Does the Degree Wellness franchise agreement allow for liens?
Degree_Wellness Franchise · 2025 FDDAnswer from 2025 FDD Document
- 17.4 Lien.
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 the 2025 Degree Wellness Franchise Disclosure Document, Degree Wellness retains the right to place a lien on the franchisee's assets to secure their performance and any debts owed to Degree Wellness or its affiliates. This is a fairly standard practice in franchising, allowing the franchisor to protect its financial interests.
Specifically, Degree Wellness will have a lien upon and security interest in the franchisee's inventory (both current and future), accounts, contract rights, general intangibles, and any proceeds or replacements of these assets. This broad definition of collateral gives Degree Wellness a comprehensive claim on the franchisee's business assets in case of default.
The franchisee is obligated to execute any necessary financing statements or documents to establish and maintain Degree Wellness's security interest. Furthermore, the franchisee authorizes Degree Wellness to file these financing statements without requiring the franchisee's signature. This clause streamlines the process for Degree Wellness to secure its lien.
This security interest ensures that Degree Wellness has a legal claim on the franchisee's assets, which can be enforced if the franchisee fails to meet their obligations under the franchise agreement. Prospective franchisees should understand the implications of this lien, as it could affect their ability to obtain financing or sell their business.