If I have a Development Agreement with Body20, who must sign the Payment and Performance Guarantee?
Body20 Franchise · 2025 FDDAnswer from 2025 FDD Document
If you are an Entity, each Owner, including the Operating Principal, and his/her spouse (as applicable) must sign the Payment and Performance Guarantee (the "Guarantee") attached to the Franchise Agreement, assuming and agreeing to discharge all obligations of the franchisee under the Franchise Agreement and agreeing to comply with the confidentiality, indemnification, covenant not to compete, and assignment provisions of the Franchise Agreement. If you are a party to a Development Agreement, each individual or Entity that has a legal and/or beneficial interest in you must sign the Payment and Performance Guarantee attached to the Development Agreement.
Source: Item 15 — OBLIGATION TO PARTICIPATE IN THE ACTUAL OPERATION OF THE FRANCHISE BUSINESS (FDD page 55)
What This Means (2025 FDD)
According to Body20's 2025 Franchise Disclosure Document, if you are a party to a Development Agreement, each individual or entity that has a legal or beneficial interest in you must sign the Payment and Performance Guarantee attached to the Development Agreement. This means that if the franchisee is an entity such as a corporation or LLC, all owners with a legal or beneficial interest in that entity are required to sign the guarantee.
The Payment and Performance Guarantee ensures that Body20 has recourse to the personal assets of the owners should the franchisee entity fail to meet its financial or other obligations under the Development Agreement. This is a common practice in franchising, as it provides the franchisor with an additional layer of security beyond the assets of the franchisee's business entity.
For a prospective Body20 franchisee, this requirement means that they, and potentially their spouses, will be personally liable for the entity's performance under the Development Agreement. It is important for potential franchisees to fully understand the implications of signing a Payment and Performance Guarantee and to seek legal counsel to review the agreement before signing.