What constitutes a failure to comply with the Degree Wellness franchise agreement that could lead to termination?
Degree_Wellness Franchise · 2025 FDDAnswer from 2025 FDD Document
Transfer**. Our consent to a proposed Transfer pursuant to this Section 14 will not constitute a waiver of any claims we may have against you or any Principal Owner, nor will it be deemed a waiver of our right to demand exact compliance with any of the terms or conditions of this Agreement by the Proposed New Owner. Unless otherwise specified in writing, you will be subject to all post-Transfer/post-termination obligations set forth in this Agreement.
15. TERMINATION OF THE FRANCHISE.
15.1 Event of Default. Subject to applicable law, you will be deemed to be in default under this Agreement, and we will have the right to terminate this Agreement effective upon delivery of notice of termination to you, subject only to any right to cure to the extent expressly set forth below or mandated pursuant to applicable law, if:
a. you do not develop or open the Franchise, or you (or any individuals required to attend) fail to attend and/or successfully complete any required initial training or subsequent mandatory training, in accordance with all terms and conditions (including, without limitation, time limits) provided for in this Agreement;
b. you abandon, surrender, transfer control of, lose the right to occupy the Premises of, or do not actively operate, the Franchise, or your lease for or purchase of the location of the Franchise is terminated for any reason;
c. you or your Principal Owners assign or Transfer this Agreement, any Interest, the Franchise, or assets of the Franchise without complying with the provisions of Section 14;
d. you are adjudged a bankrupt, become insolvent or make a general 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;
e. you use, sell, distribute or give away any services or products, or use any patient referral or marketing service, that has not been formally approved by us in writing and in advance for your specific Franchise or for the System as a whole;
f. you or any of your Principal Owners are convicted of or plead no contest to a felony or are convicted or plead no contest to any crime or offense that is likely to adversely affect the reputation of Degree Wellness, the Franchise, and/or the goodwill associated with the Marks, or otherwise engage in any dishonest, unethical, or other conduct that is reasonably likely to reflect materially and unfavorably on the goodwill or reputation of your Franchised Business, the Marks or the System;
g. you or any of your employees violate any health or safety law, ordinance or regulation, or operate the Franchise in a manner that presents a health or safety hazard to your customers or the public;
h. you do not pay when due any monies owed to us or our affiliates, and do not make such payment within ten (10) days after written notice is given to you (unless a longer cure period is otherwise required by applicable law, in which case such longer period shall apply);
i. if you under-report gross revenues for any period, as determined by an audit or inspection, in an amount greater than five percent (5%);
j. you or any of your Principal Owners fail to comply with any other provision of this Agreement, any other agreement with us, or any mandatory specification, program, standard, or operating procedure within 30 days after written notice of such failure to comply is given to you (unless a longer cure period is otherwise required by applicable law, in which case such longer period shall apply);
k. you fail to submit when due any financial statements, reports or other data, information, or supporting records; or
l. you or any of your Principal Owners fail on three (3) or more separate occasions within any twelve (12) consecutive month period to comply with this Agreement, whether or not such failures to comply are corrected after notice is given to you or your Principal Owners.
Source: Item 23 — Receipts (FDD pages 66–257)
What This Means (2025 FDD)
According to Degree Wellness's 2025 Franchise Disclosure Document, several events can trigger a termination of the franchise agreement. These include failing to develop or open the franchise, not attending or completing required training, abandoning the business, or losing the right to occupy the premises. Transferring the agreement or franchise assets without approval, bankruptcy, insolvency, or failure to satisfy judgments can also lead to termination.
Using unapproved services, products, or marketing services, a felony conviction of the owner, violating health or safety laws, or operating the franchise in a way that endangers customers are further grounds for termination. These stipulations ensure Degree Wellness maintains brand standards and protects its reputation.
If Degree Wellness terminates the agreement due to the franchisee's default, all rights granted to the franchisee immediately revert to Degree Wellness. The franchisee may be required to pay a termination fee equal to one-half of the current initial franchise fee, along with an amount equal to the average monthly Continuing Franchise Fee, Fund contribution, and Technology Fee multiplied by the number of months remaining in the Term of this Agreement, discounted by a present value discount factor of five percent (5%) and any additional actual, economic, consequential and indirect damages incurred by Degree Wellness including, without limitation, the loss of future revenues. The franchisee is also responsible for all costs and expenses, including attorneys' fees, related to the termination and collection of fees.
Prospective franchisees should carefully consider these conditions, as they represent significant obligations and potential liabilities. Understanding these terms is crucial for a successful and compliant franchise operation with Degree Wellness.