Finally received it.
You asked: "Will I be able to sell the assets of the business to an employee to operate under a different name, different business at the expiration of the franchise agreement?"
The franchise agreement limits your use of the trade marks and trade secrets of TXS. The trade secrets include the TXS exercise programs, operation manuals, marketing strategy and marketing materials. The franchise agreement provides that you "will not, at any time during the term of this Agreement or any time thereafter, use or attempt to use these trade secrets in connection with any other entity or business in which you have an interest, direct or indirect, nor shall you disclose, duplicate, reveal, sell or sublease the trade practices
In short, you cannot transfer any property belonging to TXS after the franchise terminates. Most importantly, this includes membership lists and leads and the agreement requires that you destroy these lists after the agreement terminates.
Also, the Franchise Agreement contains a Non-Compete Covenenant which limits you from, directly or indirectly, operating a competing business at the same location (or 20 mile radius) for a period of 2 years. This brings into question whether you may sell the assets to an employee to operate after the franchise agreement expires. It appears that if you were to continue on with the business yourself after the franchise expiration, this would violate the non-compete clause. Selling to an employee likely gets around the non-compete, but you must not have any interest or participation in the business after the sell.
So, in short, after reviewing the franchise agreement, it appears that you are not prohibited from selling the business assets/studio to an employee to operate a fitness facility, as long as none of the TXS confidential information, property, or customer lists are involved in the transaction and the TXS trade secrets are not used. Further, the sell must be complete and you may not retain any interest or participation in the business.
Please let me know if you have further questions on this matter.