Does the Degree Wellness franchise agreement confer any benefits to individuals or entities who are not parties to the agreement?
Degree_Wellness Franchise · 2025 FDDAnswer from 2025 FDD Document
- 9.3 Notwithstanding the fact that Degree Wellness is made a third party beneficiary of Sections 10 and 11.1 and certain other provisions in this Agreement, Licensed Provider and Management Company acknowledge and agree that Degree Wellness is not a party to this Agreement, and that Licensed Provider has no contract or other rights against Degree Wellness with respect to any matter including, without limitation, the operation or profitability of the Studio business, any employee-related matters, and any marketing or other System materials, methods or guidelines.
10. Restrictive Covenants.
11. Indemnification.
- 11.1 Licensed Provider agrees to defend, indemnify and hold harmless Management Company, Degree Wellness and their respective owners, directors, officers, employees, agents, successors, and assigns (each a "Management Indemnified Party"), from and against any and all claims, lawsuits, demands, actions, causes of action or other events, and for all costs and expenses incurred by the Management Indemnified Party in connection therewith, including without limitation actual and consequential damages, reasonable attorneys', accountants', and/or expert witness fees, cost of investigation and proof of facts court costs, other litigation expenses, and travel and living expenses, to the extent caused by, relating to or otherwise arising out of (1) the effects, outcomes and consequences of Licensed Provider's acts and omissions and the acts and omissions of Licensed Provider's employees, representatives and agents in connection with or relating to the provision of the Licensed Provider Services or the operation of the Studio, (2) any agreements, representations, or warranties Licensed Provider makes to third parties that are not expressly authorized under this Agreement, (3) any damages to any person or property directly or indirectly arising out of the performance of the Licensed Provider Services or the operation of the Studio, whether or not caused by Licensed Provider's negligent or willful action or failure to act or acts or omissions deemed to be professional malpractice, and/or (4) Licensed Provider's breach of any provision of this Agreement. Degree Wellness shall be deemed to be a third party beneficiary of all of the covenants contained in this Section 11.1.
Source: Item 20 — OUTLETS AND FRANCHISEE INFORMATION (FDD pages 63–66)
What This Means (2025 FDD)
According to the 2025 Degree Wellness Franchise Disclosure Document, Degree Wellness is a third-party beneficiary to certain aspects of the agreement between the Licensed Provider (franchisee) and the Management Company. Specifically, Degree Wellness is a third-party beneficiary of sections 10 and 11.1 of the agreement.
Section 10 outlines restrictive covenants, including the protection of confidential information. This means Degree Wellness benefits from the franchisee's agreement not to disclose confidential information belonging to Degree Wellness and to ensure their employees also agree to these restrictions. This protects Degree Wellness's proprietary information and trade secrets.
Section 11.1 details indemnification, where the Licensed Provider agrees to defend, indemnify, and hold harmless Management Company, Degree Wellness, and their respective owners, directors, officers, employees, agents, successors, and assigns from claims, lawsuits, damages, and expenses arising from the Licensed Provider's actions, omissions, or breach of the agreement. This provides a direct benefit to Degree Wellness by offering them protection from liabilities caused by the franchisee's business operations.
In essence, while Degree Wellness is not a direct party to the agreement between the Licensed Provider and the Management Company, these specific clauses grant Degree Wellness rights and protections, making them a beneficiary of certain obligations and covenants within the agreement. This is a fairly common practice in franchising, as it allows the franchisor to enforce certain standards and protect its brand and system, even when the direct contractual relationship is between the franchisee and a management entity.