Are accounts receivable of the Degree Wellness franchise subject to a lien?
Degree_Wellness Franchise · 2025 FDDAnswer from 2025 FDD Document
- 17.4 Lien.
To secure your performance under this Agreement and indebtedness for all sums due us or our affiliates, we shall have a lien upon, and you hereby grant us a security interest in, the following collateral and any and all additions, accessions, and substitutions to or for it and the proceeds from all of the same: (a) all inventory now owned or after-acquired by the Franchise, including but not limited to all inventory and supplies transferred to or acquired by you in connection with this Agreement; (b) all accounts of the Franchise now existing or subsequently arising, together with all interest in the Franchise, now existing or subsequently arising, together with all chattel paper, documents, and instruments relating to such accounts; (c) all contract rights of the Franchise, now existing or subsequently arising including, without limitation, accounts receivable and other contractual rights to payment from others; (d) all general intangibles of the Franchise, now owned or existing, or after-acquired or subsequently arising including, without limitation, all awards, damages, payments, escrowed monies, insurance proceeds, and interest, fees, charges or payments accruing on or received from or to be received on any of the foregoing in any way; and (e) all products, proceeds, substitutions, and replacements of any of the above described collateral.
You agree to execute such financing statements, instruments, and other documents, in a form satisfactory to us, that we deem necessary so that we may establish and maintain a valid security interest in and to these assets, and you authorize us to file, without your signature, such financing statements as we shall deem necessary or advisable to reflect the security interest granted herein.
Source: Item 23 — Receipts (FDD pages 66–257)
What This Means (2025 FDD)
According to Degree Wellness's 2025 Franchise Disclosure Document, accounts receivable are subject to a lien. Degree Wellness retains a lien upon all accounts of the franchise, whether existing now or arising later. This includes all interest in the franchise, chattel paper, documents, and instruments related to these accounts.
This lien serves to secure the franchisee's performance under the Franchise Agreement and to cover any debts owed to Degree Wellness or its affiliates. The lien extends to a broad range of assets beyond just accounts receivable, including inventory, contract rights, general intangibles, and any proceeds or replacements of these assets.
As a prospective Degree Wellness franchisee, it's crucial to understand that Degree Wellness has a security interest in your business's assets. You are obligated to execute any necessary financing statements or documents to establish and maintain this security interest. Degree Wellness is also authorized to file these statements without your signature, which underscores the extent of their control over these assets. This arrangement protects Degree Wellness's financial interests and ensures that they have a claim on your business assets if you fail to meet your obligations under the Franchise Agreement.