What interest rate can the arbitrator award on damages for breach of the Body20 franchise agreement?
Body20 Franchise · 2025 FDDAnswer from 2025 FDD Document
The parties agree that the arbitrator may award interest from the date of any damages incurred for breach or other violation of this Agreement, and from the date of the award, until paid in full, at a rate to be fixed by the arbitrator, but in no event less than 2.5% per annum above the Citibank Preference Rate quoted for the corresponding periods, as reported in The Wall Street Journal, or the maximum rate permitted by applicable law, whichever is less.
Source: Item 23 — RECEIPT (FDD pages 74–251)
What This Means (2025 FDD)
According to Body20's 2025 Franchise Disclosure Document, in the event of a breach of the franchise agreement, the arbitrator has the authority to award interest on damages. This interest can be applied from the date the damages were incurred and continue until the damages are fully paid.
The interest rate will be determined by the arbitrator, but it is subject to certain limitations. The rate cannot be less than 2.5% per annum above the Citibank Preference Rate, as quoted for the corresponding periods in The Wall Street Journal. Additionally, the interest rate cannot exceed the maximum rate permitted by applicable law. The arbitrator must choose the lower of these two rates.
This provision ensures that Body20 franchisees may be compensated for the time value of money when damages are awarded due to a breach of contract. However, it also places a cap on the interest rate to prevent excessive penalties. Prospective franchisees should be aware of these terms, as they could impact the financial outcome of any dispute resolution process.