Upon expiration or termination of the Body20 agreement, what must a franchisee do regarding payments owed to Body20, its affiliates, and approved suppliers?
Body20 Franchise · 2025 FDDAnswer from 2025 FDD Document
15.1 Payment of Costs and Amounts Due. You will pay upon demand all sums owing to us, our Affiliates, and our approved suppliers. If this Agreement is terminated due to an Event of Default, you will promptly pay all damages, costs, and expenses, including reasonable attorneys' fees, incurred by us as a result of your default. These payment obligations will give rise to and remain, until paid in full, a lien in favor of us against the Studio premises and any and all of the personal property, fixtures, equipment, and inventory that you own at the time of the occurrence of the Event of Default. We are hereby authorized at any time after the Effective Date to make any filings and to execute such documents on your behalf of to perfect such lien. You also must pay to us all damages, costs, and expenses, including reasonable attorneys' fees, that we incur after the termination or expiration of this Agreement related to enforcing the terms of this Agreement, including cost incurred in obtaining injunctive or other relief for the enforcement of any provision of this Section 15, whether or not we initiate a formal legal proceeding. Such damages, costs and expenses include reasonable accountants', attorneys', arbitrators' and related fees and expenses.
Source: Item 23 — RECEIPT (FDD pages 74–251)
What This Means (2025 FDD)
According to the 2025 Body20 Franchise Disclosure Document, upon termination or expiration of the franchise agreement, a franchisee is obligated to pay all outstanding sums to Body20, its affiliates, and approved suppliers. This includes not only the amounts originally owed but also any damages, costs, and expenses, including reasonable attorney's fees, that Body20 incurs as a result of the franchisee's default if the termination was due to an event of default.
This obligation creates a lien in favor of Body20 against the studio premises and any personal property, fixtures, equipment, and inventory owned by the franchisee at the time of the default. Body20 is authorized to make filings and execute documents to perfect this lien. Furthermore, the franchisee is responsible for all damages, costs, and expenses, including attorney's fees, that Body20 incurs after the termination or expiration while enforcing the terms of the agreement.
In practical terms, this means that a Body20 franchisee needs to be aware that ending the franchise relationship does not eliminate their financial responsibilities. All debts must be settled, and any legal or related costs incurred by Body20 in enforcing the agreement will be the franchisee's responsibility. This could significantly increase the financial burden on a franchisee at the end of the agreement, especially if the termination is due to a default on the franchisee's part.