During the term of the Body20 franchise agreement, are franchisees and their owners allowed to make loans to a competitive business?
Body20 Franchise · 2025 FDDAnswer from 2025 FDD Document
| Provision | Section in Franchise Agreement | Summary | |
|---|---|---|---|
| Franchisee Party owns the Site, we may elect to purchase the Site, or lease the Site, from that Franchisee Party. If the Site is leased from an unaffiliated lessor, you must, at our option, cause the applicable Franchisee Party to assign the lease to us or enter into a sublease with us on the same terms. | |||
| p. | Death or disability of franchisee | Section 13.8 | Executor or representative must, within 120 days after death or appointment of a personal representative or trustee, dispose of the interest under the applicable terms of Section 13 of the Franchise Agreement, except no transfer fee will be payable in connection with that disposition. |
| q. | Non-competition covenants during the term | Section 12.1 | You and your Owners may not: (A) own, manage, engage in, be employed by, advise, make loans to, or have any other interest in (i) any gymnasium, studio, athletic or fitness center, health club, exercise, aerobics facility, or similar fitness or exercise facility or business, (ii) any business that offers fitness training or products, services, or Sessions that are similar to those offered by a Studio, or (iii) any Entity that grants franchises or licenses for any of the businesses in (i) or (ii) (a "Competitive Business") in the United States; (B) divert or attempt to divert any business or customer or potential business or customer of the Studio to any Competitive Business, by direct or indirect inducement or otherwise; (C) perform, directly or indirectly, any other act injurious or prejudicial to the goodwill associated with the Marks and the System; or (D) use any vendor relationship established through your association with us for any purpose other than to purchase products or equipment for use or retail sale in the Studio. |
Source: Item 17 — RENEWAL, TERMINATION, TRANSFER, AND DISPUTE RESOLUTION (FDD pages 56–64)
What This Means (2025 FDD)
According to the 2025 Body20 Franchise Disclosure Document, franchisees and their owners face significant restrictions regarding involvement with competitive businesses during the term of the franchise agreement. Specifically, Item 17(q) outlines non-competition covenants that prohibit franchisees and their owners from making loans to any entity that operates a competing business. A "Competitive Business" includes gymnasiums, studios, athletic or fitness centers, health clubs, exercise facilities, or any business offering similar fitness training, products, services, or sessions as a Body20 studio, or any entity that grants franchises or licenses for such businesses within the United States.
This restriction is in place to protect Body20's market position and prevent franchisees from supporting ventures that could directly compete with the Body20 franchise. The non-competition covenant extends beyond just financial support, also preventing franchisees and their owners from owning, managing, engaging in, being employed by, or advising a Competitive Business. This comprehensive restriction aims to ensure that franchisees remain fully committed to the success of their Body20 franchise and do not divert resources or knowledge to competing ventures.
After the franchise agreement expires or is terminated, these non-competition covenants remain in effect for two years, although with some geographical limitations. The restrictions on owning, managing, engaging in, being employed by, advising, or making loans to a Competitive Business are limited to those located within a 10-mile radius of the former Body20 studio or any other Body20 studio operating or under development at that time. This post-term restriction is designed to further protect Body20's interests by preventing former franchisees from immediately leveraging their experience and resources to establish a competing business in close proximity to existing Body20 locations.