Does the Degree Wellness franchise agreement allow transfer of interest through divorce proceedings?
Degree_Wellness Franchise · 2025 FDDAnswer from 2025 FDD Document
- a. You understand and acknowledge that the rights and duties created by this Agreement are personal to you and that we have entered into this Agreement in reliance on the individual or collective character, skill, aptitude, attitude, business ability, and financial capacity of you and your Principal Owners. Accordingly, if you Transfer or attempt to Transfer either this Agreement or any part of your interest in it, or any Interest of Franchise Owner or a Principal Owner, without our advance written approval, you will have breached this Agreement and we will have the right to terminate this Agreement under the terms of Article 15 below. In addition, any attempted Transfer by you of this Agreement or any part of your Interest in it, without our prior consent, is null and void.
- b. As used in this Agreement the term "Transfer" means any voluntary, involuntary, direct or indirect assignment, sale, gift, exchange, grant of a security interest, or occurrence of any other event which would or might change the ownership of any Interest, and includes, without limitation: (1) the Transfer of ownership of stock, units, membership interests, partnership interest or other ownership interest; (2) merger or consolidation, or issuance of additional securities representing an ownership interest in Franchise Owner; (3) sale or issuance of stock, units, membership interests, partnership interest or other ownership interest; (4) Transfer of an Interest in a divorce proceeding or otherwise by operation of law; (5) Transfer or all, or substantially all, of the operating assets of the Franchised Business; or (6) Transfer of an Interest by will, declaration of or transfer in trust, or under the laws of intestate succession.
Source: Item 23 — Receipts (FDD pages 66–257)
What This Means (2025 FDD)
According to Degree Wellness's 2025 Franchise Disclosure Document, a transfer of interest can occur during divorce proceedings. However, any transfer of interest, including those resulting from divorce, requires the advance written approval of Degree Wellness.
The Degree Wellness franchise agreement defines "Transfer" broadly to include any event that might change the ownership of any interest in the franchise. This definition specifically includes the transfer of an interest in a divorce proceeding or otherwise by operation of law. This means that if a franchisee's ownership interest is subject to division in a divorce, it is considered a transfer under the agreement.
Before a transfer can take place, Degree Wellness must grant written approval. If a franchisee attempts to transfer any part of their interest without prior consent from Degree Wellness, it constitutes a breach of the franchise agreement, potentially leading to termination. Degree Wellness states that they have entered into the agreement based on the skills, aptitude, and financial capacity of the franchisee and their principal owners. Therefore, they maintain the right to approve any changes in ownership to ensure that the new owner meets their standards.