Is Body20 required to obtain franchisee approval to assign the franchise agreement to a third party?
Body20 Franchise · 2025 FDDAnswer from 2025 FDD Document
(i) Your proposed transferee and their representatives must successfully complete our then-current training requirements at their expense;
(j) Your proposed transferee (and, if the transferee is not an individual, such owners of a legal or beneficial interest in the transferee as we may request) must (i) enter into a written assignment, in a form satisfactory to us, assuming and agreeing to discharge and guarantee all of your obligations under this Agreement and (ii) must execute our then-current form of personal guarantee;
(k) Your proposed transferee (and, if the transferee is not an individual, such owners of a legal or beneficial interest in the transferee as we may request) must execute, for a term ending on the last day of the existing Term and with such Successor Term as is provided by this Agreement, our then-current franchise agreement for new franchisees and such other agreements as we may require, which agreements will supersede this Agreement in all respects.
The terms of the new franchise agreement may differ significantly from the terms of this Agreement, including different fees.
The prospective transferee will not be required to pay any initial Franchise Fee;
(l) Your proposed transferee must make arrangements to modernize, renovate, or upgrade the Studio, at its expense, to conform to our then-current System Standards for new Studios;
(m) Your proposed transferee must covenant that it will continue to operate the Studio under the Marks and using the System;
(n) We must determine, in our sole discretion, that the purchase price and payment terms will not adversely affect the operation of the Studio.
If you or your Owners finance any part of the purchase price, you and they must agree that all obligations under promissory notes, agreements, or security interests reserved in the Studio will be subordinate to the transferee's obligation to pay all amounts due to us and our Affiliates and otherwise to comply with this Agreement; and
(o) You and your Owners and the transferee and its owners must execute a consent to Transfer agreement in a form that we prescribe that describes the conditions that must be complied with in order to obtain our consent to the Transfer.
13.5 Non-Control Transfers.
Source: Item 23 — RECEIPT (FDD pages 74–251)
What This Means (2025 FDD)
According to Body20's 2025 Franchise Disclosure Document, a franchisee needs Body20's consent to assign their franchise agreement. Specifically, Item 13.4(d) of the Franchise Agreement states that a general release is required as a condition of sale and/or assignment/transfer, although this does not apply to any liability arising under the Maryland Franchise Registration and Disclosure Law.
Before a Body20 franchisee can transfer their franchise, the proposed transferee must meet several conditions. The transferee must complete Body20's training, enter into a written assignment assuming all obligations under the existing agreement, and execute Body20's current form of personal guarantee. Additionally, the transferee must execute Body20's then-current franchise agreement for new franchisees, which may have significantly different terms and fees compared to the original agreement. However, the prospective transferee will not be required to pay any initial Franchise Fee.
Furthermore, the proposed transferee must modernize or upgrade the Body20 studio to meet the current system standards for new studios and covenant to continue operating under the Body20 marks and system. Body20 must also determine that the purchase price and payment terms will not adversely affect the studio's operation. Both the franchisee and the transferee must execute a consent to transfer agreement outlining the conditions for obtaining Body20's consent to the transfer.
These requirements ensure that any new franchisee meets Body20's standards and is committed to maintaining the brand's quality and operational consistency. Franchisees should be aware of these conditions and the potential costs associated with transferring their franchise, including training, upgrades, and adherence to a new franchise agreement with potentially different terms.