Degree_Wellness 2025 Franchise FAQ - FDD Ninja

Question 1

According to Chart 2, what was the average expense for utilities for Degree Wellness locations during the first quarter of 2025?

Accepted Answer

|  | Studio 1 | % of Rev. | Studio 3 | % of Rev. | Studio 4 | % of Rev. | Average | % of Rev. Above/Below | Median |
|---|---|---|---|---|---|---|---|---|---|
| Gross Revenue | 181,459 | 100.0% | 137,586 | 100.0% | 156,307 | 100.0% | 158,451 | 100.0% 1/2 | 156,307 |
| Cost of Goods Sold | 19,269 | 10.6% | 12,047 | 8.8% | 16,452 | 10.5% | 15,922 | 10.0% 2/1 | 16,452 |
| Gross Profit | 162,190 | 89.4% | 125,539 | 91.2% | 139,855 | 89.5% | 142,528 | 90.0% 1/2 |  |
| Expenses |  |  |  |  |  |  |  |  |  |
| Advertising & Marketing | 8,234 | 4.5% | 8,308 | 6.0% | 12,293 | 7.9% | 9,612 | 6.1% 1/2 | 8,308 |
| Insurance | 1,382 | 0.8% | 1,094 | 0.8% | 1,731 | 1.1% | 1,402 | 0.9% 1/2 | 1,382 |
| Office Expenses | 2,649 | 1.5% | 3,248 | 2.4% | 2,866 | 1.8% | 2,921 | 1.8% 1/2 | 2,866 |
| Payroll Expenses | 27,191 | 15.0% | 25,280 | 18.4% | 29,034 | 18.6% | 27,169 | 17.1% 2/1 | 27,191 |
| Rent & Lease | 13,078 | 7.2% | 13,832 | 10.1% | 23,276 | 14.9% | 16,728 | 10.6% 1/2 | 13,832 |
| Repairs & Maintenance | 679 | 0.4% | 329 | 0.2% | -- | 0.0% | 336 | 0.2% 1/2 | 329 |
| Taxes | -- | 0.0% | -- | 0.0% | -- | 0.0% | -- | 0.0% | -- |
| Utilities | 3,866 | 2.1% | 2,920 | 2.1% | 6,188 | 4.0% | 4,325 | 2.7% 1/2 | 3,866 |
| Total Expenses | 57,079 | 31.5% | 55,011 | 40.0% | 75,389 | 48.2% | 62,493 | 39.4% 1/2 | 57,079 |
| Net Operating Income | 105,112 | 57.9% | 70,528 | 51.3% | 64,466 | 41.2% | 80,035 | 50.5% 1/2 | 70,528 |
| Estimated Fees |  |  |  |  |  |  |  |  |  |
| Royalties | 12,702 | 7.0% | 9,631 | 7.0% | 10,941 | 7.0% | 11,092 | 7.0% 1/2 | 10,941 |
| Brand Fund | 1,815 | 1.0% | 1,376 | 1.0% | 1,563 | 1.0% | 1,585 | 1.0% 1/2 | 1,563 |
| Total Estimated Fees | 14,517 | 8.0% | 11,007 | 8.0% | 12,505 | 8.0% | 12,676 | 8.0% 1/2 | 12,505 |
| Net Income Adjusted, OO | 90,595 | 49.9% | 59,521 | 43.3% | 51,962 | 33.2% | 67,359 | 42.5% 1/2 | 59,521 |
| Studio Manager Payroll Expenses | 17,295 | 9.5% | 12,672 | 9.2% | 14,441 | 9.2% | 8,882 | 5.6% 3/0 | 14,441 |
| Net Income Adjusted, Investor | 73,300 | 40.4% | 46,849 | 34.1% | 37,520 | 24.0% | 58,477 | 36.9% 1/2 | 46,849 |

Source: Item 19 — FINANCIAL PERFORMANCE REPRESENTATIONS (FDD pages 60–63)

Question 2

What was the average cost of goods sold for the Degree Wellness locations included in Chart 2, both in dollars and as a percentage of revenue?

Accepted Answer

|  | Studio 1 | % of Rev. | Studio 3 | % of Rev. | Studio 4 | % of Rev. | Average | % of Rev. Above/Below | Median |
|---|---|---|---|---|---|---|---|---|---|
| Gross Revenue | 181,459 | 100.0% | 137,586 | 100.0% | 156,307 | 100.0% | 158,451 | 100.0% 1/2 | 156,307 |
| Cost of Goods Sold | 19,269 | 10.6% | 12,047 | 8.8% | 16,452 | 10.5% | 15,922 | 10.0% 2/1 | 16,452 |
| Gross Profit | 162,190 | 89.4% | 125,539 | 91.2% | 139,855 | 89.5% | 142,528 | 90.0% 1/2 |

Source: Item 19 — FINANCIAL PERFORMANCE REPRESENTATIONS (FDD pages 60–63)

Question 3

What was the average gross revenue for Degree Wellness studios, according to the financial performance representation?

Accepted Answer

|  | Studio 1 | % of Rev. | Studio 3 | % of Rev. | Studio 4 | % of Rev. | Average | % of Rev. Above/Below | Median |
|---|---|---|---|---|---|---|---|---|---|
| Gross Revenue | 181,459 | 100.0% | 137,586 | 100.0% | 156,307 | 100.0% | 158,451 | 100.0% 1/2 | 156,307 |

Source: Item 19 — FINANCIAL PERFORMANCE REPRESENTATIONS (FDD pages 60–63)

Question 4

What was the average Gross Revenue for Degree Wellness studios, according to the provided data?

Accepted Answer

|  | Studio 1 | % of Rev. | Studio 3 | % of Rev. | Studio 4 | % of Rev. | Average | % of Rev. Above/Below | Median |
|---|---|---|---|---|---|---|---|---|---|
| Gross Revenue | 181,459 | 100.0% | 137,586 | 100.0% | 156,307 | 100.0% | 158,451 | 100.0% 1/2 | 156,307 |

Source: Item 19 — FINANCIAL PERFORMANCE REPRESENTATIONS (FDD pages 60–63)

Question 5

What was the average Net Income Adjusted for investors across all Degree Wellness studios?

Accepted Answer

ational characteristics as a those being offered pursuant to this disclosure document and do not otherwise materially differ from what you would operate as a franchisee.

|  | Studio 1 | % of Rev. | Studio 3 | % of Rev. | Studio 4 | % of Rev. | Average | % of Rev. Above/Below | Median |
|---|---|---|---|---|---|---|---|---|---|
| Gross Revenue | 181,459 | 100.0% | 137,586 | 100.0% | 156,307 | 100.0% | 158,451 | 100.0% 1/2 | 156,307 |
| Cost of Goods Sold | 19,269 | 10.6% | 12,047 | 8.8% | 16,452 | 10.5% | 15,922 | 10.0% 2/1 | 16,452 |
| Gross Profit | 162,190 | 89.4% | 125,539 | 91.2% | 139,855 | 89.5% | 142,528 | 90.0% 1/2 |  |
| Expenses |  |  |  |  |  |  |  |  |  |
| Advertising & Marketing | 8,234 | 4.5% | 8,308 | 6.0% | 12,293 | 7.9% | 9,612 | 6.1% 1/2 | 8,308 |
| Insurance | 1,382 | 0.8% | 1,094 | 0.8% | 1,731 | 1.1% | 1,402 | 0.9% 1/2 | 1,382 |
| Office Expenses | 2,649 | 1.5% | 3,248 | 2.4% | 2,866 | 1.8% | 2,921 | 1.8% 1/2 | 2,866 |
| Payroll Expenses | 27,191 | 15.0% | 25,280 | 18.4% | 29,034 | 18.6% | 27,169 | 17.1% 2/1 | 27,191 |
| Rent & Lease | 13,078 | 7.2% | 13,832 | 10.1% | 23,276 | 14.9% | 16,728 | 10.6% 1/2 | 13,832 |
| Repairs & Maintenance | 679 | 0.4% | 329 | 0.2% | -- | 0.0% | 336 | 0.2% 1/2 | 329 |
| Taxes | -- | 0.0% | -- | 0.0% | -- | 0.0% | -- | 0.0% | -- |
| Utilities | 3,866 | 2.1% | 2,920 | 2.1% | 6,188 | 4.0% | 4,325 | 2.7% 1/2 | 3,866 |
| Total Expenses | 57,079 | 31.5% | 55,011 | 40.0% | 75,389 | 48.2% | 62,493 | 39.4% 1/2 | 57,079 |
| Net Operating Income | 105,112 | 57.9% | 70,528 | 51.3% | 64,466 | 41.2% | 80,035 | 50.5% 1/2 | 70,528 |
| Estimated Fees |  |  |  |  |  |  |  |  |  |
| Royalties | 12,702 | 7.0% | 9,631 | 7.0% | 10,941 | 7.0% | 11,092 | 7.0% 1/2 | 10,941 |
| Brand Fund | 1,815 | 1.0% | 1,376 | 1.0% | 1,563 | 1.0% | 1,585 | 1.0% 1/2 | 1,563 |
| Total Estimated Fees | 14,517 | 8.0% | 11,007 | 8.0% | 12,505 | 8.0% | 12,676 | 8.0% 1/2 | 12,505 |
| Net Income Adjusted, OO | 90,595 | 49.9% | 59,521 | 43.3% | 51,962 | 33.2% | 67,359 | 42.5% 1/2 | 59,521 |
| Studio Manager Payroll Expenses | 17,295 | 9.5% | 12,672 | 9.2% | 14,441 | 9.2% | 8,882 | 5.6% 3/0 | 14,441 |
| Net Income Adjusted, Investor | 73,300 | 40.4% | 46,849 | 34.1% | 37,520 | 24.0% | 58,477 | 36.9% 1/2 | 46,849 |
#### **Explanatory Notes to Tables 1 and 2**

- 1. *Gross Sales* means all gross receipts, less tips and sales tax and represents the amount upon which will base your Royalty Fee, Local Advertising Requirement and Fund Contribution under your Franchise Agreement with us.
- 2. *COGS* means all variable cost inputs to facilitate customer sales, including equipmentrelated consumables, medical supplies and other usage-based costs.
- 3. *Gross Profit* means Gross Sales less COGS.
- 4. *Advertising and Marketing* means the actual local marketing expenditures of the location. Your requirements will include \$12,000 of Presale Marketing and an annual Local Marketing Requirement of \$2500 per month (\$30,000 per year).
- 5. *Insurance* means the actual amounts expended on insurance in the operation of the Studio.
- 6. *Office Expenses* means general cleaning supplies/services, office supplies, postage, and software.
- 7. *Payroll Expenses* means all hourly and salaried labor excluding general managers, including based wages, payroll taxes, and benefits. This definition excludes the cost of multi-unit managers.

- 8. *Rent and Lease* means base rent and all related NNN (triple net) costs, including common area maintenance, insurance, and tax-related obligations under the Lease.
- 9. *Repairs and Maintenance* means all standard maintenance items, including HVAC maintenance, electrical maintenance, necessary repair items, and any equipment repairs.
- 10. *Taxes* means all taxes, including property taxes, incurred in the operation of the Studio.
- 11. *Utilities* means the following utility expenses electric, water, power, internet and phone.
- 12.

Source: Item 19 — FINANCIAL PERFORMANCE REPRESENTATIONS (FDD pages 60–63)

Question 6

What was the average net income adjusted for studio manager payroll expenses for the Degree Wellness locations included in Chart 2?

Accepted Answer

|  | Studio 1 | % of Rev. | Studio 3 | % of Rev. | Studio 4 | % of Rev. | Average | % of Rev. Above/Below | Median |
|---|---|---|---|---|---|---|---|---|---|
| Gross Revenue | 181,459 | 100.0% | 137,586 | 100.0% | 156,307 | 100.0% | 158,451 | 100.0% 1/2 | 156,307 |
| Cost of Goods Sold | 19,269 | 10.6% | 12,047 | 8.8% | 16,452 | 10.5% | 15,922 | 10.0% 2/1 | 16,452 |
| Gross Profit | 162,190 | 89.4% | 125,539 | 91.2% | 139,855 | 89.5% | 142,528 | 90.0% 1/2 |  |
| Expenses |  |  |  |  |  |  |  |  |  |
| Advertising & Marketing | 8,234 | 4.5% | 8,308 | 6.0% | 12,293 | 7.9% | 9,612 | 6.1% 1/2 | 8,308 |
| Insurance | 1,382 | 0.8% | 1,094 | 0.8% | 1,731 | 1.1% | 1,402 | 0.9% 1/2 | 1,382 |
| Office Expenses | 2,649 | 1.5% | 3,248 | 2.4% | 2,866 | 1.8% | 2,921 | 1.8% 1/2 | 2,866 |
| Payroll Expenses | 27,191 | 15.0% | 25,280 | 18.4% | 29,034 | 18.6% | 27,169 | 17.1% 2/1 | 27,191 |
| Rent & Lease | 13,078 | 7.2% | 13,832 | 10.1% | 23,276 | 14.9% | 16,728 | 10.6% 1/2 | 13,832 |
| Repairs & Maintenance | 679 | 0.4% | 329 | 0.2% | -- | 0.0% | 336 | 0.2% 1/2 | 329 |
| Taxes | -- | 0.0% | -- | 0.0% | -- | 0.0% | -- | 0.0% | -- |
| Utilities | 3,866 | 2.1% | 2,920 | 2.1% | 6,188 | 4.0% | 4,325 | 2.7% 1/2 | 3,866 |
| Total Expenses | 57,079 | 31.5% | 55,011 | 40.0% | 75,389 | 48.2% | 62,493 | 39.4% 1/2 | 57,079 |
| Net Operating Income | 105,112 | 57.9% | 70,528 | 51.3% | 64,466 | 41.2% | 80,035 | 50.5% 1/2 | 70,528 |
| Estimated Fees |  |  |  |  |  |  |  |  |  |
| Royalties | 12,702 | 7.0% | 9,631 | 7.0% | 10,941 | 7.0% | 11,092 | 7.0% 1/2 | 10,941 |
| Brand Fund | 1,815 | 1.0% | 1,376 | 1.0% | 1,563 | 1.0% | 1,585 | 1.0% 1/2 | 1,563 |
| Total Estimated Fees | 14,517 | 8.0% | 11,007 | 8.0% | 12,505 | 8.0% | 12,676 | 8.0% 1/2 | 12,505 |
| Net Income Adjusted, OO | 90,595 | 49.9% | 59,521 | 43.3% | 51,962 | 33.2% | 67,359 | 42.5% 1/2 | 59,521 |
| Studio Manager Payroll Expenses | 17,295 | 9.5% | 12,672 | 9.2% | 14,441 | 9.2% | 8,882 | 5.6% 3/0 | 14,441 |
| Net Income Adjusted, Investor | 73,300 | 40.4% | 46,849 | 34.1% | 37,520 | 24.0% | 58,477 | 36.9% 1/2 | 46,849 |

Source: Item 19 — FINANCIAL PERFORMANCE REPRESENTATIONS (FDD pages 60–63)

Question 7

What was the average Net Operating Income for Degree Wellness studios?

Accepted Answer

ational characteristics as a those being offered pursuant to this disclosure document and do not otherwise materially differ from what you would operate as a franchisee.

|  | Studio 1 | % of Rev. | Studio 3 | % of Rev. | Studio 4 | % of Rev. | Average | % of Rev. Above/Below | Median |
|---|---|---|---|---|---|---|---|---|---|
| Gross Revenue | 181,459 | 100.0% | 137,586 | 100.0% | 156,307 | 100.0% | 158,451 | 100.0% 1/2 | 156,307 |
| Cost of Goods Sold | 19,269 | 10.6% | 12,047 | 8.8% | 16,452 | 10.5% | 15,922 | 10.0% 2/1 | 16,452 |
| Gross Profit | 162,190 | 89.4% | 125,539 | 91.2% | 139,855 | 89.5% | 142,528 | 90.0% 1/2 |  |
| Expenses |  |  |  |  |  |  |  |  |  |
| Advertising & Marketing | 8,234 | 4.5% | 8,308 | 6.0% | 12,293 | 7.9% | 9,612 | 6.1% 1/2 | 8,308 |
| Insurance | 1,382 | 0.8% | 1,094 | 0.8% | 1,731 | 1.1% | 1,402 | 0.9% 1/2 | 1,382 |
| Office Expenses | 2,649 | 1.5% | 3,248 | 2.4% | 2,866 | 1.8% | 2,921 | 1.8% 1/2 | 2,866 |
| Payroll Expenses | 27,191 | 15.0% | 25,280 | 18.4% | 29,034 | 18.6% | 27,169 | 17.1% 2/1 | 27,191 |
| Rent & Lease | 13,078 | 7.2% | 13,832 | 10.1% | 23,276 | 14.9% | 16,728 | 10.6% 1/2 | 13,832 |
| Repairs & Maintenance | 679 | 0.4% | 329 | 0.2% | -- | 0.0% | 336 | 0.2% 1/2 | 329 |
| Taxes | -- | 0.0% | -- | 0.0% | -- | 0.0% | -- | 0.0% | -- |
| Utilities | 3,866 | 2.1% | 2,920 | 2.1% | 6,188 | 4.0% | 4,325 | 2.7% 1/2 | 3,866 |
| Total Expenses | 57,079 | 31.5% | 55,011 | 40.0% | 75,389 | 48.2% | 62,493 | 39.4% 1/2 | 57,079 |
| Net Operating Income | 105,112 | 57.9% | 70,528 | 51.3% | 64,466 | 41.2% | 80,035 | 50.5% 1/2 | 70,528 |
| Estimated Fees |  |  |  |  |  |  |  |  |  |
| Royalties | 12,702 | 7.0% | 9,631 | 7.0% | 10,941 | 7.0% | 11,092 | 7.0% 1/2 | 10,941 |
| Brand Fund | 1,815 | 1.0% | 1,376 | 1.0% | 1,563 | 1.0% | 1,585 | 1.0% 1/2 | 1,563 |
| Total Estimated Fees | 14,517 | 8.0% | 11,007 | 8.0% | 12,505 | 8.0% | 12,676 | 8.0% 1/2 | 12,505 |
| Net Income Adjusted, OO | 90,595 | 49.9% | 59,521 | 43.3% | 51,962 | 33.2% | 67,359 | 42.5% 1/2 | 59,521 |
| Studio Manager Payroll Expenses | 17,295 | 9.5% | 12,672 | 9.2% | 14,441 | 9.2% | 8,882 | 5.6% 3/0 | 14,441 |
| Net Income Adjusted, Investor | 73,300 | 40.4% | 46,849 | 34.1% | 37,520 | 24.0% | 58,477 | 36.9% 1/2 | 46,849 |
#### **Explanatory Notes to Tables 1 and 2**

- 1. *Gross Sales* means all gross receipts, less tips and sales tax and represents the amount upon which will base your Royalty Fee, Local Advertising Requirement and Fund Contribution under your Franchise Agreement with us.
- 2. *COGS* means all variable cost inputs to facilitate customer sales, including equipmentrelated consumables, medical supplies and other usage-based costs.
- 3. *Gross Profit* means Gross Sales less COGS.
- 4. *Advertising and Marketing* means the actual local marketing expenditures of the location. Your requirements will include \$12,000 of Presale Marketing and an annual Local Marketing Requirement of \$2500 per month (\$30,000 per year).
- 5. *Insurance* means the actual amounts expended on insurance in the operation of the Studio.
- 6. *Office Expenses* means general cleaning supplies/services, office supplies, postage, and software.
- 7. *Payroll Expenses* means all hourly and salaried labor excluding general managers, including based wages, payroll taxes, and benefits. This definition excludes the cost of multi-unit managers.

- 8. *Rent and Lease* means base rent and all related NNN (triple net) costs, including common area maintenance, insurance, and tax-related obligations under the Lease.
- 9. *Repairs and Maintenance* means all standard maintenance items, including HVAC maintenance, electrical maintenance, necessary repair items, and any equipment repairs.
- 10. *Taxes* means all taxes, including property taxes, incurred in the operation of the Studio.
- 11. *Utilities* means the following utility expenses electric, water, power, internet and phone.
- 12.

Source: Item 19 — FINANCIAL PERFORMANCE REPRESENTATIONS (FDD pages 60–63)

Question 8

What was the average percentage of revenue spent on Advertising & Marketing for Degree Wellness studios?

Accepted Answer

|  | Studio 1 | % of Rev. | Studio 3 | % of Rev. | Studio 4 | % of Rev. | Average | % of Rev. Above/Below |
|---|---|---|---|---|---|---|---|---|
| Advertising & Marketing | 8,234 | 4.5% | 8,308 | 6.0% | 12,293 | 7.9% | 9,612 | 6.1% 1/2 |

|  | Studio 1 | % of Rev. | Studio 2 | % of Rev. | Average/Median | % of Rev. |
|---|---|---|---|---|---|---|
| Advertising & Marketing | 31,900 | 4.3% | 51,106 | 10.6% | 41,503 | 6.8% |

- 4. *Advertising and Marketing* means the actual local marketing expenditures of the location. Your requirements will include $12,000 of Presale Marketing and an annual Local Marketing Requirement of $2500 per month ($30,000 per year).

Source: Item 19 — FINANCIAL PERFORMANCE REPRESENTATIONS (FDD pages 60–63)

Question 9

What was the average Studio Manager Payroll Expenses for Degree Wellness studios?

Accepted Answer

ational characteristics as a those being offered pursuant to this disclosure document and do not otherwise materially differ from what you would operate as a franchisee.

|  | Studio 1 | % of Rev. | Studio 3 | % of Rev. | Studio 4 | % of Rev. | Average | % of Rev. Above/Below | Median |
|---|---|---|---|---|---|---|---|---|---|
| Gross Revenue | 181,459 | 100.0% | 137,586 | 100.0% | 156,307 | 100.0% | 158,451 | 100.0% 1/2 | 156,307 |
| Cost of Goods Sold | 19,269 | 10.6% | 12,047 | 8.8% | 16,452 | 10.5% | 15,922 | 10.0% 2/1 | 16,452 |
| Gross Profit | 162,190 | 89.4% | 125,539 | 91.2% | 139,855 | 89.5% | 142,528 | 90.0% 1/2 |  |
| Expenses |  |  |  |  |  |  |  |  |  |
| Advertising & Marketing | 8,234 | 4.5% | 8,308 | 6.0% | 12,293 | 7.9% | 9,612 | 6.1% 1/2 | 8,308 |
| Insurance | 1,382 | 0.8% | 1,094 | 0.8% | 1,731 | 1.1% | 1,402 | 0.9% 1/2 | 1,382 |
| Office Expenses | 2,649 | 1.5% | 3,248 | 2.4% | 2,866 | 1.8% | 2,921 | 1.8% 1/2 | 2,866 |
| Payroll Expenses | 27,191 | 15.0% | 25,280 | 18.4% | 29,034 | 18.6% | 27,169 | 17.1% 2/1 | 27,191 |
| Rent & Lease | 13,078 | 7.2% | 13,832 | 10.1% | 23,276 | 14.9% | 16,728 | 10.6% 1/2 | 13,832 |
| Repairs & Maintenance | 679 | 0.4% | 329 | 0.2% | -- | 0.0% | 336 | 0.2% 1/2 | 329 |
| Taxes | -- | 0.0% | -- | 0.0% | -- | 0.0% | -- | 0.0% | -- |
| Utilities | 3,866 | 2.1% | 2,920 | 2.1% | 6,188 | 4.0% | 4,325 | 2.7% 1/2 | 3,866 |
| Total Expenses | 57,079 | 31.5% | 55,011 | 40.0% | 75,389 | 48.2% | 62,493 | 39.4% 1/2 | 57,079 |
| Net Operating Income | 105,112 | 57.9% | 70,528 | 51.3% | 64,466 | 41.2% | 80,035 | 50.5% 1/2 | 70,528 |
| Estimated Fees |  |  |  |  |  |  |  |  |  |
| Royalties | 12,702 | 7.0% | 9,631 | 7.0% | 10,941 | 7.0% | 11,092 | 7.0% 1/2 | 10,941 |
| Brand Fund | 1,815 | 1.0% | 1,376 | 1.0% | 1,563 | 1.0% | 1,585 | 1.0% 1/2 | 1,563 |
| Total Estimated Fees | 14,517 | 8.0% | 11,007 | 8.0% | 12,505 | 8.0% | 12,676 | 8.0% 1/2 | 12,505 |
| Net Income Adjusted, OO | 90,595 | 49.9% | 59,521 | 43.3% | 51,962 | 33.2% | 67,359 | 42.5% 1/2 | 59,521 |
| Studio Manager Payroll Expenses | 17,295 | 9.5% | 12,672 | 9.2% | 14,441 | 9.2% | 8,882 | 5.6% 3/0 | 14,441 |
| Net Income Adjusted, Investor | 73,300 | 40.4% | 46,849 | 34.1% | 37,520 | 24.0% | 58,477 | 36.9% 1/2 | 46,849 |
#### **Explanatory Notes to Tables 1 and 2**

- 1. *Gross Sales* means all gross receipts, less tips and sales tax and represents the amount upon which will base your Royalty Fee, Local Advertising Requirement and Fund Contribution under your Franchise Agreement with us.
- 2. *COGS* means all variable cost inputs to facilitate customer sales, including equipmentrelated consumables, medical supplies and other usage-based costs.
- 3. *Gross Profit* means Gross Sales less COGS.
- 4. *Advertising and Marketing* means the actual local marketing expenditures of the location. Your requirements will include \$12,000 of Presale Marketing and an annual Local Marketing Requirement of \$2500 per month (\$30,000 per year).
- 5. *Insurance* means the actual amounts expended on insurance in the operation of the Studio.
- 6. *Office Expenses* means general cleaning supplies/services, office supplies, postage, and software.
- 7. *Payroll Expenses* means all hourly and salaried labor excluding general managers, including based wages, payroll taxes, and benefits. This definition excludes the cost of multi-unit managers.

- 8. *Rent and Lease* means base rent and all related NNN (triple net) costs, including common area maintenance, insurance, and tax-related obligations under the Lease.
- 9. *Repairs and Maintenance* means all standard maintenance items, including HVAC maintenance, electrical maintenance, necessary repair items, and any equipment repairs.
- 10. *Taxes* means all taxes, including property taxes, incurred in the operation of the Studio.
- 11. *Utilities* means the following utility expenses electric, water, power, internet and phone.
- 12.

Source: Item 19 — FINANCIAL PERFORMANCE REPRESENTATIONS (FDD pages 60–63)

Question 10

What was the average total estimated fees, including royalties and brand fund contributions, for Degree Wellness studios?

Accepted Answer

ational characteristics as a those being offered pursuant to this disclosure document and do not otherwise materially differ from what you would operate as a franchisee.

|  | Studio 1 | % of Rev. | Studio 3 | % of Rev. | Studio 4 | % of Rev. | Average | % of Rev. Above/Below | Median |
|---|---|---|---|---|---|---|---|---|---|
| Gross Revenue | 181,459 | 100.0% | 137,586 | 100.0% | 156,307 | 100.0% | 158,451 | 100.0% 1/2 | 156,307 |
| Cost of Goods Sold | 19,269 | 10.6% | 12,047 | 8.8% | 16,452 | 10.5% | 15,922 | 10.0% 2/1 | 16,452 |
| Gross Profit | 162,190 | 89.4% | 125,539 | 91.2% | 139,855 | 89.5% | 142,528 | 90.0% 1/2 |  |
| Expenses |  |  |  |  |  |  |  |  |  |
| Advertising & Marketing | 8,234 | 4.5% | 8,308 | 6.0% | 12,293 | 7.9% | 9,612 | 6.1% 1/2 | 8,308 |
| Insurance | 1,382 | 0.8% | 1,094 | 0.8% | 1,731 | 1.1% | 1,402 | 0.9% 1/2 | 1,382 |
| Office Expenses | 2,649 | 1.5% | 3,248 | 2.4% | 2,866 | 1.8% | 2,921 | 1.8% 1/2 | 2,866 |
| Payroll Expenses | 27,191 | 15.0% | 25,280 | 18.4% | 29,034 | 18.6% | 27,169 | 17.1% 2/1 | 27,191 |
| Rent & Lease | 13,078 | 7.2% | 13,832 | 10.1% | 23,276 | 14.9% | 16,728 | 10.6% 1/2 | 13,832 |
| Repairs & Maintenance | 679 | 0.4% | 329 | 0.2% | -- | 0.0% | 336 | 0.2% 1/2 | 329 |
| Taxes | -- | 0.0% | -- | 0.0% | -- | 0.0% | -- | 0.0% | -- |
| Utilities | 3,866 | 2.1% | 2,920 | 2.1% | 6,188 | 4.0% | 4,325 | 2.7% 1/2 | 3,866 |
| Total Expenses | 57,079 | 31.5% | 55,011 | 40.0% | 75,389 | 48.2% | 62,493 | 39.4% 1/2 | 57,079 |
| Net Operating Income | 105,112 | 57.9% | 70,528 | 51.3% | 64,466 | 41.2% | 80,035 | 50.5% 1/2 | 70,528 |
| Estimated Fees |  |  |  |  |  |  |  |  |  |
| Royalties | 12,702 | 7.0% | 9,631 | 7.0% | 10,941 | 7.0% | 11,092 | 7.0% 1/2 | 10,941 |
| Brand Fund | 1,815 | 1.0% | 1,376 | 1.0% | 1,563 | 1.0% | 1,585 | 1.0% 1/2 | 1,563 |
| Total Estimated Fees | 14,517 | 8.0% | 11,007 | 8.0% | 12,505 | 8.0% | 12,676 | 8.0% 1/2 | 12,505 |
| Net Income Adjusted, OO | 90,595 | 49.9% | 59,521 | 43.3% | 51,962 | 33.2% | 67,359 | 42.5% 1/2 | 59,521 |
| Studio Manager Payroll Expenses | 17,295 | 9.5% | 12,672 | 9.2% | 14,441 | 9.2% | 8,882 | 5.6% 3/0 | 14,441 |
| Net Income Adjusted, Investor | 73,300 | 40.4% | 46,849 | 34.1% | 37,520 | 24.0% | 58,477 | 36.9% 1/2 | 46,849 |
#### **Explanatory Notes to Tables 1 and 2**

- 1. *Gross Sales* means all gross receipts, less tips and sales tax and represents the amount upon which will base your Royalty Fee, Local Advertising Requirement and Fund Contribution under your Franchise Agreement with us.
- 2. *COGS* means all variable cost inputs to facilitate customer sales, including equipmentrelated consumables, medical supplies and other usage-based costs.
- 3. *Gross Profit* means Gross Sales less COGS.
- 4. *Advertising and Marketing* means the actual local marketing expenditures of the location. Your requirements will include \$12,000 of Presale Marketing and an annual Local Marketing Requirement of \$2500 per month (\$30,000 per year).
- 5. *Insurance* means the actual amounts expended on insurance in the operation of the Studio.
- 6. *Office Expenses* means general cleaning supplies/services, office supplies, postage, and software.
- 7. *Payroll Expenses* means all hourly and salaried labor excluding general managers, including based wages, payroll taxes, and benefits. This definition excludes the cost of multi-unit managers.

- 8. *Rent and Lease* means base rent and all related NNN (triple net) costs, including common area maintenance, insurance, and tax-related obligations under the Lease.
- 9. *Repairs and Maintenance* means all standard maintenance items, including HVAC maintenance, electrical maintenance, necessary repair items, and any equipment repairs.
- 10. *Taxes* means all taxes, including property taxes, incurred in the operation of the Studio.
- 11. *Utilities* means the following utility expenses electric, water, power, internet and phone.
- 12.

Source: Item 19 — FINANCIAL PERFORMANCE REPRESENTATIONS (FDD pages 60–63)

Question 11

What was the average total expenses for the Degree Wellness locations included in Chart 2 during the 2025 Measurement Period?

Accepted Answer

|  | Studio 1 | % of Rev. | Studio 3 | % of Rev. | Studio 4 | % of Rev. | Average | % of Rev. Above/Below | Median |
|---|---|---|---|---|---|---|---|---|---|
| Gross Revenue | 181,459 | 100.0% | 137,586 | 100.0% | 156,307 | 100.0% | 158,451 | 100.0% 1/2 | 156,307 |
| Cost of Goods Sold | 19,269 | 10.6% | 12,047 | 8.8% | 16,452 | 10.5% | 15,922 | 10.0% 2/1 | 16,452 |
| Gross Profit | 162,190 | 89.4% | 125,539 | 91.2% | 139,855 | 89.5% | 142,528 | 90.0% 1/2 |  |
| Expenses |  |  |  |  |  |  |  |  |  |
| Advertising & Marketing | 8,234 | 4.5% | 8,308 | 6.0% | 12,293 | 7.9% | 9,612 | 6.1% 1/2 | 8,308 |
| Insurance | 1,382 | 0.8% | 1,094 | 0.8% | 1,731 | 1.1% | 1,402 | 0.9% 1/2 | 1,382 |
| Office Expenses | 2,649 | 1.5% | 3,248 | 2.4% | 2,866 | 1.8% | 2,921 | 1.8% 1/2 | 2,866 |
| Payroll Expenses | 27,191 | 15.0% | 25,280 | 18.4% | 29,034 | 18.6% | 27,169 | 17.1% 2/1 | 27,191 |
| Rent & Lease | 13,078 | 7.2% | 13,832 | 10.1% | 23,276 | 14.9% | 16,728 | 10.6% 1/2 | 13,832 |
| Repairs & Maintenance | 679 | 0.4% | 329 | 0.2% | -- | 0.0% | 336 | 0.2% 1/2 | 329 |
| Taxes | -- | 0.0% | -- | 0.0% | -- | 0.0% | -- | 0.0% | -- |
| Utilities | 3,866 | 2.1% | 2,920 | 2.1% | 6,188 | 4.0% | 4,325 | 2.7% 1/2 | 3,866 |
| Total Expenses | 57,079 | 31.5% | 55,011 | 40.0% | 75,389 | 48.2% | 62,493 | 39.4% 1/2 | 57,079 |
| Net Operating Income | 105,112 | 57.9% | 70,528 | 51.3% | 64,466 | 41.2% | 80,035 | 50.5% 1/2 | 70,528 |
| Estimated Fees |  |  |  |  |  |  |  |  |  |
| Royalties | 12,702 | 7.0% | 9,631 | 7.0% | 10,941 | 7.0% | 11,092 | 7.0% 1/2 | 10,941 |
| Brand Fund | 1,815 | 1.0% | 1,376 | 1.0% | 1,563 | 1.0% | 1,585 | 1.0% 1/2 | 1,563 |
| Total Estimated Fees | 14,517 | 8.0% | 11,007 | 8.0% | 12,505 | 8.0% | 12,676 | 8.0% 1/2 | 12,505 |
| Net Income Adjusted, OO | 90,595 | 49.9% | 59,521 | 43.3% | 51,962 | 33.2% | 67,359 | 42.5% 1/2 | 59,521 |
| Studio Manager Payroll Expenses | 17,295 | 9.5% | 12,672 | 9.2% | 14,441 | 9.2% | 8,882 | 5.6% 3/0 | 14,441 |
| Net Income Adjusted, Investor | 73,300 | 40.4% | 46,849 | 34.1% | 37,520 | 24.0% | 58,477 | 36.9% 1/2 | 46,849 |

Source: Item 19 — FINANCIAL PERFORMANCE REPRESENTATIONS (FDD pages 60–63)

Question 12

What does the Grand Total initial investment for a Degree Wellness franchise include?

Accepted Answer

TMENT YOUR ESTIMATED INITIAL INVESTMENT**

## Single Studio

| Type of Expenditure | Amount | Method of Payment | When Due | To Whom Payment Is To |
|---|---|---|---|---|
|  |  |  |  | Be Made |
| Franchise License Fee (1) | $49,500 to $49,500 | Lump Sum | At signing of Franchise Agreement | Us |
| Initial Training Fee | $8,000 to $8,000 | Lump Sum | At signing of Franchise Agreement | Us |
| Training Program Expenses (2) | $1,500 to $5,000 | As agreed | As incurred | Third-party providers, including airline, lodging and meals. |
| Studio Layout, Architect, Engineer, Drawings, and Permits (3) | $19,250 to $21,500 | As agreed | As incurred | Approved Supplier and Third Party Providers |
| R/E & Construction Mgt | $20,500 to $20,500 | Lump Sum | As incurred | Approved Supplier |
| Fee (4) |  |  |  |  |
| Lease - Security Deposit | $11,318 to $34,668 | As agreed | When securing the | Third Party Provider |
| (3 months) (5) |  |  | premises |  |
| Initial Equipment Package | $13,620 to $145,709 As agreed, invoiced or |  | As incurred | Approved Supplier |
| (6) | arranged |  |  |  |
| Leasehold Improvements | $138,952 to $384,621 | As arranged | As invoiced | Third Party Provider |
| (7) |  |  |  |  |
| Furniture, Fixtures, and | $29,629 to $40,019 | As agreed | As invoiced | Us and Approved Supplier |
| Equipment (FFE) (8) |  |  |  |  |
| Point of Sale System, | $3,850 to $4,250 | As agreed | As incurred | Approved Supplier |
| Hardware, Software and |  |  |  |  |
| Installation (9) |  |  |  |  |
| Initial Inventory & | $9,531 to $11,092 | As agreed, invoiced or | As incurred | Approved Supplier |
| Supplies (10) |  | arranged |  |  |
| Professional Fees & | $2,586 to $5,000 | As agreed | As incurred | Approved Supplier |
| Licenses (11) |  |  |  |  |
| Presale Marketing (12) | $12,000 to $15,458 | As agreed | Before opening | Third Party Provider |
| Insurance (13) | $1,023 to $2,340 | As agreed | As invoiced | Third Party Provider |
| Exterior Signage (14) | $3,318 to $9,675 | As agreed | As incurred | Approved Supplier |![](_page_21_Picture_4.jpeg)

| Additional Funds (3 Months)(15) |  | Varies, but expected within first 3 months of operations | Business personnel; Landlord; Approved Suppliers; Third-Party Provider(s) and/or Providers; Utility Providers; Us; Etc. |
|---|---|---|---|
| Total Estimated Initial | $348,487 to $797,332 |  |  |
| Investment |  |  |  |
## Multi-Unit Development

| TYPE OF EXPENDITURE                                 | AMOUNT                                                                         | METHOD OF PAYMENT                                                                                                                                                                                                                                                                                                                   | WHEN DUE                                      | TO WHOM PAYMENT IS TO BE MADE |
|--------------------------------------------------------|--------------------------------------------------------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-----------------------------------------------|-------------------------------------|
| Development Fee                                        | \$91,500 (2 Studios) \$129,500 (3Studios)                                   | Lump sum                                                                                                                                                                                                                                                                                                                                  | Upon execution of Development Agreement | Us                                  |
| Initial Investment to Open Initial/Single Studio | \$298,987 to \$747,832

Source: Item 7 — Estimated Initial Investment (FDD pages 22–26)

Question 13

For the Degree Wellness locations included in Chart 2, what was the average gross revenue during the first quarter of 2025?

Accepted Answer

|  | Studio 1 | % of Rev. | Studio 3 | % of Rev. | Studio 4 | % of Rev. | Average | % of Rev. Above/Below | Median |
|---|---|---|---|---|---|---|---|---|---|
| Gross Revenue | 181,459 | 100.0% | 137,586 | 100.0% | 156,307 | 100.0% | 158,451 | 100.0% 1/2 | 156,307 |

Source: Item 19 — FINANCIAL PERFORMANCE REPRESENTATIONS (FDD pages 60–63)

Question 14

What was the median gross revenue for the Degree Wellness locations included in Chart 2 during the first quarter of 2025?

Accepted Answer

|  | Studio 1 | % of Rev. | Studio 2 | % of Rev. | Average/Median | % of Rev. |
|---|---|---|---|---|---|---|
| Gross Revenue | 738,070 | 100.0% | 482,725 | 100.0% | 610,397 | 100.0% |
| Cost of Goods Sold | 66,837 | 9.1% | 43,044 | 8.9% | 54,940 | 9.0% |
| Gross Profit | 671,233 | 90.9% | 439,682 | 91.1% | 555,457 | 91.0% |
| Expenses |  |  |  |  |  |  |
| Advertising & Marketing | 31,900 | 4.3% | 51,106 | 10.6% | 41,503 | 6.8% |
| Insurance | 5,275 | 0.7% | 3,412 | 0.7% | 4,343 | 0.7% |
| Office Expenses | 10,058 | 1.4% | 10,305 | 2.1% | 10,182 | 1.7% |
| Payroll Expenses | 137,648 | 18.6% | 93,674 | 19.4% | 115,661 | 18.9% |
| Rent & Lease | 56,401 | 7.6% | 98,476 | 20.4% | 77,439 | 12.7% |
| Repairs & Maintenance | 4,796 | 0.6% | 4,071 | 0.8% | 4,434 | 0.7% |
| Taxes | 4,446 | 0.6% | 2,932 | 0.6% | 3,689 | 0.6% |
| Utilities | 17,030 | 2.3% | 2,791 | 0.6% | 9,910 | 1.6% |
| Total Expenses | 267,554 | 36.3% | 266,767 | 55.3% | 267,160 | 43.8% |
| Net Operating Income | 403,679 | 54.7% | 172,915 | 35.8% | 288,297 | 47.2% |
| Estimated Fees |  |  |  |  |  |  |
| Royalties | 51,665 | 7.0% | 33,791 | 7.0% | 42,728 | 7.0% |
| Brand Fund | 7,381 | 1.0% | 4,827 | 1.0% | 6,104 | 1.0% |
| Total Estimated Fees | 59,046 | 8.0% | 38,618 | 8.0% | 48,832 | 8.0% |
| Net Income Adjusted, OO | 344,633 | 46.7% | 134,297 | 27.8% | 239,465 | 39.2% |
| Studio Manager Payroll Expenses | 61,096 | 8.3% | 50,986 | 10.6% | 56,041 | 9.2% |
| Net Income Adjusted, Investor | 283,537 | 38.4% | 83,311 | 17.3% | 183,424 | 30.0% |
![](_page_59_Picture_7.jpeg)

#### **Chart 2 Profit and Loss for First Quarter 2025**

Chart 2 discloses the historical performance of 3 affiliate-owned locations for the first quarter of 2025 (the "2025 Measurement Period"). Studio 2 was excluded from this chart on the basis that it is in the process of being relocated and was in the process of winding down operations during the 2025 Measurement period. Except for Studio 2, each disclosed location has the same financial and operational characteristics as a those being offered pursuant to this disclosure document and do not otherwise materially differ from what you would operate as a franchisee.

Source: Item 19 — FINANCIAL PERFORMANCE REPRESENTATIONS (FDD pages 60–63)

Question 15

What was the median net operating income for the Degree Wellness locations included in Chart 2 during the first quarter of 2025?

Accepted Answer

|  | Studio 1 | % of Rev. | Studio 2 | % of Rev. | Average/Median | % of Rev. |
|---|---|---|---|---|---|---|
| Gross Revenue | 738,070 | 100.0% | 482,725 | 100.0% | 610,397 | 100.0% |
| Cost of Goods Sold | 66,837 | 9.1% | 43,044 | 8.9% | 54,940 | 9.0% |
| Gross Profit | 671,233 | 90.9% | 439,682 | 91.1% | 555,457 | 91.0% |
| Expenses |  |  |  |  |  |  |
| Advertising & Marketing | 31,900 | 4.3% | 51,106 | 10.6% | 41,503 | 6.8% |
| Insurance | 5,275 | 0.7% | 3,412 | 0.7% | 4,343 | 0.7% |
| Office Expenses | 10,058 | 1.4% | 10,305 | 2.1% | 10,182 | 1.7% |
| Payroll Expenses | 137,648 | 18.6% | 93,674 | 19.4% | 115,661 | 18.9% |
| Rent & Lease | 56,401 | 7.6% | 98,476 | 20.4% | 77,439 | 12.7% |
| Repairs & Maintenance | 4,796 | 0.6% | 4,071 | 0.8% | 4,434 | 0.7% |
| Taxes | 4,446 | 0.6% | 2,932 | 0.6% | 3,689 | 0.6% |
| Utilities | 17,030 | 2.3% | 2,791 | 0.6% | 9,910 | 1.6% |
| Total Expenses | 267,554 | 36.3% | 266,767 | 55.3% | 267,160 | 43.8% |
| Net Operating Income | 403,679 | 54.7% | 172,915 | 35.8% | 288,297 | 47.2% |
| Estimated Fees |  |  |  |  |  |  |
| Royalties | 51,665 | 7.0% | 33,791 | 7.0% | 42,728 | 7.0% |
| Brand Fund | 7,381 | 1.0% | 4,827 | 1.0% | 6,104 | 1.0% |
| Total Estimated Fees | 59,046 | 8.0% | 38,618 | 8.0% | 48,832 | 8.0% |
| Net Income Adjusted, OO | 344,633 | 46.7% | 134,297 | 27.8% | 239,465 | 39.2% |
| Studio Manager Payroll Expenses | 61,096 | 8.3% | 50,986 | 10.6% | 56,041 | 9.2% |
| Net Income Adjusted, Investor | 283,537 | 38.4% | 83,311 | 17.3% | 183,424 | 30.0% |

Source: Item 19 — FINANCIAL PERFORMANCE REPRESENTATIONS (FDD pages 60–63)

Question 16

What percentage of revenue is allocated to royalties for Degree Wellness, according to the average/median data?

Accepted Answer

2 has terminated its original lease and entered into a new lease. However, it has not yet completed its relocation.

**Chart 1 – Profit and Loss for Calendar Year 2024**

|  | Studio 1 | % of Rev. | Studio 2 | % of Rev. | Average/Median | % of Rev. |
|---|---|---|---|---|---|---|
| Gross Revenue | 738,070 | 100.0% | 482,725 | 100.0% | 610,397 | 100.0% |
| Cost of Goods Sold | 66,837 | 9.1% | 43,044 | 8.9% | 54,940 | 9.0% |
| Gross Profit | 671,233 | 90.9% | 439,682 | 91.1% | 555,457 | 91.0% |
| Expenses |  |  |  |  |  |  |
| Advertising & Marketing | 31,900 | 4.3% | 51,106 | 10.6% | 41,503 | 6.8% |
| Insurance | 5,275 | 0.7% | 3,412 | 0.7% | 4,343 | 0.7% |
| Office Expenses | 10,058 | 1.4% | 10,305 | 2.1% | 10,182 | 1.7% |
| Payroll Expenses | 137,648 | 18.6% | 93,674 | 19.4% | 115,661 | 18.9% |
| Rent & Lease | 56,401 | 7.6% | 98,476 | 20.4% | 77,439 | 12.7% |
| Repairs & Maintenance | 4,796 | 0.6% | 4,071 | 0.8% | 4,434 | 0.7% |
| Taxes | 4,446 | 0.6% | 2,932 | 0.6% | 3,689 | 0.6% |
| Utilities | 17,030 | 2.3% | 2,791 | 0.6% | 9,910 | 1.6% |
| Total Expenses | 267,554 | 36.3% | 266,767 | 55.3% | 267,160 | 43.8% |
| Net Operating Income | 403,679 | 54.7% | 172,915 | 35.8% | 288,297 | 47.2% |
| Estimated Fees |  |  |  |  |  |  |
| Royalties | 51,665 | 7.0% | 33,791 | 7.0% | 42,728 | 7.0% |
| Brand Fund | 7,381 | 1.0% | 4,827 | 1.0% | 6,104 | 1.0% |
| Total Estimated Fees | 59,046 | 8.0% | 38,618 | 8.0% | 48,832 | 8.0% |
| Net Income Adjusted, OO | 344,633 | 46.7% | 134,297 | 27.8% | 239,465 | 39.2% |
| Studio Manager Payroll Expenses | 61,096 | 8.3% | 50,986 | 10.6% | 56,041 | 9.2% |
| Net Income Adjusted, Investor | 283,537 | 38.4% | 83,311 | 17.3% | 183,424 | 30.0% |
![](_page_59_Picture_7.jpeg)

#### **Chart 2 Profit and Loss for First Quarter 2025**

Chart 2 discloses the historical performance of 3 affiliate-owned locations for the first quarter of 2025 (the "2025 Measurement Period"). Studio 2 was excluded from this chart on the basis that it is in the process of being relocated and was in the process of winding down operations during the 2025 Measurement period. Except for Studio 2, each disclosed location has the same financial and operational characteristics as a those being offered pursuant to this disclosure document and do not otherwise materially differ from what you would operate as a franchisee.

Source: Item 19 — FINANCIAL PERFORMANCE REPRESENTATIONS (FDD pages 60–63)

Question 17

What percentage of revenue was allocated to royalties on average for the Degree Wellness locations in Chart 2?

Accepted Answer

|  | Studio 1 | % of Rev. | Studio 3 | % of Rev. | Studio 4 | % of Rev. | Average | % of Rev. Above/Below | Median |
|---|---|---|---|---|---|---|---|---|---|
| Gross Revenue | 181,459 | 100.0% | 137,586 | 100.0% | 156,307 | 100.0% | 158,451 | 100.0% 1/2 | 156,307 |
| Cost of Goods Sold | 19,269 | 10.6% | 12,047 | 8.8% | 16,452 | 10.5% | 15,922 | 10.0% 2/1 | 16,452 |
| Gross Profit | 162,190 | 89.4% | 125,539 | 91.2% | 139,855 | 89.5% | 142,528 | 90.0% 1/2 |  |
| Expenses |  |  |  |  |  |  |  |  |  |
| Advertising & Marketing | 8,234 | 4.5% | 8,308 | 6.0% | 12,293 | 7.9% | 9,612 | 6.1% 1/2 | 8,308 |
| Insurance | 1,382 | 0.8% | 1,094 | 0.8% | 1,731 | 1.1% | 1,402 | 0.9% 1/2 | 1,382 |
| Office Expenses | 2,649 | 1.5% | 3,248 | 2.4% | 2,866 | 1.8% | 2,921 | 1.8% 1/2 | 2,866 |
| Payroll Expenses | 27,191 | 15.0% | 25,280 | 18.4% | 29,034 | 18.6% | 27,169 | 17.1% 2/1 | 27,191 |
| Rent & Lease | 13,078 | 7.2% | 13,832 | 10.1% | 23,276 | 14.9% | 16,728 | 10.6% 1/2 | 13,832 |
| Repairs & Maintenance | 679 | 0.4% | 329 | 0.2% | -- | 0.0% | 336 | 0.2% 1/2 | 329 |
| Taxes | -- | 0.0% | -- | 0.0% | -- | 0.0% | -- | 0.0% | -- |
| Utilities | 3,866 | 2.1% | 2,920 | 2.1% | 6,188 | 4.0% | 4,325 | 2.7% 1/2 | 3,866 |
| Total Expenses | 57,079 | 31.5% | 55,011 | 40.0% | 75,389 | 48.2% | 62,493 | 39.4% 1/2 | 57,079 |
| Net Operating Income | 105,112 | 57.9% | 70,528 | 51.3% | 64,466 | 41.2% | 80,035 | 50.5% 1/2 | 70,528 |
| Estimated Fees |  |  |  |  |  |  |  |  |  |
| Royalties | 12,702 | 7.0% | 9,631 | 7.0% | 10,941 | 7.0% | 11,092 | 7.0% 1/2 | 10,941 |
| Brand Fund | 1,815 | 1.0% | 1,376 | 1.0% | 1,563 | 1.0% | 1,585 | 1.0% 1/2 | 1,563 |
| Total Estimated Fees | 14,517 | 8.0% | 11,007 | 8.0% | 12,505 | 8.0% | 12,676 | 8.0% 1/2 | 12,505 |
| Net Income Adjusted, OO | 90,595 | 49.9% | 59,521 | 43.3% | 51,962 | 33.2% | 67,359 | 42.5% 1/2 | 59,521 |
| Studio Manager Payroll Expenses | 17,295 | 9.5% | 12,672 | 9.2% | 14,441 | 9.2% | 8,882 | 5.6% 3/0 | 14,441 |
| Net Income Adjusted, Investor | 73,300 | 40.4% | 46,849 | 34.1% | 37,520 | 24.0% | 58,477 | 36.9% 1/2 | 46,849 |

Source: Item 19 — FINANCIAL PERFORMANCE REPRESENTATIONS (FDD pages 60–63)

Question 18

What percentage of revenue was allocated to Royalties on average for Degree Wellness studios?

Accepted Answer

anager will report directly to you. Our affiliate locations report into high level manager whose expenses are not disclosed given this role is not required or recommended.
- 14. *Estimated Royalties* (Calculated at 7% of *Gross Sales*) means the calculated estimated Royalty Fees a location would have been required to pay had it been a franchise operating pursuant to this Franchise Disclosure Document. These affiliate owned location will contributed to the Fund in the future.
- 15. *Estimated Brand Fund Contribution* (Calculated at 1% of Adjusted Gross Sales) means the calculated estimated Brand Fund expenditures a location would have been required to pay had it been a franchise operating pursuant to this Franchise Disclosure Document.

Source: Item 19 — FINANCIAL PERFORMANCE REPRESENTATIONS (FDD pages 60–63)

Question 19

What percentage of revenue was spent on advertising and marketing on average for the Degree Wellness locations in Chart 2?

Accepted Answer

|  | Studio 1 | % of Rev. | Studio 3 | % of Rev. | Studio 4 | % of Rev. | Average | % of Rev. Above/Below |
|---|---|---|---|---|---|---|---|---|
| Advertising & Marketing | 8,234 | 4.5% | 8,308 | 6.0% | 12,293 | 7.9% | 9,612 | 6.1% 1/2 |

Source: Item 19 — FINANCIAL PERFORMANCE REPRESENTATIONS (FDD pages 60–63)

Question 20

What percentage of revenue was spent on Cost of Goods Sold on average across the Degree Wellness studios?

Accepted Answer

|  | Studio 1 | % of Rev. | Studio 2 | % of Rev. | Average/Median | % of Rev. |
|---|---|---|---|---|---|---|
| Gross Revenue | 738,070 | 100.0% | 482,725 | 100.0% | 610,397 | 100.0% |
| Cost of Goods Sold | 66,837 | 9.1% | 43,044 | 8.9% | 54,940 | 9.0% |
| Gross Profit | 671,233 | 90.9% | 439,682 | 91.1% | 555,457 | 91.0% |

|  | Studio 1 | % of Rev. | Studio 3 | % of Rev. | Studio 4 | % of Rev. | Average | % of Rev. Above/Below | Median |
|---|---|---|---|---|---|---|---|---|---|
| Gross Revenue | 181,459 | 100.0% | 137,586 | 100.0% | 156,307 | 100.0% | 158,451 | 100.0% 1/2 | 156,307 |
| Cost of Goods Sold | 19,269 | 10.6% | 12,047 | 8.8% | 16,452 | 10.5% | 15,922 | 10.0% 2/1 | 16,452 |

- 2. *COGS* means all variable cost inputs to facilitate customer sales, including equipmentrelated consumables, medical supplies and other usage-based costs.

Studio 2 however, although it operated under the same trademarks, is unable to offer several key services and features. Namely, it does not offer contrast therapy or cold plunge, and it does not have showers.

Source: Item 19 — FINANCIAL PERFORMANCE REPRESENTATIONS (FDD pages 60–63)

Question 21

What percentage of revenue was spent on Payroll Expenses on average across the Degree Wellness studios?

Accepted Answer

2 has terminated its original lease and entered into a new lease. However, it has not yet completed its relocation.

**Chart 1 – Profit and Loss for Calendar Year 2024**

|  | Studio 1 | % of Rev. | Studio 2 | % of Rev. | Average/Median | % of Rev. |
|---|---|---|---|---|---|---|
| Gross Revenue | 738,070 | 100.0% | 482,725 | 100.0% | 610,397 | 100.0% |
| Cost of Goods Sold | 66,837 | 9.1% | 43,044 | 8.9% | 54,940 | 9.0% |
| Gross Profit | 671,233 | 90.9% | 439,682 | 91.1% | 555,457 | 91.0% |
| Expenses |  |  |  |  |  |  |
| Advertising & Marketing | 31,900 | 4.3% | 51,106 | 10.6% | 41,503 | 6.8% |
| Insurance | 5,275 | 0.7% | 3,412 | 0.7% | 4,343 | 0.7% |
| Office Expenses | 10,058 | 1.4% | 10,305 | 2.1% | 10,182 | 1.7% |
| Payroll Expenses | 137,648 | 18.6% | 93,674 | 19.4% | 115,661 | 18.9% |
| Rent & Lease | 56,401 | 7.6% | 98,476 | 20.4% | 77,439 | 12.7% |
| Repairs & Maintenance | 4,796 | 0.6% | 4,071 | 0.8% | 4,434 | 0.7% |
| Taxes | 4,446 | 0.6% | 2,932 | 0.6% | 3,689 | 0.6% |
| Utilities | 17,030 | 2.3% | 2,791 | 0.6% | 9,910 | 1.6% |
| Total Expenses | 267,554 | 36.3% | 266,767 | 55.3% | 267,160 | 43.8% |
| Net Operating Income | 403,679 | 54.7% | 172,915 | 35.8% | 288,297 | 47.2% |
| Estimated Fees |  |  |  |  |  |  |
| Royalties | 51,665 | 7.0% | 33,791 | 7.0% | 42,728 | 7.0% |
| Brand Fund | 7,381 | 1.0% | 4,827 | 1.0% | 6,104 | 1.0% |
| Total Estimated Fees | 59,046 | 8.0% | 38,618 | 8.0% | 48,832 | 8.0% |
| Net Income Adjusted, OO | 344,633 | 46.7% | 134,297 | 27.8% | 239,465 | 39.2% |
| Studio Manager Payroll Expenses | 61,096 | 8.3% | 50,986 | 10.6% | 56,041 | 9.2% |
| Net Income Adjusted, Investor | 283,537 | 38.4% | 83,311 | 17.3% | 183,424 | 30.0% |
![](_page_59_Picture_7.jpeg)

#### **Chart 2 Profit and Loss for First Quarter 2025**

Chart 2 discloses the historical performance of 3 affiliate-owned locations for the first quarter of 2025 (the "2025 Measurement Period"). Studio 2 was excluded from this chart on the basis that it is in the process of being relocated and was in the process of winding down operations during the 2025 Measurement period. Except for Studio 2, each disclosed location has the same financial and operational characteristics as a those being offered pursuant to this disclosure document and do not otherwise materially differ from what you would operate as a franchisee.

|  | Studio 1 | % of Rev. | Studio 3 | % of Rev. | Studio 4 | % of Rev. | Average | % of Rev. Above/Below | Median |
|---|---|---|---|---|---|---|---|---|---|
| Gross Revenue | 181,459 | 100.0% | 137,586 | 100.0% | 156,307 | 100.0% | 158,451 | 100.0% 1/2 | 156,307 |
| Cost of Goods Sold | 19,269 | 10.6% | 12,047 | 8.8% | 16,452 | 10.5% | 15,922 | 10.0% 2/1 | 16,452 |
| Gross Profit | 162,190 | 89.4% | 125,539 | 91.2% | 139,855 | 89.5% | 142,528 | 90.0% 1/2 |  |
| Expenses |  |  |  |  |  |  |  |  |  |
| Advertising & Marketing | 8,234 | 4.5% | 8,308 | 6.0% | 12,293 | 7.9% | 9,612 | 6.1% 1/2 | 8,308 |
| Insurance | 1,382 | 0.8% | 1,094 | 0.8% | 1,731 | 1.1% | 1,402 | 0.9% 1/2 | 1,382 |
| Office Expenses | 2,649 | 1.5% | 3,248 | 2.4% | 2,866 | 1.8% | 2,921 | 1.8% 1/2 | 2,866 |
| Payroll Expenses | 27,191 | 15.0% | 25,280 | 18.4% | 29,034 | 18.6% | 27,169 | 17.1% 2/1 | 27,191 |
| Rent & Lease | 13,078 | 7.2% | 13,832 | 10.1% | 23,276 | 14.9% | 16,728 | 10.6% 1/2 | 13,832 |
| Repairs & Maintenance | 679 | 0.4% | 329 | 0.2% | -- | 0.0% | 336 | 0.2% 1/2 | 329 |
| Taxes | -- | 0.0% | -- | 0.0% | -- | 0.0% | -- | 0.0% | -- |
| Utilities | 3,866 | 2.1% | 2,920 | 2.1% | 6,188 | 4.0% | 4,325 | 2.7% 1/2 | 3,866 |
| Total Expenses | 57,079 | 31.5% | 55,011 | 40.0% | 75,389 | 48.2% | 62,493 | 39.4% 1/2 | 57,079 |
| Net Operating Income | 105,112 | 57.9% | 70,528 | 51.3% | 64,466 | 41.2% | 80,035 | 50.5% 1/2 | 70,528 |
| Estimated Fees |  |  |  |  |  |  |  |  |  |
| Royalties | 12,702 | 7.0% | 9,631 | 7.0% | 10,941 | 7.0% | 11,092 | 7.0% 1/2 | 10,941 |
| Brand Fund | 1,815 | 1.0% | 1,376 | 1.0% | 1,563 | 1.0% | 1,585 | 1.0% 1/2 | 1,563 |
| Total Estimated Fees | 14,517 | 8.0% | 11,007 | 8.0% | 12,505 | 8.0% | 12,676 | 8.0% 1/2 | 12,505 |
| Net Income Adjusted, OO | 90,595 | 49.9% | 59,521 | 43.3% | 51,962 | 33.2% | 67,359 | 42.5% 1/2 |

Source: Item 19 — FINANCIAL PERFORMANCE REPRESENTATIONS (FDD pages 60–63)

Question 22

What percentage of revenue was spent on rent and lease for the average/median Degree Wellness studio?

Accepted Answer

[Item 19: FINANCIAL PERFORMANCE REPRESENTATIONS]

|  | Studio 1 | % of Rev. | Studio 3 | % of Rev. | Studio 4 | % of Rev. | Average | % of Rev. Above/Below | Median |
|---|---|---|---|---|---|---|---|---|---|
| Gross Revenue | 181,459 | 100.0% | 137,586 | 100.0% | 156,307 | 100.0% | 158,451 | 100.0% 1/2 | 156,307 |
| Cost of Goods Sold | 19,269 | 10.6% | 12,047 | 8.8% | 16,452 | 10.5% | 15,922 | 10.0% 2/1 | 16,452 |
| Gross Profit | 162,190 | 89.4% | 125,539 | 91.2% | 139,855 | 89.5% | 142,528 | 90.0% 1/2 |  |
| Expenses |  |  |  |  |  |  |  |  |  |
| Advertising & Marketing | 8,234 | 4.5% | 8,308 | 6.0% | 12,293 | 7.9% | 9,612 | 6.1% 1/2 | 8,308 |
| Insurance | 1,382 | 0.8% | 1,094 | 0.8% | 1,731 | 1.1% | 1,402 | 0.9% 1/2 | 1,382 |
| Office Expenses | 2,649 | 1.5% | 3,248 | 2.4% | 2,866 | 1.8% | 2,921 | 1.8% 1/2 | 2,866 |
| Payroll Expenses | 27,191 | 15.0% | 25,280 | 18.4% | 29,034 | 18.6% | 27,169 | 17.1% 2/1 | 27,191 |
| Rent & Lease | 13,078 | 7.2% | 13,832 | 10.1% | 23,276 | 14.9% | 16,728 | 10.6% 1/2 | 13,832 |

[Item 19: FINANCIAL PERFORMANCE REPRESENTATIONS]

|  | Studio 1 | % of Rev. | Studio 2 | % of Rev. | Average/Median | % of Rev. |
|---|---|---|---|---|---|---|
| Gross Revenue | 738,070 | 100.0% | 482,725 | 100.0% | 610,397 | 100.0% |
| Rent & Lease | 56,401 | 7.6% | 98,476 | 20.4% | 77,439 | 12.7% |

- 8. *Rent and Lease* means base rent and all related NNN (triple net) costs, including common area maintenance, insurance, and tax-related obligations under the Lease.

Chart 1 discloses the historical performance of each affiliate-owned location that was open for the entire 2024 calendar year (the "2024 Measurement Period"). The studio labelled Studio 1 has the same financial and operational characteristics as a those being offered pursuant to this disclosure document and do not otherwise materially differ from what you would operate as a franchisee. Studio 2 however, although it operated under the same trademarks, is unable to offer several key services and features. Namely, it does not offer contrast therapy or cold plunge, and it does not have showers. Studio 2 is being relocated to a new site in order to offer these services. As of the issuance date of this Disclosure document Studio 2 has terminated its original lease and entered into a new lease. However, it has not yet completed its relocation.

Source: Item 19 — FINANCIAL PERFORMANCE REPRESENTATIONS (FDD pages 60–63)

Question 23

What topics are covered in the franchise and related agreements for a Degree Wellness Studio franchise?

Accepted Answer

This table lists certain important provisions of the franchise and related agreements for your Studio franchise. You should read these provisions in the agreements attached to this Disclosure Document.

#### **THE FRANCHISE RELATIONSHIP**

Franchise Agreement

---

| Provision                                          | Section in Franchise Agreement | Summary                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|----------------------------------------------------|--------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  |  | Agreement, we may terminate the |
|  |  | Franchise Agreement. |
| i. Your obligations on termination/ non-renewal | Section 16                        | You must pay all amounts owed to us; refrain from using our Marks, return to us or destroy (as we specify) all customer lists, forms and materials bearing our Marks or relating to the franchise; de-identify the franchise premises; return the Operations Manual; comply with covenants against competition and the non solicitation, non-disparagement, and non-disclosure covenants in Section 9 of the Franchise Agreement; and cease using all confidential information.                                                                                                                                                                                                                                    |
|  |  | You irrevocably appoint us your |
|  |  | attorney-in-fact- |
|  |  | to de-identify your |
|  |  | franchise premises and enforce your |
|  |  | requirement to discontinue use of the |
|  |  | Marks if you do not perform these |
|  |  | obligations within 10 days of the |
|  |  | termination of your Agreement. |
|  |  | You |
|  |  | must |
|  |  | also |
|  |  | (1) |
|  |  | execute |
|  |  | any |
|  |  | documents |
|  |  | and |
|  |  | take |
|  |  | any |
|  |  | steps |
|  |  | necessary to delete your listings from |
|  |  | classified |
|  |  | telephone |
|  |  | directories, |
|  |  | disconnect, or, at our option, assign to |
|  |  | us all telephone numbers that have |
|  |  | been |
|  |  | used |
|  |  | in |
|  |  | your |
|  |  | Franchised |
|  |  | Business, assign to |
|  |  | us any URLs, |
|  |  | domain names, and social media and |
|  |  | social networking names that you |
|  |  | have used in connection with your |
|  |  | Franchised Business, and terminate |
|  |  | all other references that indicate you |
|  |  | are or ever were affiliated with us, and |
|  |  | (2) give us a final accounting for your |
|  |  | Studio, and you must maintain all |
|  |  | accounts and records for your Studio |
|  |  | for a period of not less than seven |
|  |  | years after final payment of any |
|  |  | amounts you owe to us, our affiliates, |
|  |  | and/or related persons, but you may |
|  |  | not |
|  |  | sell, |
|  |  | disclose, |
|  |  | or |
|  |  | otherwise |
| Provision                                     | Section in Franchise Agreement | Summary                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|-----------------------------------------------|--------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  |  | transfer |
|  |  | any |
|  |  | of |
|  |  | the |
|  |  | information |
|  |  | contained |
|  |  | in |
|  |  | those |
|  |  | accounts |
|  |  | and |
|  |  | records (other than patient records |
|  |  | needed for their continuing care) to, |
|  |  | or |
|  |  | for |
|  |  | use |
|  |  | by, |
|  |  | any |
|  |  | competitive |
|  |  | business. |
| j. Assignment of contract by us               | Section 14.3                         | Fully transferable by us.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
| k. "Transfer" by you-defined                  | Section 14                        | Transfer includes any voluntary, involuntary, direct or indirect assignment, sale, gift, exchange, grant of a security interest or change of ownership in the Franchise Agreement, the franchise or its assets, or any interest in the franchise.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
| l. Our approval of transfer by you            | Section 14.4                      | You may not transfer the Franchise Agreement, the franchise or its assets or any interest in the franchise without our approval. We will not unreasonably withhold approval if you are in full compliance with the Franchise Agreement.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
| m. Conditions for our approval of transfer | Section 14.5                      | If you propose to transfer the Franchise Agreement, the franchise or its assets, or any interest in the franchise, or if any of your Principal Owners proposes to transfer a controlling interest in you or make a transfer that is one of a series of transfers which taken together would constitute the transfer of a controlling interest, then you must apply to us for approval of such transfer and sign such forms and procedures as we have in effect at that time, the person or entity to whom you wish to make the transfer must apply to us for acceptance as a franchisee, and you must submit to us all of the information and documentation required for us to evaluate the proposed transfer. Also, the new owner must have sufficient business experience, |
| Provision                                                                       | Section in Franchise Agreement | Summary                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
|---------------------------------------------------------------------------------|--------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  |  | interest |
|  |  | within |
|  |  | 12 |
|  |  | months; |
|  |  | all |
|  |  | transfers are subject to provisions in |
|  |  | Franchise |
|  |  | Agreement |
|  |  | regulating |
|  |  | transfers. |
| q. Non-competition covenants during the term of the franchise                | Section 9.3 and 17.8           | Neither you, your Principal Owners, General Managers, nor any immediate family members of you or your Principal Owners may perform services for or have any interest in any competitive business.                                                                                                                                                                                                                                                                                                                   |
| r. Non-competition covenants after | Not applicable | Not applicable. |
| the franchise is terminated or |  |  |
| expires |  |  |
| s. Modification of the agreement | Section 20 | No |
|  |  | modifications |
|  |  | to |
|  |  | Franchise |
|  |  | Agreement unless you and we agree |
|  |  | in writing; we may amend Operations |
|  |  | Manual at any time. |
| t. Integration/merger clause | Section 20 | Only |
|  |  | the |
|  |  | Franchise |
|  |  | Agreement |
|  |  | applies (subject to state and federal |
|  |  | law); all other agreements or promises |
|  |  | not enforceable, except that nothing |
|  |  | in the Franchise Agreement will |
|  |  | operate to waive or disclaim your |
|  |  | right to rely on the representations |
|  |  | and claims asserted in this FDD. |
| u. Dispute resolution by arbitration or mediation                            | Section 17.9                         | Except for certain claims, we and you must arbitrate all disputes in Duvall, Florida (subject to state law) before a single arbitrator with the American Arbitration Association.                                                                                                                                                                                                                                                                                                                                         |
|  |  | Except as we elect to enforce the |
|  |  | Franchise |
|  |  | Agreement |
|  |  | or |
|  |  | to |
|  |  | seek |
|  |  | temporary or permanent injunctive |
|  |  | relief, before either party commences |
|  |  | an arbitration, the parties agree that, |
|  |  | as a condition precedent to the filing |
|  |  | or commencement of any arbitration, |
|  |  | they |
|  |  | will attempt to resolve any |
|  |  | dispute through internal mediation |
|  |  | between the partiesto be conducted in |
|  |  | a mutually agreeable location, or if no |
|  |  | such location is agreed upon within |
|  |  | 10 days after a request for mediation, |

Source: Item 17 — Renewal, Termination, Transfer, and Dispute Resolution (FDD pages 49–59)

Question 24

What is the total estimated initial investment range for a single Degree Wellness studio?

Accepted Answer

| TYPE OF EXPENDITURE                                 | AMOUNT                                                                         | METHOD OF PAYMENT                                                                                                                                                                                                                                                                                                                   | WHEN DUE                                      | TO WHOM PAYMENT IS TO BE MADE |
|--------------------------------------------------------|--------------------------------------------------------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-----------------------------------------------|-------------------------------------|
| Development Fee                                        | \$91,500 (2 Studios) \$129,500 (3Studios)                                   | Lump sum                                                                                                                                                                                                                                                                                                                                  | Upon execution of Development Agreement | Us                                  |
| Initial Investment to Open Initial/Single Studio | \$298,987 to \$747,832                                                         | Totals from Single Unit Chart of this Item 7 less the Initial Franchise Fee.                                                                                                                                                                                                                                                           |                                               |                                     |
| Grand Total                                            | \$390,487 to \$839,332 (2 Studios) \$428,487 to \$877,332 (3 Studios) | This is the total estimated initial investment to enter into a Development Agreement for the right to own a total of two to three, as well as the estimated initial costs to open and begin operating your initial Studio for the first three months (as described more fully in the "Single Unit Franchise" chart above). |                                               |                                     |

#### Explanatory Notes:

*General.* The preceding chart and accompanying notes describe the estimated total initial investment expenses to obtain and commence business for a single Degree Wellness Studio franchise. These estimated initial expenses are our best estimate of the costs you may incur in establishing and operating a single Degree Wellness Studio. Unless negotiated with a third-party, non-affiliated vendor, all payments disclosed in this Item are non-refundable.

Our estimates are based on our experience with our Studio franchises and our current requirements for Studios. The factors underlying our estimates may vary depending on a number of variables, and the actual investment you make in developing and opening your Degree Wellness Studio franchise may be greater or less than the estimates given depending upon the location of your franchise, and current relevant market conditions.

Your estimated initial investment for each additional Studio you purchase may be lower if we charge a reduced Initial Franchise Fee. See Item 5 for additional information.

Source: Item 7 — Estimated Initial Investment (FDD pages 22–26)

Question 25

What is the total potential length of a Degree Wellness franchise if the renewal option is exercised?

Accepted Answer

| Provision                                     | Section in Franchise Agreement | Summary                                                                                                                                                                                                                                                                             |
|-----------------------------------------------|--------------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| a. Length of franchise term                   | Section 2.1                          | 10 years                                                                                                                                                                                                                                                                            |
| b. Renewal or extension of the term           | Section 2.4                          | Additional terms of 10 years                                                                                                                                                                                                                                                        |
| c. Requirements for you to renew or extend | Section 2.4                          | The term "renewal" means that you will be granted a franchise for 1 additional term, equal in length to the initial term, subject to your compliance with all the terms of the Franchise Agreement and all other agreements between you and us, |

Source: Item 17 — Renewal, Termination, Transfer, and Dispute Resolution (FDD pages 49–59)

Question 26

What is the total projected number of new franchised Degree Wellness outlets expected to open in the next fiscal year across all states listed?

Accepted Answer

| State | Franchise         | Projected New      | Projected New       |
|-------|-------------------|--------------------|---------------------|
|       | Agreements Signed | Franchised Outlets | Company-Owned       |
|       | but Outlets Not   | in the Next Fiscal | Outlets in the Next |
|       | Opened            | Year               | Fiscal Year         |
| AL    | 1                 | 1                  | 0                   |
| AZ    | 1                 | 1                  | 0                   |
| FL    | 6                 | 6                  | 0                   |
| GA    | 2                 | 2                  | 0                   |
| IN    | 1                 | 1                  | 0                   |
| NC    | 2                 | 1                  | 0                   |
| NJ    | 1                 | 1                  | 0                   |
| NV    | 2                 | 2                  | 0                   |
| PA    | 2                 | 2                  | 0                   |
| TX    | 4                 | 4                  | 0                   |
| UT    | 1                 | 1                  | 0                   |
| Total | 23                | 23                 | 0                   |

Source: Item 20 — OUTLETS AND FRANCHISEE INFORMATION (FDD pages 63–66)

Question 27

According to Degree Wellness, what factors will make Degree Wellness Studios appealing to customers despite competition in the wellness sector?

Accepted Answer

Your Studio will compete with other businesses in the health and wellness market. These competitors may include independent or franchised businesses offering some or all of the same services. The wellness sector is competitive in most markets. Despite this competition, we believe that Degree Wellness Studios will appeal to customers because of the brand, the unique combination of services offered, a reputation for authenticity and trustworthiness, the pricing model, and other distinctive characteristics. While you will provide your products and services to the general public, your target market will be female heads of household, who typically preside over both household budget and health and wellness decisions. We believe this is a large and important, yet underserved market. As a female-founded brand, Degree Wellness is uniquely positioned to serve this market.

Source: Item 1 — The Franchisor and any Parents, Predecessors, and Affiliates (FDD pages 9–12)

Question 28

What is the auditor's responsibility regarding the detection of material misstatements in Degree Wellness's financial statements due to fraud versus error?

Accepted Answer

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with GAAS will always detect a material misstatement when it exists. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Misstatements are considered material if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the financial statements.

In performing an audit in accordance with GAAS, we:

- Exercise professional judgment and maintain professional skepticism throughout the audit.
- Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.
- Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of Degree Wellness Franchise, LLC's internal control. Accordingly, no such opinion is expressed.
- Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluate the overall presentation of the financial statements.
- Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise substantial doubt about Degree Wellness Franchise, LLC's ability to continue as a going concern for a reasonable period of time.

Source: Item 23 — Receipts (FDD pages 66–257)

Question 29

Why does Degree Wellness believe it is uniquely positioned to serve its target market?

Accepted Answer

Despite this competition, we believe that Degree Wellness Studios will appeal to customers because of the brand, the unique combination of services offered, a reputation for authenticity and trustworthiness, the pricing model, and other distinctive characteristics. While you will provide your products and services to the general public, your target market will be female heads of household, who typically preside over both household budget and health and wellness decisions. We believe this is a large and important, yet underserved market. As a female-founded brand, Degree Wellness is uniquely positioned to serve this market.

Source: Item 1 — The Franchisor and any Parents, Predecessors, and Affiliates (FDD pages 9–12)

Question 30

Is the Continuing Franchise Fee for Degree Wellness a fixed amount or a percentage of gross revenues?

Accepted Answer

nitial franchise fee.

#### **Item 6**

#### **OTHER FEES**

| Type of Fee (1)             | Amount                         | Due Date                                              | Remarks                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|-----------------------------|--------------------------------|-------------------------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| Continuing Franchise Fee | 7% of gross revenues (2) | Due on the day of each month we specify (3). | Based on gross revenues during the previous month (2). If you do not open for business within 12 months after execution of the Franchise Agreement, you will be assessed a \$500.00 monthly fee until you open. If you do not open for business within 15 months after execution of the Franchise Agreement, you will be assessed a \$1,000.00 monthly fee until you open. If you do not open for business within 18 months after execution of the Franchise Agreement, you will

Source: Item 6 — Other Fees (FDD pages 14–21)

Question 31

What was the highest rent and lease expense among the Degree Wellness locations included in Chart 2, and what percentage of revenue did it represent?

Accepted Answer

|  | Studio 1 | % of Rev. | Studio 3 | % of Rev. | Studio 4 | % of Rev. | Average | % of Rev. Above/Below | Median |
|---|---|---|---|---|---|---|---|---|---|
| Gross Revenue | 181,459 | 100.0% | 137,586 | 100.0% | 156,307 | 100.0% | 158,451 | 100.0% 1/2 | 156,307 |
| Cost of Goods Sold | 19,269 | 10.6% | 12,047 | 8.8% | 16,452 | 10.5% | 15,922 | 10.0% 2/1 | 16,452 |
| Gross Profit | 162,190 | 89.4% | 125,539 | 91.2% | 139,855 | 89.5% | 142,528 | 90.0% 1/2 |  |
| Expenses |  |  |  |  |  |  |  |  |  |
| Advertising & Marketing | 8,234 | 4.5% | 8,308 | 6.0% | 12,293 | 7.9% | 9,612 | 6.1% 1/2 | 8,308 |
| Insurance | 1,382 | 0.8% | 1,094 | 0.8% | 1,731 | 1.1% | 1,402 | 0.9% 1/2 | 1,382 |
| Office Expenses | 2,649 | 1.5% | 3,248 | 2.4% | 2,866 | 1.8% | 2,921 | 1.8% 1/2 | 2,866 |
| Payroll Expenses | 27,191 | 15.0% | 25,280 | 18.4% | 29,034 | 18.6% | 27,169 | 17.1% 2/1 | 27,191 |
| Rent & Lease | 13,078 | 7.2% | 13,832 | 10.1% | 23,276 | 14.9% | 16,728 | 10.6% 1/2 | 13,832 |
| Repairs & Maintenance | 679 | 0.4% | 329 | 0.2% | -- | 0.0% | 336 | 0.2% 1/2 | 329 |
| Taxes | -- | 0.0% | -- | 0.0% | -- | 0.0% | -- | 0.0% | -- |
| Utilities | 3,866 | 2.1% | 2,920 | 2.1% | 6,188 | 4.0% | 4,325 | 2.7% 1/2 | 3,866 |
| Total Expenses | 57,079 | 31.5% | 55,011 | 40.0% | 75,389 | 48.2% | 62,493 | 39.4% 1/2 | 57,079 |
| Net Operating Income | 105,112 | 57.9% | 70,528 | 51.3% | 64,466 | 41.2% | 80,035 | 50.5% 1/2 | 70,528 |
| Estimated Fees |  |  |  |  |  |  |  |  |  |
| Royalties | 12,702 | 7.0% | 9,631 | 7.0% | 10,941 | 7.0% | 11,092 | 7.0% 1/2 | 10,941 |
| Brand Fund | 1,815 | 1.0% | 1,376 | 1.0% | 1,563 | 1.0% | 1,585 | 1.0% 1/2 | 1,563 |
| Total Estimated Fees | 14,517 | 8.0% | 11,007 | 8.0% | 12,505 | 8.0% | 12,676 | 8.0% 1/2 | 12,505 |
| Net Income Adjusted, OO | 90,595 | 49.9% | 59,521 | 43.3% | 51,962 | 33.2% | 67,359 | 42.5% 1/2 | 59,521 |
| Studio Manager Payroll Expenses | 17,295 | 9.5% | 12,672 | 9.2% | 14,441 | 9.2% | 8,882 | 5.6% 3/0 | 14,441 |
| Net Income Adjusted, Investor | 73,300 | 40.4% | 46,849 | 34.1% | 37,520 | 24.0% | 58,477 | 36.9% 1/2 | 46,849 |

Source: Item 19 — FINANCIAL PERFORMANCE REPRESENTATIONS (FDD pages 60–63)

Question 32

What was the highest Rent & Lease expense among the Degree Wellness studios listed?

Accepted Answer

|  | Studio 1 | % of Rev. | Studio 2 | % of Rev. | Average/Median | % of Rev. |
|---|---|---|---|---|---|---|
| Gross Revenue | 738,070 | 100.0% | 482,725 | 100.0% | 610,397 | 100.0% |
| Cost of Goods Sold | 66,837 | 9.1% | 43,044 | 8.9% | 54,940 | 9.0% |
| Gross Profit | 671,233 | 90.9% | 439,682 | 91.1% | 555,457 | 91.0% |
| Expenses |  |  |  |  |  |  |
| Advertising & Marketing | 31,900 | 4.3% | 51,106 | 10.6% | 41,503 | 6.8% |
| Insurance | 5,275 | 0.7% | 3,412 | 0.7% | 4,343 | 0.7% |
| Office Expenses | 10,058 | 1.4% | 10,305 | 2.1% | 10,182 | 1.7% |
| Payroll Expenses | 137,648 | 18.6% | 93,674 | 19.4% | 115,661 | 18.9% |
| Rent & Lease | 56,401 | 7.6% | 98,476 | 20.4% | 77,439 | 12.7% |
| Repairs & Maintenance | 4,796 | 0.6% | 4,071 | 0.8% | 4,434 | 0.7% |
| Taxes | 4,446 | 0.6% | 2,932 | 0.6% | 3,689 | 0.6% |
| Utilities | 17,030 | 2.3% | 2,791 | 0.6% | 9,910 | 1.6% |
| Total Expenses | 267,554 | 36.3% | 266,767 | 55.3% | 267,160 | 43.8% |
| Net Operating Income | 403,679 | 54.7% | 172,915 | 35.8% | 288,297 | 47.2% |
| Estimated Fees |  |  |  |  |  |  |
| Royalties | 51,665 | 7.0% | 33,791 | 7.0% | 42,728 | 7.0% |
| Brand Fund | 7,381 | 1.0% | 4,827 | 1.0% | 6,104 | 1.0% |
| Total Estimated Fees | 59,046 | 8.0% | 38,618 | 8.0% | 48,832 | 8.0% |
| Net Income Adjusted, OO | 344,633 | 46.7% | 134,297 | 27.8% | 239,465 | 39.2% |
| Studio Manager Payroll Expenses | 61,096 | 8.3% | 50,986 | 10.6% | 56,041 | 9.2% |
| Net Income Adjusted, Investor | 283,537 | 38.4% | 83,311 | 17.3% | 183,424 | 30.0% |

Source: Item 19 — FINANCIAL PERFORMANCE REPRESENTATIONS (FDD pages 60–63)

Question 33

How does the initial franchise fee for Degree Wellness in Item 5 compare to other fees potentially due as listed in Item 6?

Accepted Answer

| Type of Expenditure | Amount | Method of Payment | When Due | To Whom Payment Is To |
|---|---|---|---|---|
|  |  |  |  | Be Made |
| Franchise License Fee (1) | $49,500 to $49,500 | Lump Sum | At signing of Franchise Agreement | Us |
| Initial Training Fee | $8,000 to $8,000 | Lump Sum | At signing of Franchise Agreement | Us |
| Training Program Expenses (2) | $1,500 to $5,000 | As agreed | As incurred | Third-party providers, including airline, lodging and meals. |
| Studio Layout, Architect, Engineer, Drawings, and Permits (3) | $19,250 to $21,500 | As agreed | As incurred | Approved Supplier and Third Party Providers |
| R/E & Construction Mgt | $20,500 to $20,500 | Lump Sum | As incurred | Approved Supplier |
| Fee (4) |  |  |  |  |
| Lease - Security Deposit | $11,318 to $34,668 | As agreed | When securing the | Third Party Provider |
| (3 months) (5) |  |  | premises |  |
| Initial Equipment Package | $13,620 to $145,709 As agreed, invoiced or |  | As incurred | Approved Supplier |
| (6) | arranged |  |  |  |
| Leasehold Improvements | $138,952 to $384,621 | As arranged | As invoiced | Third Party Provider |
| (7) |  |  |  |  |
| Furniture, Fixtures, and | $29,629 to $40,019 | As agreed | As invoiced | Us and Approved Supplier |
| Equipment (FFE) (8) |  |  |  |  |
| Point of Sale System, | $3,850 to $4,250 | As agreed | As incurred | Approved Supplier |
| Hardware, Software and |  |  |  |  |
| Installation (9) |  |  |  |  |
| Initial Inventory & | $9,531 to $11,092 | As agreed, invoiced or | As incurred | Approved Supplier |
| Supplies (10) |  | arranged |  |  |
| Professional Fees & | $2,586 to $5,000 | As agreed | As incurred | Approved Supplier |
| Licenses (11) |  |  |  |  |
| Presale Marketing (12) | $12,000 to $15,458 | As agreed | Before opening | Third Party Provider |
| Insurance (13) | $1,023 to $2,340 | As agreed | As invoiced | Third Party Provider |
| Exterior Signage (14) | $3,318 to $9,675 | As agreed | As incurred | Approved Supplier |

Question 34

How does the initial franchise fee for Degree Wellness (Item 5) relate to the total estimated initial investment (Item 7)?

Accepted Answer

| TYPE OF EXPENDITURE                                 | AMOUNT                                                                         | METHOD OF PAYMENT                                                                                                                                                                                                                                                                                                                   | WHEN DUE                                      | TO WHOM PAYMENT IS TO BE MADE |
|--------------------------------------------------------|--------------------------------------------------------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-----------------------------------------------|-------------------------------------|
| Development Fee                                        | \$91,500 (2 Studios) \$129,500 (3Studios)                                   | Lump sum                                                                                                                                                                                                                                                                                                                                  | Upon execution of Development Agreement | Us                                  |
| Initial Investment to Open Initial/Single Studio | \$298,987 to \$747,832                                                         | Totals from Single

Question 35

How does the initial franchise fee for a Degree Wellness studio (Item 5) compare to the ongoing royalty fees or other fees listed in Item 6?

Accepted Answer

uired to be disclosed in this Item.

#### **Item 5**

## **INITIAL FEES**

#### **Initial Franchise Fee**

You must pay to us a lump sum initial franchise fee upon signing your Franchise Agreement. The initial franchise fee for a Studio is \$49,500 for the first franchise purchased. The Initial Franchise Fee is fully earned by us when paid, and is not refundable in whole or in part under any circumstances.

#### **Development Fee**

If we grant you the right to open multiple Studios under a Development Agreement, you must pay us a one-time Development Fee immediately upon execution of your Development Agreement. Your Development Fee will depend on the number of Studios we grant you the right to open within the Site Selection Area and is calculated as follows:

| Number of Franchised Studios | Development Fee |
|---|---|
| 2 Studios | $91,500 |
| 3 Studios | $129,500 |
| 4 Studios | $165,500 |
| 5 Studios | $199,500 |
| 6 through 10 Studios | $32,000 per unit |
You will be required to enter into our then-current form of Franchise Agreement for each Studio you wish to open under your Development Agreement, but you will not be required to pay any additional Initial Franchise Fee at the time you execute each of these Franchise Agreements. You will execute our current form of Franchise Agreement for the first Studio we grant you the right to open within your Development Area concurrently with the Development Agreement (unless we agree otherwise in writing).

The Development Fee does not include the fee to purchase our optional programs with your franchise. The Development Fee is fully earned by us when paid and is not refundable in whole or in part under any circumstances.

#### **Initial Training Fee**

You will pay to us a \$8,000 initial training fee for our two-stage initial training program. The initial training fee is due in a lump sum when you sign your Franchise Agreement and is not refundable under any circumstances. The initial training fee is uniformly imposed and includes a 3-day Business Training currently hosted in Ann Arbor and on-site Studio Training with a Corporate Studio Opener.

Question 36

How does the initial franchise fee for a Degree Wellness studio (Item 5) relate to the ongoing brand recognition and goodwill associated with the franchise (Item 13)?

Accepted Answer

ny circumstances.

#### **Initial Training Fee**

You will pay to us a \$8,000 initial training fee for our two-stage initial training program. The initial training fee is due in a lump sum when you sign your Franchise Agreement and is not refundable under any circumstances. The initial training fee is uniformly imposed and includes a 3-day Business Training currently hosted in Ann Arbor and on-site Studio Training with a Corporate Studio Opener. On-site Studio training is typically 5 days with a corporate representative in person to assist you with the startup of your Degree Wellness Studio.

Initial Training Fee is due only in connection with the opening of your first Studio. Currently, Initial Training for subsequent studios, or in relationship to the transfer of an existing studio to new ownership, will be offered at the rates provided in Item 6 and typically includes the fees associated with the return of a Studio Opener if requested or required by the franchisor. We charge you \$300 per day, per corporate employee, for any return on-site training exceeding the standard five days, plus travel, food, and accommodations and all other necessary expenses, subject to increase by us of up to \$1,000 per day, per corporate employee.

## **VetFran Discount and Payment Arrangements**

If you qualify for the VetFran program sponsored by the International Franchise Association, then the Development Fee or the Initial Franchise Fee for your first franchise will be reduced by \$2,500.

#### **Uniformity and Other Relevant Disclosures**

All of the initial fees and expenditures described in this Item are: (i) uniformly calculated and imposed on our franchisees; and (ii) payable in lump sum. All of the fees are deemed fully earned upon receipt and non-refundable.

See Exhibit K for any state-specific disclosures about your initial franchise fee.

#### **Item 6**

#### **OTHER FEES**

| Type of Fee (1)             | Amount                         | Due Date                                              | Remarks                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|-----------------------------|--------------------------------|-------------------------------------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Question 37

How does the initial franchise fee for a Degree Wellness studio (Item 5) relate to the ongoing support and assistance provided by the franchisor (Item 11)?

Accepted Answer

ny circumstances.

#### **Initial Training Fee**

You will pay to us a \$8,000 initial training fee for our two-stage initial training program. The initial training fee is due in a lump sum when you sign your Franchise Agreement and is not refundable under any circumstances. The initial training fee is uniformly imposed and includes a 3-day Business Training currently hosted in Ann Arbor and on-site Studio Training with a Corporate Studio Opener. On-site Studio training is typically 5 days with a corporate representative in person to assist you with the startup of your Degree Wellness Studio.

Initial Training Fee is due only in connection with the opening of your first Studio. Currently, Initial Training for subsequent studios, or in relationship to the transfer of an existing studio to new ownership, will be offered at the rates provided in Item 6 and typically includes the fees associated with the return of a Studio Opener if requested or required by the franchisor. We charge you \$300 per day, per corporate employee, for any return on-site training exceeding the standard five days, plus travel, food, and accommodations and all other necessary expenses, subject to increase by us of

Question 38

How does the initial franchise fee for a Degree Wellness studio (Item 5) relate to the ongoing value and support provided by the franchisor (Item 11)?

Accepted Answer

You will pay to us a $8,000 initial training fee for our two-stage initial training program. The initial training fee is due in a lump sum when you sign your Franchise Agreement and is not refundable under any circumstances. The initial training fee is uniformly imposed and includes a 3-day Business Training currently hosted in Ann Arbor and on-site Studio Training with a Corporate Studio Opener. On-site Studio training is typically 5 days with a corporate representative in person to assist you with the startup of your Degree Wellness Studio.

The second component of the initial training program is Studio Opening training. Currently we provide one individual (Corporate Trainer) to provide you with on-site
training services at your Studio for a period of up to 5 days, to provide opening support, software, technical and sales training. This training is scheduled at our discretion and is subject to our availability. The Initial Training Fee of $8,000 currently includes the cost of travel for corporate personnel, typically the Studio Opener at your first Studio only. Any/all additional training, including training for—if applicable—your second and subsequent Studio, is currently provided at $300/day plus travel. Initial training is conducted on an as needed basis, in conjunction with Franchisees development, opening schedule and needs, but in no event less than twice per year.

However, the estimated annual expense in maintaining or replacing your computer system is $355 per year.

You agree to contribute to the Fund in the amount of one percent (1%) of the gross revenues of the Franchise.

At no time during the term of this Agreement will your contribution to the Fund exceed 2% of gross revenue.

We may suspend contributions to, and the operations of, the Fund for any period we deem appropriate, and may terminate the Fund upon 30 days' written notice to you. All unspent monies held by the Fund on the date of termination will be distributed to us, our affiliates, and you and our other franchisees in proportion to each party's respective contributions to the Fund during the preceding 12-month period.

We are not required to spend ANY amount in advertising in your territory.

Question 39

How does the initial training fee for a Degree Wellness franchise in Item 7 relate to the training program expenses also listed in Item 7?

Accepted Answer

| Type of Expenditure | Amount | Method of Payment | When Due | To Whom Payment Is To |
|---|---|---|---|---|
|  |  |  |  | Be Made |
| Franchise License Fee (1) | $49,500 to $49,500 | Lump Sum | At signing of Franchise Agreement | Us |
| Initial Training Fee | $8,000 to $8,000 | Lump Sum | At signing of Franchise Agreement | Us |
| Training Program Expenses (2) | $1,500 to $5,000 | As agreed | As incurred | Third-party providers, including airline, lodging and meals. |

Question 40

How does the initial training fee for Degree Wellness (Item 7) relate to the franchisor's pre-opening obligations regarding training (Item 11)?

Accepted Answer

ny circumstances.

#### **Initial Training Fee**

You will pay to us a \$8,000 initial training fee for our two-stage initial training program. The initial training fee is due in a lump sum when you sign your Franchise Agreement and is not refundable under any circumstances. The initial training fee is uniformly imposed and includes a 3-day Business Training currently hosted in Ann Arbor and on-site Studio Training with a Corporate Studio Opener. On-site Studio training is typically 5 days with a corporate representative in person to assist you with the startup of your Degree Wellness Studio.

Initial Training Fee is due only in connection with the opening of your first Studio. Currently, Initial Training for subsequent studios, or in relationship to the transfer of an existing studio to new ownership, will be offered at the rates provided in Item 6 and typically includes the fees associated with the return of a Studio Opener if requested or required by the franchisor. We charge you \$300 per day, per corporate employee, for any return on-site training exceeding the standard five days, plus travel, food, and accommodations and all other necessary expenses, subject to increase by us of up to \$1,000 per day, per corporate employee.

## **VetFran Discount and Payment Arrangements**

If you qualify for the VetFran program sponsored by the International Franchise Association, then the Development Fee or the Initial Franchise Fee for your first franchise will be reduced by \$2,500.

#### **Uniformity and Other Relevant Disclosures**

All of the initial fees and expenditures described in this Item are: (i) uniformly calculated and imposed on our franchisees; and (ii) payable in lump sum. All of the fees are deemed fully earned upon receipt and non-refundable.

See Exhibit K for any state-specific disclosures about your initial franchise fee.

#### **Item 6**

#### **OTHER FEES**

| Type of Fee (1)             | Amount                         | Due Date                                              | Remarks                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|-----------------------------|--------------------------------|-------------------------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| Continuing Franchise Fee | 7% of gross revenues (2) | Due on the day of each month we specify (3).

Question 41

How does the initial training fee for a Degree Wellness studio (Item 7) relate to the ongoing training and support provided by the franchisor (Item 11)?

Accepted Answer

ny circumstances.

#### **Initial Training Fee**

You will pay to us a \$8,000 initial training fee for our two-stage initial training program. The initial training fee is due in a lump sum when you sign your Franchise Agreement and is not refundable under any circumstances. The initial training fee is uniformly imposed and includes a 3-day Business Training currently hosted in Ann Arbor and on-site Studio Training with a Corporate Studio Opener. On-site Studio training is typically 5 days with a corporate representative in person to assist you with the startup of your Degree Wellness Studio.

Initial Training Fee is due only in connection with the opening of your first Studio. Currently, Initial Training for subsequent studios, or in relationship to the transfer of an existing studio to new ownership, will be offered at the rates provided in Item 6 and typically includes the fees associated with the return of a Studio Opener if requested or required by the franchisor. We charge you \$300 per day, per corporate employee, for any return on-site training exceeding the standard five days, plus travel, food, and accommodations and all other necessary expenses, subject to increase by us of

Question 42

What key services does Studio 2, a Degree Wellness affiliate location, not offer that differentiate it from franchised locations?

Accepted Answer

Chart 1 discloses the historical performance of each affiliate-owned location that was open for the entire 2024 calendar year (the "2024 Measurement Period"). The studio labelled Studio 1 has the same financial and operational characteristics as a those being offered pursuant to this disclosure document and do not otherwise materially differ from what you would operate as a franchisee. Studio 2 however, although it operated under the same trademarks, is unable to offer several key services and features. Namely, it does not offer contrast therapy or cold plunge, and it does not have showers. Studio 2 is being relocated to a new site in order to offer these services. As of the issuance date of this Disclosure document Studio 2 has terminated its original lease and entered into a new lease. However, it has not yet completed its relocation.

Source: Item 19 — FINANCIAL PERFORMANCE REPRESENTATIONS (FDD pages 60–63)

Question 43

What is the relationship between the initial franchise fee for a Degree Wellness studio in Item 5 and the franchise license fee listed in the initial investment table in Item 7?

Accepted Answer

| Type of Expenditure | Amount | Method of Payment | When Due | To Whom Payment Is To |
|---|---|---|---|---|
|  |  |  |  | Be Made |
| Franchise License Fee (1) | $49,500 to $49,500 | Lump Sum | At signing of Franchise Agreement | Us |
| Initial Training Fee | $8,000 to $8,000 | Lump Sum | At signing of Franchise Agreement | Us |

Question 44

What must I do to correct any operational deficiencies in my Degree Wellness franchise before the expiration date to be eligible for renewal?

Accepted Answer

|  |  | in |
|  |  | any |
|  |  | bankruptcy |
|  |  | proceeding |
|  |  | and |
|  |  | you |
|  |  | cease, or have ceased, performance |

![](_page_49_Picture_1.jpeg)

| Provision                                          | Section in Franchise Agreement | Summary                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|----------------------------------------------------|--------------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  |  | under the Franchise Agreement in any |
|  |  | respect, then all rights granted to you |
|  |  | under the Franchise Agreement shall |
|  |  | immediately |
|  |  | and |
|  |  | automatically |
|  |  | terminate and revert to us without |
|  |  | further notice to you or action on our |
|  |  | part. |
|  |  | A termination of your Franchise |
|  |  | Agreement will not automatically |
|  |  | result |
|  |  | in |
|  |  | a |
|  |  | termination |
|  |  | of |
|  |  | your |
|  |  | Development |
|  |  | Agreement, |
|  |  | if |
|  |  | applicable. |
| g. "Cause" defined –curable defaults         | Section 15                           | You do not pay us within 10 days after written notice; you do not comply with any other provision of the Franchise Agreement or specification, standard, or operating procedure and do not correct such failure within 30 days after written notice.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
| h. "Cause" defined – non-curable defaults | Section 15                        | You fail to timely develop or open the franchise; you (or any individuals required to attend) fail to attend and/or successfully complete any required initial training or subsequent mandatory training; you abandon, surrender, transfer control of or do not actively operate the franchise or lose the right to occupy the franchise location; you or any Principal Owner make an unauthorized transfer or assignment of the franchise or its assets; you are adjudged a bankrupt, become insolvent, or make an assignment for the benefit of creditors, or you fail to satisfy any judgment rendered against you for a period of 30 days after all appeals have been exhausted; you use, sell, or distribute unauthorized products, or use any patient referral or marketing services that has not been formally approved by us in writing and in advance for your franchise or for the franchise system as a whole; you or your Principal Owners are convicted |

![](_page_50_Picture_1.jpeg)

| whether you properly them. and expressly assume, ratify Franchise Agreement immediately and part.

Source: Item 17 — Renewal, Termination, Transfer, and Dispute Resolution (FDD pages 49–59)

Question 45

When does the $1,000 minimum monthly cooperative contribution apply to the satisfaction of the local advertising requirement for a Degree Wellness studio?

Accepted Answer

f our affiliate's wholly-owned subsidiaries or by franchisees. The franchisees will administer the cooperative. If we require you to participate in an established cooperative advertising campaign for your market area, you minimum contribution will be \$1,000 per month. The actual amount will be set by the cooperatives governing documents, of which we do not have a copy to provide to you. Each cooperative will establish their own governing documents and self-govern. If Franchisor-owned locations are a part of the advertising cooperative, then they will contribute at the same rate as franchisee-owned locations and have the same voting rights. Each franchisee in the same market will be required to be a member. Your \$1,000 minimum monthly cooperative contribution will apply to the satisfaction of your local advertising requirement once the Studio is open at least 12 full months. Governing documents are not available for the franchisee's review. The contribution amount will be set by a majority vote of the members of the cooperative. A membership of the cooperative is determined by the numbers of locations a franchisee may have. For example if a franch

Source: Item 11 — Franchisor's Assistance, Advertising, Computer Systems, and Training (FDD pages 32–42)

Question 46

According to the Degree Wellness franchise agreement, what is the deadline for opening the franchise if the agreement was signed pursuant to the purchase of a Development Agreement?

Accepted Answer

- a. You agree at your own expense to do the following (i) within 12 months of the date of this Agreement, or (ii) if you sign this Agreement pursuant to the purchase of a Development Agreement, by the Opening Deadline defined in Exhibit 1:
  - (1) secure all financing required to fully develop the Franchise;
  - (2) obtain all required building, utility, sign, health, sanitation and business permits and licenses and any other required permits and licenses;
  - (3) construct the Franchise location according to the construction plans and specifications we have provided and/or approved;
  - (4) decorate the Franchise location in compliance with plans and specifications we have provided and/or approved;
  - (5) purchase and install all required equipment, furniture, furnishings and signs prior to commencing operations;
  - (6) cause all the training requirements of Section 4 to be completed prior to commencing operations;
  - (7) purchase an opening inventory of products and other supplies and materials prior to commencing operations;
  - (8) provide proof prior to commencing operations, in a form satisfactory to us, that your operation of the Franchise at the Franchise location does not violate any applicable state or local zoning or land use laws, ordinances, or regulations, or any restrictive covenants that apply to such location;

Source: Item 23 — Receipts (FDD pages 66–257)

Question 47

According to Degree Wellness, if I buy a franchise, could my contact information be disclosed to other buyers when I leave the Degree Wellness franchise system?

Accepted Answer

If you buy this franchise, your contact information may be disclosed to other buyers when you leave the franchise system.

Source: Item 20 — OUTLETS AND FRANCHISEE INFORMATION (FDD pages 63–66)

Question 48

According to the Maryland amendment, what is being deferred for Degree Wellness franchisees based on the franchisor's financial condition?

Accepted Answer

THIS AMENDMENT TO DEVELOPMENT AGREEMENT ("Amendment") dated , is intended to be a part of, and by this reference is incorporated into that certain Development Agreement (the "Development Agreement") dated, by and between Degree Wellness Franchise, LLC ("Franchisor"), a Delaware limited liability company, with its principal office in Jacksonville, Florida, and ("you" or "Developer"). Defined terms contained in the Development Agreement shall have the identical meanings in this Amendment. Item 2 of the Development Agreement is supplemented by the following: Based upon the franchisor's financial condition, the Maryland Securities Commissioner has required a financial assurance. Therefore, all initial fees and payments owed by franchisees shall be deferred until the franchisor completes its pre-opening obligations under the franchise agreement. "In addition, all development fees and initial payments by area developers shall be deferred until the first franchise under the development agreement opens. IN WITNESS WHEREOF, the parties have executed this Amendment on the date first shown above. DEVELOPER DEGREE WELLNESS FRANCHISE, LLC

Source: Item 23 — Receipts (FDD pages 66–257)

Question 49

According to the Maryland Amendment, what is the effect on the choice of law language in the Degree Wellness Franchise Agreement?

Accepted Answer

- 5. The Franchise Agreement is amended by the addition of the following language to the original language that appears in the choice of law language therein:

"This section shall not in any way abrogate or reduce any of your rights as provided for in Section 14-216(c)(25) of the Maryland Franchise Registration and Disclosure Law,

including the right to submit matters to the jurisdiction of the Courts of Maryland."

Source: Item 23 — Receipts (FDD pages 66–257)

Question 50

According to the Maryland Amendment, what is supplemented in Item 6 of the Degree Wellness Franchise Agreement?

Accepted Answer

- 6. Item 6 of the Franchise Agreement is supplemented by the following: Based upon the franchisor's financial condition, the Maryland Securities Commissioner has required a financial assurance. Therefore, all initial fees and payments owed by franchisees shall be deferred until the franchisor completes its pre-opening obligations under the franchise agreement. "In addition, all development fees and initial payments by area developers shall be deferred until the first franchise under the development agreement opens.

Source: Item 23 — Receipts (FDD pages 66–257)

Question 51

Does Degree Wellness acknowledge the possibility of a discrepancy between estimated and actual financial results?

Accepted Answer

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with GAAS will always detect a material misstatement when it exists. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Misstatements are considered material if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the financial statements.

Source: Item 23 — Receipts (FDD pages 66–257)

Question 52

What actions must a Degree Wellness Business Associate take if they know of a pattern of activity by an agent that violates the agent's obligations?

Accepted Answer

If Business Associate knows of a pattern of activity or practice of an agent that constitutes a violation of the agent's obligations to Business Associate, Business Associate shall take reasonable steps to end the violation, and if such steps are unsuccessful, Business Associate must terminate the arrangement if feasible.

Source: Item 23 — Receipts (FDD pages 66–257)

Question 53

Besides the Franchise Agreement, are there any other agreements that a Degree Wellness franchisee must comply with to be eligible for renewal?

Accepted Answer

| Provision                                     | Section in Franchise Agreement | Summary                                                                                                                                                                                                                                                                             |
|-----------------------------------------------|--------------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| a. Length of franchise term                   | Section 2.1                          | 10 years                                                                                                                                                                                                                                                                            |
| b. Renewal or extension of the term           | Section 2.4                          | Additional terms of 10 years                                                                                                                                                                                                                                                        |
| c. Requirements for you to renew or extend | Section 2.4                          | The term "renewal" means that you will be granted a franchise for 1 additional term, equal in length to the initial term, subject to your compliance with all the terms of the Franchise Agreement and all other agreements between you and us, |

Source: Item 17 — Renewal, Termination, Transfer, and Dispute Resolution (FDD pages 49–59)

Question 54

What should the Degree Wellness Business Associate do if provisions of the agreement conflict with state law?

Accepted Answer

- b. If any lawful requirement or court order of any jurisdiction (1) requires a greater advance notice of the termination or non-renewal of this Agreement than is required under this Agreement, or the taking of some other action which is not required by this Agreement, or (2) makes any provision of this Agreement or any specification, program, standard, or operating procedure we prescribed invalid or unenforceable, then the advance notice and/or other action required or revision of the specification, program, standard, or operating procedure will be substituted for the comparable provisions of this Agreement in order to make the modified provisions enforceable to the greatest extent possible. You agree to be bound by the modification to the greatest extent lawfully permitted.

- c.

If a state regulator requires an amendment to this Agreement, the amendment is attached to this Agreement.

We will not, however, be precluded from contesting the validity, enforceability, or applicability of such regulator's required amendment in any action relating to this Agreement or to its rescission or termination.

Source: Item 23 — Receipts (FDD pages 66–257)

Question 55

Does compliance with all agreements between the franchisee and franchisor affect the Degree Wellness franchisee's ability to renew?

Accepted Answer

| Provision                                     | Section in Franchise Agreement | Summary                                                                                                                                                                                                                                                                             |
|-----------------------------------------------|--------------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| a. Length of franchise term                   | Section 2.1                          | 10 years                                                                                                                                                                                                                                                                            |
| b. Renewal or extension of the term           | Section 2.4                          | Additional terms of 10 years                                                                                                                                                                                                                                                        |
| c. Requirements for you to renew or extend | Section 2.4                          | The term "renewal" means that you will be granted a franchise for 1 additional term, equal in length to the initial term, subject to your compliance with all the terms of the Franchise Agreement and all other agreements between you and us, |

Source: Item 17 — Renewal, Termination, Transfer, and Dispute Resolution (FDD pages 49–59)

Question 56

Is compliance with the terms of the Franchise Agreement a requirement for Degree Wellness franchise renewal?

Accepted Answer

| Provision                                     | Section in Franchise Agreement | Summary                                                                                                                                                                                                                                                                             |
|-----------------------------------------------|--------------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| a. Length of franchise term                   | Section 2.1                          | 10 years                                                                                                                                                                                                                                                                            |
| b. Renewal or extension of the term           | Section 2.4                          | Additional terms of 10 years                                                                                                                                                                                                                                                        |
| c. Requirements for you to renew or extend | Section 2.4                          | The term "renewal" means that you will be granted a franchise for 1 additional term, equal in length to the initial term, subject to your compliance with all the terms of the Franchise Agreement and all other agreements between you and us, |

Source: Item 17 — Renewal, Termination, Transfer, and Dispute Resolution (FDD pages 49–59)

Question 57

What is the condition for a Degree Wellness franchisee to renew their franchise agreement?

Accepted Answer

fied. Renewal of the Franchise will be conditioned on your continued compliance with all the terms and conditions of this Agreement up to the date of expiration, and not just on

those conditions set forth in our 6 month deficiency notice. If we send a notice of non-renewal, it will state the reasons for our refusal to renew.

c. **Renewal Agreement; Releases**. To renew the Franchise, Degree Wellness, you and your Principal Owners must execute the form of Franchise Agreement and any ancillary agreements we are then customarily using in the grant or renewal of franchises for the operation of Studio Franchises (with appropriate modifications to reflect the fact that the agreement relates to the grant of a renewal franchise), except that no initial franchise fee will be payable upon renewal of the Franchise. The terms of the Franchise Agreement that you must execute upon renewal, and any other agreements we may require, may differ materially from those contained in this Agreement, including the possibility of increased Continuing Franchise Fees and Fund contributions. Your right to renew will be contingent upon your acceptance of the new terms. You must pay

Source: Item 23 — Receipts (FDD pages 66–257)

Question 58

What conditions must a Degree Wellness franchisee meet to maintain the right to use the marks?

Accepted Answer

Your right to use the Marks is derived solely from your Franchise Agreement, and is limited to your conduct of business in compliance with the Franchise Agreement and all applicable specifications, standards, and operating procedures we prescribe during the term of your franchise, including, without limitation, timely payment of the Initial Franchise Fee, Continuing Franchise Fees, Fund contributions, and all other sums due to us. Any unauthorized use of the Marks by you will constitute an infringement of our rights in and to the Marks. Your use of the Marks and any goodwill established by them will be for our exclusive benefit, and your Franchise Agreement does not confer any goodwill or other interests in the Marks upon you. All provisions of your Franchise Agreement applicable to the Marks will apply to any additional proprietary trade and service marks and commercial symbols authorized for use by, and licensed to you under, your Franchise Agreement. You may not at any time during or after the term of your franchise contest, or assist any other person in contesting, the validity or ownership of any of the Marks.

Source: Item 13 — Trademarks (FDD pages 45–47)

Question 59

What is the consequence if a Degree Wellness franchisee fails to maintain required licenses and permits?

Accepted Answer

You agree to secure and maintain in force in your name all required licenses, permits and certificates relating to the operation of the Franchise.

You also agree to operate the Franchise in full compliance with all applicable laws, ordinances, and regulations, including without limitation all government regulations relating to worker's compensation insurance, advertising, unemployment insurance, the practice of health care in your state, and withholding and payment of federal and state income taxes, social security taxes, and sales taxes.

Source: Item 23 — Receipts (FDD pages 66–257)

Question 60

What is the deadline for Degree Wellness Franchise, LLC to provide the disclosure document in Rhode Island, considering the first personal meeting?

Accepted Answer

If Degree Wellness Franchise, LLC offers you a franchise, it must provide you this disclosure document to you 14 calendar-days before you sign a binding agreement with, or make a payment to, the franchisor or an affiliate in connection with the proposed franchise sale. Rhode Island requires that we give you this disclosure document at the earlier of the first personal meeting or 10 business days before the execution of the franchise or other agreement or the payment of any consideration that relates to the franchise relationship.

Source: Item 23 — Receipts (FDD pages 66–257)

Question 61

Is the deadline for securing financing for a Degree Wellness franchise different if the agreement is signed pursuant to a Development Agreement?

Accepted Answer

#### 3.3 **Development of the Franchise**

- a. You agree at your own expense to do the following (i) within 12 months of the date of this Agreement, or (ii) if you sign this Agreement pursuant to the purchase of a Development Agreement, by the Opening Deadline defined in Exhibit 1:
  - (1) secure all financing required to fully develop the Franchise;

Source: Item 23 — Receipts (FDD pages 66–257)

Question 62

Can the definition of 'Management Company Services' for Degree Wellness change?

Accepted Answer

2.1 For purposes of this Agreement, the phrase "Management Company Services" specifically includes the following, except to the extent any of the foregoing would constitute Studio Services (as defined in Section 3.1 below): *[Subject to change in order to comply with applicable law]*

Source: Item 20 — OUTLETS AND FRANCHISEE INFORMATION (FDD pages 63–66)

Question 63

Does Degree Wellness disclose franchisee contact information to other potential buyers if a franchisee leaves the Degree Wellness system?

Accepted Answer

If you buy this franchise, your contact information may be disclosed to other buyers when you leave the franchise system.

Source: Item 20 — OUTLETS AND FRANCHISEE INFORMATION (FDD pages 63–66)

Question 64

Does the Degree Wellness franchise agreement require any specific actions from the franchisee to be eligible for renewal?

Accepted Answer

| Provision                                     | Section in Franchise Agreement | Summary                                                                                                                                                                                                                                                                             |
|-----------------------------------------------|--------------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| a. Length of franchise term                   | Section 2.1                          | 10 years                                                                                                                                                                                                                                                                            |
| b. Renewal or extension of the term           | Section 2.4                          | Additional terms of 10 years                                                                                                                                                                                                                                                        |
| c. Requirements for you to renew or extend | Section 2.4                          | The term "renewal" means that you will be granted a franchise for 1 additional term, equal in length to the initial term, subject to your compliance with all the terms of the Franchise Agreement and all other agreements between you and us, |

Source: Item 17 — Renewal, Termination, Transfer, and Dispute Resolution (FDD pages 49–59)

Degree_Wellness 2025 FDD FAQ