Does the Degree Wellness franchise agreement consider a merger or consolidation as a transfer?
Degree_Wellness Franchise · 2025 FDDAnswer from 2025 FDD Document
- 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 merger or consolidation is explicitly considered a transfer under the franchise agreement. This means that if a Degree Wellness franchisee merges their business with another entity or consolidates it, it would be treated as a transfer of ownership.
As a result, the franchisee must obtain prior written approval from Degree Wellness for the merger or consolidation to be valid. Failing to get this approval would constitute a breach of the franchise agreement, potentially leading to termination. This requirement allows Degree Wellness to maintain control over who operates their franchises and ensures that any new entity meets their standards.
This provision is typical in franchise agreements, as franchisors want to carefully vet and approve any changes in ownership or control to protect their brand and system. For a prospective Degree Wellness franchisee, it's crucial to understand these transfer restrictions and plan accordingly, especially if they anticipate any future mergers or consolidations involving their franchise business.