In a dispute with Degree Wellness, what is the limit of damages a franchisee can recover?
Degree_Wellness Franchise · 2025 FDDAnswer from 2025 FDD Document
15.3 Our Remedies upon Termination. In the event that we terminate this Agreement under Section 15.1 or other applicable provisions of this Agreement, but excluding the circumstances described in Section 15.2, all rights granted to you under this Agreement shall immediately and automatically terminate and revert to us, and we shall be entitled, to recover from you any and all of the foregoing:
a. in those states in which such termination fees are enforceable, to receive from you a termination fee in the amount equal to one-half (1/2) of our then-current initial franchise fee for new Degree Wellness Studio franchises; and
b. an amount equal to your 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 us including, without limitation, the loss of future revenues (which we both agree include the expected amount of Continuing Franchise Fees, Fund contributions, and Technology Fees payable by you for the remainder of the Term of this Agreement); and
c. all costs and expenses, including attorneys' fees, incurred in connection with the termination, collection of the termination fee and/or damages, and audit fees and expenses.
Source: Item 23 — Receipts (FDD pages 66–257)
What This Means (2025 FDD)
Based on the 2025 FDD, the document does not explicitly state a limit on the damages a Degree Wellness franchisee can recover in a dispute with the franchisor. However, Section 15.3 outlines what Degree Wellness is entitled to recover from the franchisee if the agreement is terminated due to the franchisee's actions. This includes a termination fee, which is one-half of the current initial franchise fee for new Degree Wellness Studio franchises.
Additionally, Degree Wellness can recover an amount equal to the franchisee's average monthly Continuing Franchise Fee, Fund contribution, and Technology Fee, multiplied by the number of months remaining in the term of the agreement, discounted by a present value discount factor of five percent. Degree Wellness can also recover any additional actual, economic, consequential, and indirect damages, including the loss of future revenues, which are defined as the expected amount of Continuing Franchise Fees, Fund contributions, and Technology Fees payable for the remainder of the agreement's term.
Furthermore, Degree Wellness is entitled to all costs and expenses, including attorneys' fees, incurred in connection with the termination, collection of the termination fee and/or damages, and audit fees and expenses. While this section details the damages Degree Wellness can recover from a franchisee, it does not specify any limits on damages a franchisee can recover from Degree Wellness. A prospective franchisee should consult with a legal professional to understand their rights and potential liabilities in case of a dispute.