If the Body20 agreement is terminated due to an Event of Default, what specific payments are the franchisee obligated to make?
Body20 Franchise · 2025 FDDAnswer from 2025 FDD Document
15.1 Payment of Costs and Amounts Due. You will pay upon demand all sums owing to us, our Affiliates, and our approved suppliers. If this Agreement is terminated due to an Event of Default, you will promptly pay all damages, costs, and expenses, including reasonable attorneys' fees, incurred by us as a result of your default. These payment obligations will give rise to and remain, until paid in full, a lien in favor of us against the Studio premises and any and all of the personal property, fixtures, equipment, and inventory that you own at the time of the occurrence of the Event of Default. We are hereby authorized at any time after the Effective Date to make any filings and to execute such documents on your behalf of to perfect such lien. You also must pay to us all damages, costs, and expenses, including reasonable attorneys' fees, that we incur after the termination or expiration of this Agreement related to enforcing the terms of this Agreement, including cost incurred in obtaining injunctive or other relief for the enforcement of any provision of this Section 15, whether or not we initiate a formal legal proceeding. Such damages, costs and expenses include reasonable accountants', attorneys', arbitrators' and related fees and expenses.
15.2 Liquidated Damages..
- (a) Amount.
You agree that any termination of this Agreement before the expiration of the Term will deprive us of the benefit of the bargain we are entitled to receive under this Agreement.
As a result, if this Agreement is terminated after the Studio opens, you must pay us, as liquidated damages for the loss of the benefit of the bargain we are entitled to receive, and not as a penalty, a lump-sum payment equal to the average monthly Royalty Fee you owed us during the 12 months before the termination date times the lesser of the remainder of the Term or 36 months.
If less than 12 months have lapsed between the date the Studio opens and the termination date, the liquidated damages will be the average monthly Royalty Fee during the time between the date the Studio opens and the termination date, multiplied by 36.
If the termination occurs before the Studio opens, you will forfeit the Franchise Fee paid and will not owe us any liquidated damages.
Source: Item 23 — RECEIPT (FDD pages 74–251)
What This Means (2025 FDD)
According to Body20's 2025 Franchise Disclosure Document, if the Franchise Agreement is terminated due to an Event of Default, the franchisee must pay all sums owed to Body20, its Affiliates, and approved suppliers. Additionally, the franchisee is responsible for promptly paying all damages, costs, and expenses, including reasonable attorneys' fees, incurred by Body20 as a result of the default. These payment obligations will result in a lien in favor of Body20 against the studio premises and any personal property, fixtures, equipment, and inventory owned by the franchisee at the time of the Event of Default.
Furthermore, the franchisee must pay liquidated damages to Body20 for the loss of the benefit of the bargain if the termination occurs before the expiration of the term but after the studio opens. This liquidated damage is calculated as the average monthly Royalty Fee owed during the 12 months before termination, multiplied by the lesser of the remaining term or 36 months. If the studio has been open for less than 12 months, the liquidated damages will be the average monthly Royalty Fee during that period, multiplied by 36. However, if the termination occurs before the studio opens, the franchisee will forfeit the Franchise Fee paid but will not owe any liquidated damages.
These financial obligations highlight the significant financial risks associated with defaulting on the Body20 Franchise Agreement. Franchisees should be aware that Body20 can pursue various legal and financial remedies in the event of a default, including placing a lien on the studio's assets and demanding substantial liquidated damages. Prospective franchisees should carefully consider their financial capacity and business plan to minimize the risk of default and potential termination.