Under what conditions will the increased royalty fee during the Interim Period for a Body20 franchise terminate?
Body20 Franchise · 2025 FDDAnswer from 2025 FDD Document
However, beginning on the 30th day of the Interim Period, the monthly Royalty Fee (as defined in Section 3.2 (Royalty Fee)) shall increase to 10% of your Studio's Gross Sales (as defined in Section 3.2(b) (Gross Sales)) during each week that you fail to enter into a Successor Term until (A) you comply with the conditions necessary to acquire a Successor Term (including execution of the Successor Agreements and a general release and payment of the Successor Fee) or (B) this Agreement is terminated.
By accepting any increased Royalty Fees, we do not waive any of the rights and remedies under this Agreement, including the right to terminate this Agreement.
Source: Item 23 — RECEIPT (FDD pages 74–251)
What This Means (2025 FDD)
According to Body20's 2025 Franchise Disclosure Document, if a franchisee continues to operate the studio after the expiration of the franchise agreement, it may be considered an Interim Period. Beginning on the 30th day of this Interim Period, the monthly royalty fee will increase to 10% of the studio's gross sales. This increased royalty fee will remain in effect until certain conditions are met.
The increased royalty fee during the Interim Period will terminate under two specific conditions. The first condition is when the franchisee complies with all requirements to acquire a Successor Term. This includes executing the Successor Agreements, providing a general release, and paying the Successor Fee. Once these steps are completed, the royalty fee will revert to the standard rate.
The second condition that will terminate the increased royalty fee is the termination of the franchise agreement itself. If the agreement is terminated for any reason, the increased royalty fee will no longer apply. However, Body20 retains all rights and remedies under the agreement, including the right to terminate the agreement, even while accepting the increased royalty fees. This means that paying the higher royalty fee does not guarantee the continuation of the franchise.