What documents is the franchisee required to execute to establish Degree Wellness's security interest under the Degree Wellness Agreement?
Degree_Wellness Franchise · 2025 FDDAnswer from 2025 FDD Document
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 the franchisee's performance and indebtedness, Degree Wellness will have a lien upon and security interest in the franchisee's collateral. This collateral includes all current and after-acquired inventory, accounts, contract rights, and general intangibles of the franchise, as well as any proceeds or substitutions of these items.
To establish and maintain this security interest, the franchisee must execute financing statements, instruments, and other documents in a form satisfactory to Degree Wellness. The franchisee also authorizes Degree Wellness to file these financing statements without the franchisee's signature if Degree Wellness deems it necessary or advisable to reflect the granted security interest.
This means that as a Degree Wellness franchisee, you are agreeing to provide Degree Wellness with a security interest in your business assets. This allows Degree Wellness to take possession of those assets if you fail to meet your obligations under the franchise agreement. Franchisees should carefully review the implications of granting this security interest with a legal professional.