Under the Body20 Grant of Development Rights, where can I find information regarding the delegation to affiliate-owned businesses?
Body20 Franchise · 2025 FDDAnswer from 2025 FDD Document
1.2 Delegation to Affiliate-Owned Businesses. At your request, the Franchise Agreement for any Studio in the Development Area may be signed by an Entity formed by you to develop and operate the Studio (an "Affiliated Entity") (and which Studio shall count as one of your Studios for the purpose of satisfying the Development Schedule), provided all of the following conditions are met: (a) you own at least 51% of the direct ownership interests in such Affiliated Entity; (b) the Affiliated Entity conducts no business other than the operation of one or more of the Studios; (c) we determine, in our sole discretion, the Affiliated Entity and all owners of a legal or beneficial ownership interest in the Affiliated Entity meet our then-current criteria for franchisees and franchisee owners; and (d) in addition to the guarantee requirements set forth in the applicable Franchise Agreement, you and all of your Owners sign a personal guarantee and agree to assume full and unconditional liability for, and agree to perform, all obligations, covenants and agreements contained in the Franchise Agreement.
Source: Item 23 — RECEIPT (FDD pages 74–251)
What This Means (2025 FDD)
According to the 2025 Body20 Franchise Disclosure Document, details regarding the delegation to affiliate-owned businesses under the Grant of Development Rights can be found in Section 1.2. Specifically, this section outlines the conditions under which a Franchise Agreement for a Body20 studio within the Development Area may be signed by an Entity formed by the franchisee to develop and operate the studio, referred to as an "Affiliated Entity."
For a Body20 franchisee to delegate to an Affiliated Entity, several conditions must be met. First, the franchisee must own at least 51% of the direct ownership interests in the Affiliated Entity. Second, the Affiliated Entity's business must be solely the operation of one or more Body20 Studios. Third, Body20 must determine, in its sole discretion, that the Affiliated Entity and all owners of a legal or beneficial ownership interest in the Affiliated Entity meet Body20's then-current criteria for franchisees and franchisee owners.
Furthermore, in addition to the guarantee requirements set forth in the applicable Franchise Agreement, the franchisee and all of their Owners must sign a personal guarantee. They must also agree to assume full and unconditional liability for, and agree to perform, all obligations, covenants, and agreements contained in the Franchise Agreement. This ensures that the franchisee remains fully responsible for the performance of the Body20 studio, even when operated through an Affiliated Entity.