What are the possible consequences if a Body20 franchisee continues to operate the Studio after the Agreement expires but does not sign Successor Agreements?
Body20 Franchise · 2025 FDDAnswer from 2025 FDD Document
If (i) we have not provided you with written notice that you will not be eligible to enter into a Successor Term, (ii) you and your Owners do not sign and return the Successor Agreements and comply with each of the provisions set forth in Section 2.2 (Successor Term) prior to the expiration of this Agreement, and (iii) you continue to operate the Studio and accept the benefits of this Agreement after the expiration of this Agreement, then, at our option, this Agreement may be treated either as (x) expired as of the date of the expiration of the Term, with you then operating without any authorization to do so, in violation of our rights; or (y) continued on a month-to-month basis (the "Interim Period") until one party provides the other with written notice of such party's intent to terminate the Interim Period, in which case the Interim Period will terminate 30 days after the other party's receipt of the notice to terminate the Interim Period.
The Interim Period shall be considered part of the Term.
However, if you enter into a Successor Term, the Successor Term will be deemed to have begun upon expiration of the expired term, rather than the Interim Period.
If we allow for an Interim Period, all of your obligations shall remain in full force and effect during the Interim Period as if this Agreement had not expired and all obligations and restrictions imposed on you upon expiration of this Agreement shall be deemed to take effect upon termination of the Interim Period.
However, beginning on the 30th day of the Interim Period, the monthly Royalty Fee (as defined in Section 3.2 (Royalty Fee)) shall increase to 10% of your Studio's Gross Sales (as defined in Section 3.2(b) (Gross Sales)) during each week that you fail to enter into a Successor Term until (A) you comply with the conditions necessary to acquire a Successor Term (including execution of the Successor Agreements and a general release and payment of the Successor Fee) or (B) this Agreement is terminated.
By accepting any increased Royalty Fees, we do not waive any of the rights and remedies under this Agreement, including the right to terminate this Agreement.
Source: Item 23 — RECEIPT (FDD pages 74–251)
What This Means (2025 FDD)
According to Body20's 2025 Franchise Disclosure Document, if a franchisee continues to operate the studio after the agreement expires but does not sign Successor Agreements, Body20 has options. If the franchisee has not received written notice that they are ineligible for a Successor Term, and they continue to operate the studio and accept the benefits of the agreement after expiration, Body20 can treat the agreement as either expired, with the franchisee operating without authorization, or as continued on a month-to-month basis, known as the Interim Period.
During this Interim Period, all obligations remain in effect as if the agreement had not expired. However, beginning on the 30th day of the Interim Period, the monthly Royalty Fee increases to 10% of the studio's Gross Sales for each week that the franchisee fails to enter into a Successor Term. This continues until the franchisee either complies with the conditions for a Successor Term, including executing the agreements, providing a general release, and paying the Successor Fee, or the agreement is terminated.
It is important to note that by accepting any increased Royalty Fees, Body20 does not waive any rights or remedies under the agreement, including the right to terminate the agreement. This means that even if a franchisee is paying the increased royalty fee, Body20 still retains the option to terminate the agreement. This clause protects Body20's interests while allowing for a temporary continuation of operations under specific conditions and increased fees.