What collateral does Degree Wellness have a lien upon to secure performance under the Degree Wellness Agreement?
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, to secure a franchisee's performance under the Degree Wellness Agreement, Degree Wellness has a lien upon specific collateral. This collateral includes all inventory the franchise owns or acquires, including inventory and supplies transferred or acquired in connection with the agreement. It also encompasses all accounts of the franchise, both existing and future, along with any related chattel paper, documents, and instruments. Degree Wellness's lien extends to all contract rights, such as accounts receivable and other contractual rights to payment. Additionally, it covers all general intangibles, including awards, damages, payments, escrowed monies, insurance proceeds, and any interest, fees, charges, or payments related to the aforementioned items. Finally, the lien includes all products, proceeds, substitutions, and replacements of the described collateral.
This security interest allows Degree Wellness to claim these assets if a franchisee fails to meet their obligations under the franchise agreement, such as making required payments or adhering to operational standards. The franchisee is required to execute financing statements and other documents to establish and maintain Degree Wellness's security interest in these assets. Degree Wellness is also authorized to file these financing statements without the franchisee's signature, ensuring the security interest is properly recorded and enforceable.
For a prospective Degree Wellness franchisee, this means that a significant portion of their business assets are subject to a lien in favor of the franchisor. This could impact the franchisee's ability to secure additional financing or sell the business. It is important for franchisees to fully understand the implications of this security interest and to ensure they comply with all terms of the franchise agreement to avoid triggering the lien. Franchisees should seek legal counsel to review the franchise agreement and understand their rights and obligations regarding the collateral and security interest.