Does Body20 require franchisees to provide a security interest in the assets of their Studio?
Body20 Franchise · 2025 FDDAnswer from 2025 FDD Document
- 6.16 Security Interest. You hereby collaterally assign to us the Site Lease and a security interest in all of the assets of the Studio, including Operating Assets, inventory, accounts, supplies, contracts, cash derived from the operation of the Studio and sale of other assets, and proceeds and products of all those assets. Upon our request, you must execute any documents or agreements that we require in order to further document, perfect, and record our security interest. If you default under any of your obligations under this Agreement, we may exercise all rights of a secured creditor under Applicable Laws, in addition to our other rights and remedies under this Agreement and under Applicable Laws. If an approved third-party lender requires that we subordinate our security interest in the assets of the Studio as a condition to lending you working capital for the construction or operation of the Studio, we may, in our sole discretion, agree to do so pursuant to terms and conditions that we specify. This Agreement shall be deemed to be a Security Agreement and Financing Statement and may be filed for record as such in the records of any county and state that we deem appropriate to protect our interests.
Source: Item 23 — RECEIPT (FDD pages 74–251)
What This Means (2025 FDD)
According to Body20's 2025 Franchise Disclosure Document, franchisees are required to collaterally assign the Site Lease and provide a security interest in all of the assets of their Body20 studio to the company. This includes all operating assets, inventory, accounts, supplies, contracts, cash derived from the studio's operation and sale of other assets, and any proceeds from those assets.
Body20 franchisees must also execute any documents or agreements that Body20 requires to document, perfect, and record their security interest upon request. If a franchisee defaults on their obligations under the Franchise Agreement, Body20 can exercise all rights of a secured creditor under applicable laws, in addition to other rights and remedies available to them.
However, Body20 may, at its sole discretion, agree to subordinate its security interest if an approved third-party lender requires it as a condition for providing working capital to the franchisee for the construction or operation of the studio. The Franchise Agreement itself can be deemed a Security Agreement and Financing Statement, and Body20 can file it in any county and state they deem appropriate to protect their interests.