If a Body20 franchisee breaches any agreement with Body20's affiliates, can Body20 terminate the Development Agreement?
Body20 Franchise · 2025 FDDAnswer from 2025 FDD Document
cure a failure to comply with any other provision of the Franchise Agreement, except as described in (h) below. While termination of the Development Agreement does not impact any then-effective franchise agreements, termination of a franchise agreement entitles us to terminate the | | h. | "Cause" defined – non-curable defaults | Section 14.1 | Development Agreement. You or any Owner make or have made any material misrepresentation to us; your Required Trainees fail to satisfactorily complete initial training at least 30 days before the earlier of the actual opening date or the Opening Deadline (or by such earlier deadline that we specify); you fail to secure a site by the Site Acquisition Deadline; you fail to open the Studio by the Opening Deadline; you fail to renovate the Studio and the Site in a timely manner; you fail to maintain possession of the Site and fail to enter into a lease for a new accepted site within 90 days after termination of the Site lease; you voluntarily suspend operations of the Studio for more than three days without our prior written consent; you fail to communicate with us; you fail to meet Minimum Sales Levels for two consecutive calendar years; you, your Operating Principal, your Designated Managers, or any of your representatives that we designate miss two or more required meetings; you, any Owner, or any of your officers or directors are convicted or plead nolo contendere to a crime involving moral turpitude or consumer fraud or any other crime or offense or engages in any activities that impairs the goodwill associated with the Marks; you or any Owner misuses the Marks, engages in any business under a name that is confusingly similar to any Mark, or otherwise materially impairs the goodwill associated with the Marks or our right in any of the Intellectual Property; you disclose Proprietary Information; you or your Owners make an | | | Provision | Section in Franchise Agreement | Summary | |----|--------------------------------------------------------------|--------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------| | | | | improper transfer; you or any Owner violates the noncompete | | | | | covenants of the Franchise Agreement; you or any parent | | | | | becomes insolvent or bankrupt; you or any parent admits in | | | | | writing your or their insolvency or inability to pay your or their | | | | | debts generally as they become due; you fail to pay suppliers | | | | | and trade creditors an amount exceeding $2,000 for more | | | | | than 60 days; you fail to pay your taxes; you underreport | | | | | Gross Sales by more than 2% twice in a two-year period or | | | | | by 5% in any period; you fail to permit us to inspect or audit | | | | | your books and records; you fail to timely file reports three | | | | | times in 12 months; any Franchisee Party defaults under any | | | | | Related Agreement if such default would permit the other | | | | | party to terminate that agreement; any Franchisee Party is in | | | | | default three or more times within any 18-month period;
Source: Item 17 — RENEWAL, TERMINATION, TRANSFER, AND DISPUTE RESOLUTION (FDD pages 56–64)
What This Means (2025 FDD)
According to Body20's 2025 Franchise Disclosure Document, a breach of a Related Agreement can lead to the termination of the Development Agreement. Specifically, if any Franchisee Party (which includes the franchisee, their owners, and affiliates) defaults under any Related Agreement (agreements between any Franchisee Party and Body20, its affiliates, and/or its approved vendors related to the Studio or any other Studios) and that default would allow the other party to terminate that agreement, it is grounds for Body20 to terminate the Development Agreement.
This means that if a Body20 franchisee or their related parties fail to comply with the terms of any agreement they have with Body20's affiliates or approved vendors, and that failure gives the affiliate or vendor the right to terminate the agreement, Body20 can then terminate the Development Agreement with the franchisee. This provision is listed under non-curable defaults.
This is a significant point for potential Body20 franchisees to consider. It broadens the scope of what constitutes a default beyond just the Franchise Agreement itself. Franchisees must ensure compliance not only with Body20 directly but also with any third-party agreements involving Body20's affiliates or approved vendors. Failure to do so could jeopardize their entire Development Agreement, even if they are otherwise in good standing with Body20 itself. Franchisees should carefully review all Related Agreements to understand their obligations and potential consequences.