Are there any exceptions to Body20's right to approve all transfers?
Body20 Franchise · 2025 FDDAnswer from 2025 FDD Document
| Provision | Section in Franchise Agreement | Summary | |
|---|---|---|---|
| l. | Our approval of transfer by franchisee | Section 13.3 | We have the right to approve all transfers, except for your grant of a security interest in the Site (if owned by you), the Studio, or any Operating Asset to a party providing financing for your acquisition, development, and/or operation of the Studio. |
| m. | Conditions for our approval of transfer | Sections 13.4 and 13.5 | For a Control Transfer, you pay us pay us the Transfer Fee; all of your monetary obligations to us, our affiliates, and approved suppliers are satisfied; you and your affiliates are not in default of the Franchise Agreement or any Related Agreement; you and your Owners sign a general release; you and your Owners remain liable for obligations incurred or arising prior to transfer; you comply with noncompetition and confidentiality provisions; your landlord consents to the transfer of your lease; proposed transferee agrees to discharge all of your obligations; proposed transferee qualifies, meets training requirements, and signs then-current franchise agreement; proposed transferee upgrades the Studio to our then-current specifications; new franchisee covenants to continue to operate the Studio under the Marks; proposed transferee's owners execute our then-current form of personal guarantee; we determine purchase price acceptable and financing arrangements are subordinate to our interests; and you and your Owners and the proposed transferee and its owners sign our current form of consent to transfer agreement, which states the conditions with which you must comply to secure our consent to the proposed transfer. For any Transfer that does not result in a Control Transfer, in addition to any other conditions that we reasonably specify, you and/or your transferee must satisfy the conditions above, except for the requirements to obtain your landlord's consent, complete training, sign a new franchise agreement, and renovate the Studio. |
| n. | Our right of first refusal to acquire franchisee's business | Section 13.9 | We can match any offer for your Studio, the Studio's assets, or any ownership interest, except for Transfers to an Entity under Section 13.7 of the Franchise Agreement (Permitted Transfers) or 13.8 (Transfer Upon Death, Incapacity, or Bankruptcy). |
Source: Item 17 — RENEWAL, TERMINATION, TRANSFER, AND DISPUTE RESOLUTION (FDD pages 56–64)
What This Means (2025 FDD)
According to Body20's 2025 Franchise Disclosure Document, Body20 generally has the right to approve all transfers of a franchise. However, there is an exception regarding security interests. Body20 does not have the right to approve a franchisee's grant of a security interest in the Site (if owned by you), the Studio, or any Operating Asset to a party providing financing for your acquisition, development, and/or operation of the Studio.
For all other transfers, Body20's approval is required, and the company has outlined specific conditions that must be met for a transfer to be approved. These conditions vary depending on whether the transfer is a Control Transfer (resulting in a change of control) or another type of transfer. For a Control Transfer, the franchisee must pay a transfer fee, satisfy all monetary obligations to Body20 and its affiliates, not be in default of any agreements, and ensure both the franchisee and their owners sign a general release. The proposed transferee must also meet certain qualifications, including agreeing to operate under Body20's marks, upgrading the studio to current specifications, and executing a personal guarantee.
For transfers that do not result in a Control Transfer, many of the same conditions apply, except for the requirements to obtain landlord consent, complete training, sign a new franchise agreement, and renovate the studio. Additionally, Body20 retains the right of first refusal to acquire the franchisee's business, matching any offer for the studio, its assets, or any ownership interest. However, this right of first refusal does not apply to transfers to an Entity under Section 13.7 of the Franchise Agreement (Permitted Transfers) or 13.8 (Transfer Upon Death, Incapacity, or Bankruptcy).
Prospective Body20 franchisees should carefully review Section 13 of the Franchise Agreement to fully understand the conditions and implications of transferring their franchise. Understanding these requirements is crucial for future business planning and potential exit strategies.