Under what condition can Body20 demand audited financial statements from a franchisee?

According to Body20's 2025 Franchise Disclosure Document, Body20 has the right to demand audited financial statements from a franchisee if an Event of Default has occurred within the last calendar year. Franchisees are also obligated to submit their balance sheet and income statement for the previous calendar year by April 15th each year. The Operating Principal must certify that these financial statements are correct, complete, and prepared according to generally accepted accounting principles.

In addition to the annual financial statements, Body20 can request exact copies of federal and state income and other tax returns, along with any other forms, records, books, reports, and information related to the studio or the franchisee. Franchisees must provide these documents within 15 days of the request. Franchisees are also required to maintain complete and accurate books, records, and accounts of all business conducted under the Franchise Agreement, following generally accepted accounting principles. These records must be preserved for at least five years from the date of preparation, either in hard copy or in a format that allows for easy generation of hard copies.

Body20 also requires franchisees to maintain certain information and records on the Technology System, granting Body20 remote access to this data via a specified network connection. At Body20's request, franchisees must retain and use the services of an accountant or accounting firm approved by Body20, at the franchisee's expense. Franchisees must promptly respond to requests from Body20 for clarification or additional information regarding any matter related to the agreement. This includes providing information about the franchisee's financial condition, earnings, sales, profits, costs, expenses, and performance, which Body20 may use to provide prospective franchisees with earnings information or to comply with applicable laws governing franchise sales.