What constitutes abandonment of development activities by a Degree Wellness developer that would allow termination of the agreement?
Degree_Wellness Franchise · 2025 FDDAnswer from 2025 FDD Document
6.2 Franchisor will have the right, at its option, to terminate this Agreement and all rights granted to Developer hereunder, without affording Developer any opportunity to cure such default, effective upon written notice to Developer, upon the occurrence of any of the following events: (i) if
Developer ceases to actively engage in development activities in the Site Selection Area or otherwise abandons its development business for three consecutive months, or any shorter period that indicates an objective intent by Developer to discontinue development of the Studios within the Site Selection Area; (ii) if Developer becomes insolvent or is adjudicated bankrupt, or if any action is taken by Developer, or by others against the Developer, under any insolvency, bankruptcy or reorganization act, or if Developer makes an assignment for the benefit of creditors or a receiver is appointed by the Developer; (iii) if Developer fails to meet its development obligations under the Development Schedule for any single Development Period, and fails to cure such default within 30 days of receiving notice thereof; and (iv) if any Franchise Agreement that is entered into in order to fulfill Developer's development obligations under this Agreement is terminated or subject to termination by Franchisor, pursuant to the terms of that Franchise Agreement.
Source: Item 23 — Receipts (FDD pages 66–257)
What This Means (2025 FDD)
According to Degree Wellness's 2025 Franchise Disclosure Document, the franchisor can terminate the Development Agreement if the developer ceases to actively engage in development activities in the Site Selection Area or otherwise abandons its development business for three consecutive months. The termination can also occur for any shorter period that indicates an objective intent by the developer to discontinue development of the Studios within the Site Selection Area. This termination is effective upon written notice to the developer, without affording any opportunity to cure the default.
This clause is significant for prospective Degree Wellness developers as it sets a clear expectation for continuous engagement in development activities. Failure to maintain active development, even for a period shorter than three months if it demonstrates an intent to discontinue, can lead to termination of the agreement. This could result in the loss of development rights and any investments made up to that point.
It is important for potential developers to carefully consider their capacity to meet the ongoing development demands and to have contingency plans in place to avoid any periods of inactivity that could be interpreted as abandonment. Developers should maintain open communication with Degree Wellness regarding their development progress and any challenges they may be facing to mitigate the risk of termination.