If Body20 elects to lease the site of my Body20 studio, what is the initial term length?
Body20 Franchise · 2025 FDDAnswer from 2025 FDD Document
If a Franchisee Party owns the Site, we may elect to include a fee simple interest in the Site as part of the Purchased Assets or, at our option, lease the Site from the Franchisee Party (or an Entity controlled by your Owner) for an initial ten-year term with one renewal term of five years (at our option) on commercially reasonable terms, which shall include the right to sublease the Site to another party. You and your Owners agree to cause your Affiliate or any Entity controlled by such Owner to comply with these requirements. If a Franchisee Party leases the Site from an unaffiliated lessor, you agree (at our option) to cause the Franchisee Party to assign the Site Lease to us or to enter into a sublease for the remainder of the Site Lease term on the same terms (including renewal options) as the Lease.
Source: Item 23 — RECEIPT (FDD pages 74–251)
What This Means (2025 FDD)
According to the 2025 Body20 Franchise Disclosure Document, if a franchisee party owns the site of the Body20 studio, Body20 has the option to lease the site from the franchisee party (or an entity controlled by the owner). The initial term length of this lease is ten years, with one optional renewal term of five years. The terms of the lease, including the renewal, must be commercially reasonable, and Body20 has the right to sublease the site to another party.
This clause is triggered if Body20 decides to purchase the assets of a Body20 franchise. Instead of purchasing the site outright, Body20 can elect to lease it from the franchisee. This provides Body20 with flexibility in managing its real estate assets and allows the franchisee to retain ownership of the property while still exiting the business.
For a prospective franchisee, this means that if they own the property where their Body20 studio is located, they may have the opportunity to lease it to Body20 if they decide to sell the franchise. The franchisee should pay close attention to the definition of "commercially reasonable terms" in the franchise agreement, as this will determine the financial terms of the lease. It is also important to understand the implications of Body20's right to sublease the site, as this could impact the franchisee's future relationship with the property.