How is the purchase price for the Purchased Assets determined if Body20 exercises its right to purchase?
Body20 Franchise · 2025 FDDAnswer from 2025 FDD Document
ing 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.
Source: Item 23 — RECEIPT (FDD pages 74–251)
What This Means (2025 FDD)
According to Body20's 2025 Franchise Disclosure Document, 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). This means the assets are valued as if they were being used in a generic business, not specifically a Body20 studio. The purchase price will not include any value for rights granted by the Franchise Agreement, goodwill attributable to the Body20 marks, brand image, Proprietary Information, or other intellectual property rights, or participation in the network of Studios. This protects Body20's brand value and ensures the franchisee is only compensated for the tangible assets. For equipment, including exercise equipment and the Technology System, the useful life is capped at three years when determining fair market value. This depreciation rule could significantly lower the value of the equipment.
If Body20 and the franchisee cannot agree on the fair market value for the Purchased Assets, Body20 will select an independent appraiser after consulting with the franchisee. The appraiser's determination of fair market value will be the final and binding purchase price. This provides a mechanism for resolving disputes over valuation, but ultimately Body20 has control over selecting the appraiser, albeit after consultation.
Body20 will pay the purchase price at the closing, which will occur within 60 days after the purchase price is determined. However, Body20 retains the right to decide not to complete the purchase even after the price is determined. Body20 may also offset against the purchase price any amounts that the franchisee owes to Body20 or its Affiliates, reducing the cash the franchisee receives at closing. The franchisee is responsible for providing clear title to the Purchased Assets, free of liens and encumbrances, and for paying all sales and transfer taxes. If clear title cannot be delivered or other issues remain unresolved, the sale will be closed through an escrow account.