Can Degree Wellness file financing statements without the franchisee's signature?
Degree_Wellness Franchise · 2025 FDDAnswer from 2025 FDD Document
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, franchisees agree to execute financing statements and related documents that Degree Wellness deems necessary to establish and maintain a valid security interest in the franchisee's assets.
Specifically, Degree Wellness is authorized to file financing statements without the franchisee's signature. This means that Degree Wellness can take steps to protect its financial interest in the franchise by recording a lien against the franchisee's assets without needing the franchisee to sign off on each filing.
This provision is designed to secure the franchisee's performance under the Franchise Agreement and any debts owed to Degree Wellness or its affiliates. The lien applies to a broad range of assets, including inventory, accounts, contract rights, and general intangibles of the franchise. For a prospective franchisee, this highlights the importance of understanding the financial obligations and the extent to which Degree Wellness can assert its rights over the franchise's assets in case of non-compliance or debt.
It is common practice in franchising for franchisors to take security interests in a franchisee's assets to protect their investment and ensure compliance with the franchise agreement. However, the specific terms and conditions can vary, so it is crucial for franchisees to carefully review the FDD and related agreements and seek legal counsel to fully understand their obligations and the franchisor's rights.