Does Body20 have a right of first refusal if a franchisee intends to transfer any interest in their Body20 franchise?
Body20 Franchise · 2025 FDDAnswer from 2025 FDD Document
operate Studios in accordance with the Development Schedule will not, in itself, constitute cause for us to terminate any previously-executed Franchise Agreement.
- (b) Other Remedies. If any Event of Default occurs under Section 6.1, in lieu of termination, we may at our option, and in our discretion, unilaterally modify the Development Area and/or modify the Development Schedule to decrease the number of
Studios required to be developed under this Agreement by written notice to you, and such modification shall be effective immediately upon receipt of such written notice from us to you. If we reduce your Development Area or your Development Schedule due to an Event of Default, we will not be obligated to refund any portion of the Development Fee to you.
7. Transfers.
7.1 Transfers by You. This Agreement and the rights granted to you under this Agreement are personal to you. Neither this Agreement, nor any of the rights granted to you hereunder, nor any controlling equity interest in you may be voluntarily or involuntarily, directly or indirectly, by operation of law or otherwise, assigned or otherwise transferred, given away, or encumbered by you without our prior written approval, which we may grant or withhold for any or no reason. As a condition of approving an assignment, we may require you or the transferee to comply with any conditions that we specify, including payment of a transfer fee equal to $10,000 for each Studio remaining to be developed under this Agreement at the time of transfer and execution of a general release. If you or your Owners intend to transfer any interest in you or this Agreement, we shall have a right of first refusal in accordance with the procedure set forth in Section 13.9 (Our Right of First Refusal) of the Initial Franchise Agreement.
7.2 Transfers by Us. We have the right to change our ownership or form and/or assign this Agreement to a third party without restriction. Specifically and without limiting the foregoing, we have the right to sell our assets (including this Agreement), the Marks, or the franchise system to a third party; offer our ownership interests privately or publicly; merge, acquire other business entities, or be acquired by another Entity; and/or undertake a refinancing, recapitalization, leveraged buyout, securitization, or other economic or financial restructuring.
8. Noncompete Covenants.
Section 12 (Noncompete Covenants) of the Initial Franchise Agreement is hereby incorporated by reference and shall apply under this Agreement to you and your Owners, except the post-term noncompete covenant in Section 12.2 (After Termination, Expiration, or Transfer) of the Initial Franchise Agreement shall apply to any Competitive Business that is located within (i) the Development Area, (ii) a 10-mile radius of the Development Area, or (iii) a 10-mile radius of the location of any other Studio that is operating or under development at the time of such expiration, termination, or transfer. The Owners must personally bind themselves to this Section 8 by signing our current form of Payment and Performance Guarantee, which is attached as Appendix B to this Agreement.
9. Indemnification.
You agree at all times to defend at your own cost, and to indemnify and hold harmless, to the fullest extent permitted by law, the Indemnified Parties (as defined in the Initial Franchise Agreement) from and against, and to reimburse any one or more of the Indemnified Parties for, all Losses (as defined in the Initial Franchise Agreement) directly or indirectly arising out of or relating to (i) any acts or omissions related to the development of Studios under this Agreement, (ii) the purchase, lease, or sublease of any site by you, your Owners, or your Affiliated Entities and any purchase, lease, or sublease agreements executed in connection therewith, or (iii) any actual or alleged breach of this Agreement by you, your Owners, or your Affiliated Entities.
Source: Item 23 — RECEIPT (FDD pages 74–251)
What This Means (2025 FDD)
According to Body20's 2025 Franchise Disclosure Document, Body20 does have a right of first refusal if a franchisee intends to transfer any interest in the franchise. Specifically, Section 7.1 of the agreement states that if a franchisee or their owners intend to transfer any interest in the franchise or the agreement itself, Body20 has the right of first refusal. This right is exercised according to the procedure outlined in Section 13.9 of the Initial Franchise Agreement.
The right of first refusal allows Body20 to purchase the interest being transferred on the same economic terms and conditions offered by the third party. Body20 has 30 days after receiving notice of the intended transfer to decide whether to exercise this right. If Body20 and the franchisee cannot agree on a cash equivalent for the transfer, an independent appraiser will determine the fair market value, at Body20's expense.
However, Body20's right of first refusal does not apply to transfers to an entity under Sections 13.7 or 13.8, which cover permitted transfers, transfers upon death, incapacity, or bankruptcy, or transfers to the franchisee's spouse, son, or daughter. If Body20 declines to exercise its right, the transfer must be completed within 90 days of Body20's election, and on substantially the same terms as those offered to Body20. Otherwise, it is considered a new offer subject to Body20's right of first refusal.