transfer, at Body20's discretion.
In addition to not being in default, the franchisee must also meet other conditions to transfer the franchise. These conditions include paying Body20 the transfer fee, ensuring all monetary and outstanding obligations to Body20, its affiliates, and approved suppliers are up to date, fully paid, and satisfied. The franchisee and their owners must also execute a general release of any and all claims against Body20 and its affiliates, and agree to remain liable for all obligations to Body20 in connection with the studio arising before the effective date of the transfer.
Furthermore, the franchisee must provide written notice from their landlord indicating that the landlord has agreed to transfer the site lease to the proposed transferee. The proposed transferee must meet Body20's then-current qualifications to become a franchisee, including not having any involvement with a competitive business. If the transferee or its affiliates already own a Body20 studio, they must not be in default under any agreements with Body20 or its affiliates, have a good record of customer service and compliance with Body20's system standards, and have sufficient financial and operational capacity to operate additional studios, in Body20's sole opinion.
These transfer conditions are typical in franchising, as franchisors want to ensure that new franchisees are qualified and that existing obligations are met before a transfer is approved. The requirement to resolve any defaults before a transfer protects Body20's brand and ensures a smooth transition to the new franchisee. Prospective franchisees should carefully review all transfer conditions and ensure they can meet them before seeking to transfer their Body20 franchise.