During the period between termination/expiration and the purchase of assets, can Body20 assume management of the Body20 studio?
Body20 Franchise · 2025 FDDAnswer from 2025 FDD Document
rcially 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.
- (b) Operations Pending Purchase. If we do not exercise our right to operate the Studio, we may require you to continue to operate the Studio in accordance with this Agreement during the period between the expiration or termination of this Agreement through (i) the date on which we decide to decline our right to exercise this option (or the expiration of the option, if we fail to provide an Exercise Notice by the deadline) or (ii) the closing of our purchase. However, we may, at any time during that period, assume the management of the Studio ourselves or appoint a third party (who may be our Affiliate) to manage the Studio pursuant to the terms of Section 15.6 (Our Right to Operate).
- (c) Purchase Price. The purchase price for the Purchased Assets will be their fair market value for use in the operation of a non-franchised Competitive Business (and not a Studio). However, the purchase price will not include any value for any rights granted by this Agreement, goodwill attributable to the Marks, our brand image, any Proprietary Information or our other intellectual property rights, or participation in the network of Studios. For purposes of determining the fair market value of all equipment (including the exercise equipment and Technology System) used in operating the Studio, the equipment's useful life shall be determined to be no more than three years. If we and you cannot agree on fair market value for the Purchased Assets, we will select an independent appraiser after consultation with you, and his or her determination of fair market value will be the final and binding purchase price.
- (d) Closing. We will pay the purchase price at the closing, which will take place within 60 days after the purchase price is determined, although we may decide after the purchase price is determined not to complete the purchase.
Source: Item 23 — RECEIPT (FDD pages 74–251)
What This Means (2025 FDD)
According to Body20's 2025 Franchise Disclosure Document, Body20 has the right to assume management of a studio under certain conditions following the termination or expiration of the franchise agreement. Specifically, Body20 may require the franchisee to continue operating the studio until Body20 decides whether to exercise its option to purchase the studio's assets or until the purchase is completed. However, Body20 retains the right to step in and manage the studio itself or appoint a third party, potentially an affiliate, to manage it.
This right to operate the studio allows Body20 to maintain continuous operation, ensure an orderly change of management, and protect its interests. If Body20 exercises this right, the franchisee must promptly vacate the studio and provide assistance to facilitate the transition. The franchisee will not be entitled to any revenue earned during the period Body20 or its appointee operates the studio. This can occur while Body20 evaluates whether to purchase the assets or pending resolution of any disputes regarding the termination or non-renewal of the franchise agreement.
Furthermore, Body20 can enter the studio premises and assume management if the franchisee fails to meet their obligations under the agreement. In such cases, Body20 or its appointee may charge a Management Fee. All funds generated from the studio's operation during this period will be kept in a separate account, and all studio expenses will be charged to that account. Body20's management can continue for intervals of up to 90 days each, but no more than a total of one year, during which Body20 will periodically discuss the studio's status with the franchisee. However, Body20 is only required to utilize reasonable efforts and will not be liable for any debts, losses, or obligations the studio incurs during their management.
For a prospective franchisee, this means that upon termination or expiration of the franchise agreement, Body20 has significant control over the studio's operations. The franchisee may be required to continue operating the studio or may be removed entirely, with Body20 or a third party taking over. The franchisee's ability to generate revenue from the studio during this period is contingent on whether they are allowed to continue operations, and even then, Body20 can step in and take over management at any time. This highlights the importance of understanding the conditions under which Body20 can terminate the agreement and the potential implications for the franchisee's continued involvement and financial returns.