What laws might affect the enforceability of the Body20 franchise agreement?
Body20 Franchise · 2025 FDDAnswer from 2025 FDD Document
d by the North Dakota Franchise Investment Law, but subject to your arbitration obligations, you may bring an action in North Dakota.
- The following is added to the end of the "Summary" section of Item 17(w) of the Development Agreement and the Franchise Agreement charts, entitled Choice of law:
Except for federal law, North Dakota law applies.
RHODE ISLAND
- The following is added to the end of the "Summary" section of Item 17(v) of the Development Agreement and the Franchise Agreement charts, entitled Choice of forum:
To the extent required by applicable law, but subject to your arbitration obligations, however, you may bring an action in Rhode Island for claims arising under the Rhode Island Franchise Investment Act.
- The "Summary" section of Item 17(w) of the Development Agreement and the Franchise Agreement charts, entitled Choice of law, is deleted and replaced with the following:
Except for Federal Arbitration Act and other federal law, and except as otherwise required by the Rhode Island Franchise Investment Act, the laws of the State of Delaware apply to all claims.
VIRGINIA
- The following is added to the end of the "Summary" section of Item 17(h) of the Development Agreement and the Franchise Agreement charts, entitled "Cause" defined – noncurable defaults:
Pursuant to Section 13.1-564 of the Virginia Retail Franchising Act, it is unlawful for a franchisor to use undue influence to induce a franchisee to surrender any rights given to him under the franchise. If any provision of the franchise agreement involves the use of undue influence by the franchisor to induce a franchisee to surrender any rights given to him under the franchise, that provision may not be enforceable. Pursuant to Section 13.1-564 of the Virginia Retail Franchising Act, it is unlawful for a franchisor to cancel a franchise without reasonable cause. If any
ground for default or termination stated in the Franchise Agreement does not constitute "reasonable cause," as that term may be defined in the Virginia Retail Franchising Act or the laws of Virginia, that provision may not be enforceable.
- The following paragraph is added to the end of Item 17:
No statement, questionnaire, or acknowledgement signed or agreed to by you in connection with the commencement of the franchise relationship shall have the effect of (i) waiving any claims under any applicable state franchise law, including fraud in the inducement, or (ii) disclaiming reliance on any statement made by us, any franchise seller, or any other person acting on behalf of us. This provision supersedes any other term of any document executed in connection with the franchise.
Source: Item 23 — RECEIPT (FDD pages 74–251)
What This Means (2025 FDD)
According to Body20's 2025 Franchise Disclosure Document, several state and federal laws could impact the enforceability of certain provisions within the franchise agreement. For franchisees in Virginia, the Virginia Retail Franchising Act prohibits Body20 from using undue influence to get a franchisee to surrender their rights. Additionally, any grounds for default or termination that do not constitute "reasonable cause" under Virginia law may not be enforceable.
For franchisees in California, several specific stipulations are made. California Business and Professions Code Sections 20000 through 20043 provide rights to the franchisee and multi-unit developer concerning termination or nonrenewal of a franchise, and if the franchise agreement contains a provision inconsistent with this law, the law will control. The covenant not to compete that extends beyond termination of the franchise might not be enforceable under California law. The franchise agreement's provision for termination upon bankruptcy might not be enforceable under federal bankruptcy law. The requirement for applying Delaware laws may also be unenforceable under California law.
Furthermore, for franchisees in California, the FDD notes that the highest interest rate allowed under California law is 10% annually. The document also clarifies that with limited exception, the Development Agreement and Franchise Agreement require pre-litigation mediation and binding arbitration, each to be conducted in the metropolitan area in which Body20's current principal place of business is then located (currently Newport Beach, California).